Induction Economics

1
Induction Economics

• Have your questions answered
• and find answers to unknown questions

2
Your Interest in Studying Economics ?

• Improve career prospects through new skills and
  knowledge
• Change or accelerate career by gaining a
  certificate/diploma
• The Certificate/Diploma as a stepping stone to a
  BA or MA
• Personal Interest in the Topic
• Meeting people challenging yourself

3
Why is Economics relevant?

• Because it helps your career prospects in the
  European capital of financial services and
  business
• Because it sharpens your thinking, helping you to
  improve your own decision-making
• Because it is personally enriching, helping you
  to understand key aspects of the world around
  you.

4
What is Economics ?

• Economics is the study of how society decides
  what, how, and for whom to produce (Begg,
  Fischer, Dornbusch 2003 3)
• The key problem is how deal with the problem of
  scarcity. Resources are scarce if at the price
  zero, demand would outstrip supply.

5
The Market and the State

• The market reconciles through price the decisions
  of workers, firms, and consumers. Economics looks
  both at the level of individual decisions
  (micro), but also at the level of regional,
  national or international societies (macro).
• Variations in States intervention in the market
  Market Central planning or invisible hand (A.
  Smith)
• Delivery of efficient allocation of resources and
  human utility (however that is defined)

6
Economics as a Discipline and as a Method

• Economics is a social science as it focuses on
  human behaviour at the individual (micro) or
  societal (macro) level.
• Many of the methods are quantitative and
  testable, similar to natural sciences
  (falsifiability)
• Statistics, theories, and modelling behaviour
• But also uses qualitative methods and insights
  from other disciplines (psychology, sociology)
• experiments and game theory
• What are the boundaries of rationality

7
Economics as an ArtMervyns Lessons from
Greenspan

• Economics is not a set of doctrines but a way of
  thinking. Every model has its limitations,
• One should use not only quantitative information
  but draw data from a range of sources,
• There are a small number of fundamental
  objectives that are crucial, e.g. price stability
  is not a figure, but rather an environment in
  which inflation is so low and stable over time
  that it does not materially enter into the
  decisions of households and firms

8
Economics and everyday phenomena

• There is no such thing as free lunch, is there?
  Why do you think this induction day is free?
• Why can students studying economics expect to
  earn more than equally smart student studying
  philosophy?
• Why can a top-golfer earn more in a weekend than
  a university lecturer earns in five years?

9
International Economics

• How can we prevent Global Warming?
• By putting a price-tag to pollution and waste,
  emissions trading scheme, taxes on fuel
• Why did oil prices in the 1970 go up and then
  went down again?
• Changes in supply, which then affected demand,
  which then affected incentives to widen supply
• Why did some developing countries object to the
  recent offer of cancelling their debts?
• Because of higher risk premiums for future
  borrowing. Borrowing attracts further investment

10
Time to Stretch Your Brains !

• Please answer the following six questions on the
  sheets in Groups (4 Groups in total)
• You have got 15 Minutes
• Scribble the answers down on one sheet and report
  back
• The incentive is non-pecuniary, but honorary !

11
QUIZZ Questions

• Economics is about people, and thus cannot be
  science.
• Society abolishes higher education. Students have
  to find jobs immediately. If there are no jobs
  available, how do wages and prices adjust so
  those who want jobs can find them?
• There is no such thing as a free lunch. To get
  more of one thing you have to give up something
  else.
• Why do street-level drug dealers live mostly at
  home?
• The government warns that all petrol-stations and
  all Banks in the country will find it difficult
  to meet demand for petrol and money next week.
  What do you think will happen? Would you rather
  be the boss of a petrol station or the bank
  manager?
• The European Stability and Growth Pact sets rules
  so that member states adhere to budget
  discipline. If the rules are violated, fines can
  be imposed by majority voting on sinner states.
  What could be the reasons for why large EU
  countries felt it was possible to flout the
  rules, while small countries did not?