Archive forOctober, 2012



This article is about elasticity of gas in the year 2012. It also looks at the demand from other countries including the United States and explains why the US demand for gas has decreased. This article relates to what we have talked about in class about elasticity and demand and supply.


Sad South Africa

South Africa was once accountable for 40% of the entire continent’s economy. Recently due to major changes throughout Africa, South Africa is on a steady decline. ALthough, it still holds the highest percentage of Africa’s economy it is said that Nigeria will take them over within a few years. The ruling African National Congress (ANC) is the largest reason that the economy has dwindled as poorly as it has, but they are not the only ones to blame. Since South Africa has a mature economy, it is suffering from many of the same problems that our economy and other wealthy economies are experiencing. The main cause however is the ANC’s incompetence and outright corruption. The ANC and it’s leaders are bringing down the economy. While the African countries of the North are spliting away from the one-party system, South Africa is doing the opposite which is resulting in major losses.


The Uncomfortable Truth About American Wages

This article discusses trends in American men and women’s wages over the past 40 years.  It shows how some external effects have caused what could be seen as wage stagnation or even decline, when wages are adjusted for inflation.  It also shows disparities in wages between men and women and how they are slowing moving together.  The issue of employment and wages is a very “hot” topic in American politics right now,  because of the large conern of unemployment and the fear of falling back into a recession.

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Will Iran Stop Oil Trade?

This article discusses how Iran might stop oil exports if the western economic sactions continue to get tighter and tighter. If this were to happen this would be a major problem for western countries because of reliance on the oil trade. I thought this article would be interesting for this class because we have been talking about imports and exports. I thought it would be interesting to see what would happen if one countries exports were to completely stop and how that would affect the other countries around the world.


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Externalities from Politics

With the upcoming election I thought this was an interesting video and article. Professor Mark Pennington points out that people are often deceived into thinking all externalities are due to a market failure when the reality is political campaigns are a major cause of externalities. With incentives of simply trying to win an election, a politician will often guarantee benefits to smaller groups to lock up their votes and in the process they will spread costs over a large portion of the population.

-Brian Palm


Obesity: a positive externality or a negative externality?

Obesity is a positive externality.


Obesity is a negative externality.


I just discovered a super interesting argument that the academic world has been arguing over a long term about whether obesity is a positive externality or a negative in terms of social welfare of our society.

The article in the Economist states a phenomenon that when you look at your friend become obese, you will probably exercise more and decide to avoid obesity, because your friend doesn’t look good, which acts as a signal to alert you not to become obese. The fundamental of this effect is that you are a rational person so that you compare the cost and benefit when you will decide whether or not you will eat more and become obese. When your friend who is obese doesn’t look good around you, you will consider that the cost of being obese is high enough for you to go out and exercise.

As a research doctor said:

Dr. Nicholas A. Christakis…a principal investigator in the new study, said one explanation was that friends affected each others’ perception of fatness. When a close friend becomes obese, obesity may not look so bad.  ‘You change your idea of what is an acceptable body type by looking at the people around you,’ Dr. Christakis said.


But how your perception of your friend being obese affect your decision depends on so many psychological factors, it is inconclusive to make an conclusion that the obesity negatively influences society as a whole.


Another paper analyzes the obesity is a negative social externality in terms of the health insurance. Obesity induces the social cost that other members will bear to the health insurance market. The reason is that the obese consume significantly more medical resource than the non-obese, but they all pay the same amount of health insurance premium. In the aggregated insurance pool, the obese impose a negative externality to the normal-weight individuals.

As far as I concerned, there are so many psychological conditions and decisions involved that it is hard to come to a absolute conclusion that whether or not obesity is a negative externality.

However, avoiding obesity is great and healthy style of life that we should all pick up.


Francis, Zixian Lin


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The real unemployment rate

The unemployment rate only measures the number of people without jobs that are currently looking for a new job. Another rate that is measured is the employment-population ratio. That is the percentage of the U.S. adult population that has a job. That percentage has sat at around 58.7% for the last three years and is just above the record low in the 1980’s.


When to update gadgets

I thought this article was pretty interesting because it applies very well to my life. It is very difficult to judge the costs and benefits of replacing out of date technology, especially because it is so expensive. Is getting the new technology worth it? Or should you wait a few months to get the newest release. This relates well to our economic ideas because its all about cost and benefits from the choice that we make concerning the new gadgets.

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Googles disappointing quarter

This past tuesday, google revealed its earning for this quarter. To many, the statistics were shocking and disappointing. The results were based off of its ad rates and motorals success. Many credit the loss to the ending of Googles prior deal with Apple and iPhone. Although this seems like a bad thing, it turns out they are not introuble. With new mobile advertising opportunities sparking up everyday, google is on top of their game. The recently have been putting a lot of work into mobile and video ads which have been a huge success and they are starting to see revenue from both of these

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The Next Crisis: Sponging Boomers

This post’s main idea is that “the economic legacy left by the baby-boomers is leading to a battle between the generations”. Younger generations are going to be having a harder time acquiring wealth due to the past generation’s actions. For example, the baby boomer generation is leaving a massive amount of debt behind, which leads to growth of the labor force slowing down. Some economists say that inflation could be a solution to the problem, even if it is only 5%. If there are disagreements on policies it is not fair for younger generations because the baby boomers will have 26% of the vote in a few years.


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