Week 6 Notes (10/7-10/9/2015)
Week 6 Notes (10/7-10/9/2015) ECO 108
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This 5 page Class Notes was uploaded by Jade Miller on Monday October 12, 2015. The Class Notes belongs to ECO 108 at University of Rochester taught by Rizzo in Fall 2015. Since its upload, it has received 47 views. For similar materials see Principles of Economics in Economcs at University of Rochester.
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Date Created: 10/12/15
Wednesday October 7 2015 Econ 108 Day 15 Wednesday October 7 2015 Surely we ve wrecked the planet to do all this The income elasticity of demand for environmental quality is large approaching 2 In Europe and America rivers lakes seas and air are getting cleaner Forest area larger than in previous years Farmland takes up far less acreage to feed far more people eg we grow triple the food on same amount of land as 1960 Around the world resources are more abundant Summary It s a lot better today than it was lOOZOOmany years ago Lifespan and health are important measures to see how much we ve improved Pollution is around the world today far worse than it was historically Income elasticity of demand Largest elasticity is in environment Increasing shares to improve the environment around the world Extravagant lifestyles don t come at the expense of nature Planet Wrecking Global Weather Related Deaths Average annual weather deaths and death rates fell by 93 and 98 since 1900 Droughts account for 58 of these but a 99 decrease in drought deaths since 1920 Floods account for 34 of these but a 987 decrease in ood deaths since 1930s Storms account for 7 of extreme weather event deaths from 19002008 Death rates declined by 47704 since the 1970s alone Energy is the most important aspect of producing food Better prepared to handle disasters faster response to disaster or disease Economic developments allow for us to give aid to areas that need it Of nearly 60 million annual global deaths Less than 35000 due to extreme weather 006 of deaths Comparison Diarrhea kills 800000 children per year and 15 million total Weather can cause damage but it s not causing gt quot humanquotquot damage Environment and Economy decoupling We are very likely at Peak Farmland Harvesting of wood has peaked Wild animal harvesting aside from oceans has decreased in developed countries Surely we ve wrecked our psyche to do this Layard reports that richer is NOT happier Thus if income is not important for happiness no need to focus on economic growth Easterlin paradox Wednesday October 7 2015 Is it better to be unhappy and rich versus unhappy and poor Increase in individualism and freedom since 1981 had been attributed with increase in enjoyment across the globe why sacri ce yourself if you re not going to be happy The premise of our existence is to keep existing The Stagnating West Is Low Hanging Fruit Gone 1950197 3 Median Family income is US grew rapidly GDP per capital grew at 25 19732007 It grew at 19 The Extraordinary Commercial Revolution Nearly the entire record of human history is characterized by misery suffering premature death war stagnation Compare the transition from subsistence lifestyles to our current one of plenty Temporary blips in economic progress seem grossly overstate During the Great Depression income fell to level reached prior to WWI During the Great Recession income levels fell to those horrible times of Summer 2007 Do you think the living standard you have now is at least tolerable The Demographic and Economic Transitions The Commercial Revolution can be through of as the transition from stagnation to accelerating growth Real economic success is measured by far more than dollars and cents Religious liberty Women s rights Political freedom Improved nonmarket amenities and more Commerce is a fantastic thing for freedom Thanks to the intemet the economy is getting better at feeding customer s wants and needs Suppliers on the web to deliver niches are thriving People are better off in a world where you can get what you want suppliers supply In other words What caused growth to change from extensive growth toward the modern intensive growth that we ve grown accustomed to What Happened Consider 2 theories of Production The Classical Theory We use up our increased productivity with more people The Modern Theory Continuous improvements in technology knowledge and human capital allow productivity to outpace population growth Either fixed or steadily declining Wednesday October 7 2015 We grow more food and people decide not to have more kids Response is different Question How can we understand the transition from the Classical World to the Modern World Why does fertility fall as income grows Possible answers Becker Substitution of child quality versus child quantity Why The role of property Other factors We did have lots of kids with economic growth now we have less kids w more economic growth NEXT Role of property and role of healthcare and how we haven t identified trigger Day 16 Friday October 9 2015 In Order to Move from Extensive to Intensive Population dynamics had to change from High FertilityClassical Theory Toward the Modern Low FertilityModem Theory Insight on how this happened Compare the benefits and costs of having an additional child for landless families versus wealthypropertied families Decisions to have children based on ownership of property Poor are more likely to have children there are economic benefits Was the Fertility History Right Children did NOT produce more than they consumed in huntergather societies Children did NOT produce more than they consumed in agrarian societies Half of globe has fertility rate of 21 or lower Global population is likely to stop growing Pace of fertility decline is quickening What Changed Lucas and Demographic Shift Institutions Energy Transitions Semidirected bumbling process of trial and error by clever dexterous professionals Economics 00 to Economics 10 to Economics 20 Attitudes Idea The Intellectual Foundation of the Industrial Revolution The Chinese invented the printing press before Gutenberg Middle Eastems could navigate Friday October 9 2015 Romans invented steam engine 1700 years before Thomas Newcomen s first truly operational one but nothing happened Why Origins of the Commercial Revolution Lucas and Demographic Shift Institutions Semidirected bumbling process of trial and error by clever dexterous professionals Economics 00 to Economics 10 to Economics 20 Encourages trade which is important Has been diminished in some settings Life on Earth today has become just as important as thinking about life after death Why Did the Commercial Revolution Take So Long to Happen Technologies of defense must outweigh technologies of predation The paradox of state The power of ideas Genetic factors Critical mass and trade Institutions and the Industrial Revolution What other than impacts your incentives to work save and invest You might call the corpus of these things institutions including The Rule of Law Contracts and Respect for Contracts Individual Freedom Customs and Mores and Norms Moral Institutions Legal System Religious Thought and Doctrine The Rule of Law Law versus Legislation Legitimacy under which arrangements are made agreed upo which comes first Applies equally to all e g Congress the rich the poor etc all should have the rules applied to them as the rest of us Known in advance Predictable Applied Uniformly Not arbitrary Adam Smith Writing in the Wealth of Nations Smith argued NOT that these institutions were sufficient for nations to advance prosper and grow But that these were necessary conditions Friday October 9 2015 The Whole reason we have revolutions is that we ve changed Behaviorally Emotionally
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