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Showing posts with label positive. Show all posts
Showing posts with label positive. Show all posts

Friday 21 July 2023

A Level Economics 56: Externalities

Externalities are unintended spillover effects of economic activities that impact third parties who are not directly involved in the transactions. These effects can be either positive or negative and occur when the production or consumption of a good or service creates external benefits or costs to society beyond what is reflected in the market price. Positive externalities result in underproduction of goods or services, while negative externalities lead to overproduction. In both cases, the failure of the market to fully account for these external effects can result in suboptimal outcomes for society, leading to market failures.

Market Failures Due to Positive Externalities: Positive externalities occur when the consumption or production of a good or service confers benefits to third parties. Two main market failures arise due to positive externalities:

  1. Underproduction: Positive externalities lead to underproduction of goods or services because producers do not consider the additional benefits conferred on society beyond what consumers pay for.

    Example: The use of renewable energy sources, such as solar or wind power, contributes positively to the environment by reducing greenhouse gas emissions and mitigating climate change. However, producers may not fully consider the environmental benefits when deciding how much renewable energy to generate, resulting in an underproduction of clean energy.


  2. Welfare Loss: The underproduction of goods or services with positive externalities results in a welfare loss to society. If these goods were produced and consumed at the optimal level, the social benefits to society would be greater than the private benefits to consumers.

    Example: Investments in education create positive externalities by improving the overall human capital of society, leading to a more skilled and productive workforce. However, private individuals may not consider the full societal benefits when deciding how much to invest in education, resulting in an inefficient allocation of resources.

Market Failures Due to Negative Externalities: Negative externalities occur when the consumption or production of a good or service imposes costs on third parties. Two main market failures arise due to negative externalities:

  1. Overproduction: Negative externalities cause overproduction of goods or services because producers do not bear the full costs imposed on society beyond what consumers pay for.

    Example: The production and consumption of fossil fuels result in air pollution and adverse health effects, imposing costs on society. However, the market may overprovide fossil fuels because the negative externalities, such as pollution, are not fully accounted for in the price of the fuels.


  2. Welfare Loss: The overproduction of goods or services with negative externalities results in a welfare loss to society. If these goods were produced and consumed at the optimal level, the social costs imposed on others would be lower than the private benefits to consumers.

    Example: The production of certain chemicals may lead to water pollution, harming ecosystems and communities downstream. The market may overproduce these chemicals since the costs of pollution are not borne entirely by the producers.

In both cases of positive and negative externalities, market failures arise because market participants do not take into account the full social costs or benefits associated with their decisions. To address these market failures, governments can intervene through various policy measures, such as taxes and subsidies, regulations, and market-based mechanisms, to internalize externalities and promote a more efficient allocation of resources. By correcting these externalities, policymakers aim to achieve a better balance between private interests and societal well-being, leading to a more optimal and equitable outcome for the economy and society as a whole.

Tuesday 4 July 2023

No Affirmative Action in University Admissions: US Supreme Court

 From The Economist


Should a fair country allow citizens to be treated differently based on the colour of their skin? Most people would say that it should not. But others insist that it should—if the ends are suitably enlightened.

Not long after America dismantled two centuries of slavery and segregation, it embarked on a project of “affirmative action”: a system of legally sanctioned positive discrimination for African-Americans (later expanded to other “under-represented minorities”) who sought entry to selective universities. At the time the affront to liberal norms of fairness and equality under the law was assuaged by the fact that the beneficiaries of the policy were oppressed not long ago. Yet after half a century, one marked with more racial progress than setbacks, it remained the case that an applicant to America’s top universities with the right skin colour had a much better chance of admission than one with identical credentials but the wrong skin colour. On June 29th the Supreme Court terminated the scheme.

It was right to do so. That is because affirmative action rested on contorted constitutional logic. It was also broadly unpopular outside progressive circles. Worst of all, it only marginally ameliorated America’s yawning racial gaps. Despite the sermonising of its administrators, even with race-based affirmative action the country’s best universities never represented America. The very same universities offer extreme preferences to children of alumni and donors—a shadow, unjustifiable affirmative-action scheme for the white and wealthy hidden behind the prominent one for black and Hispanic applicants (a disproportionate share of whom were wealthy themselves).

The Supreme Court’s ruling will reverberate widely. “Eliminating racial discrimination means eliminating all of it,” wrote Chief Justice John Roberts in his majority opinion. This will surely encourage lawsuits to end racial preferences in other areas, such as government contracting. But the immediate impact will be on university admissions.

A touch of class

Something better can come out of the demise of the present regime. Start with the shaky legal justification for race-conscious college admissions. After the civil war, America’s constitution was amended to guarantee all of its citizens due process and equal protection under the law, regardless of their race. Yet for decades, under Jim Crow, many states prevented black people from voting, forbade inter-racial marriage and enforced racial segregation in schools, among other outrages. After the correction of the civil-rights era, America began to try to live up to its constitutional promise. It passed landmark civil-rights legislation that forbade unequal treatment “on the ground of race, colour, or national origin”.

Yet for decades the Supreme Court allowed positive discrimination in universities. How so? The policy was justified, the justices of the day argued, not as reparations for a terrible past, but because the value of diversity was compelling for promoting “cross-racial understanding and the breaking down of racial stereotypes”. It was always odd that affirmative action was explicitly crafted for the benefit of students’ white peers. Nonetheless elite universities leapt on the rationale of diversity, using it to construct racially balanced classes while suggesting that these were the happy result not of quotas, which are banned, but of “race-conscious” holistic admissions schemes that treated people as individuals and not as avatars for their racial group.

Contrary to the dissent of the court’s liberal justices, who claim the new ban “will serve only to highlight the court’s own impotence in the face of an America whose cries for equality resound”, Americans were not happy with the old policy. In 2020 even liberal Californians voted down a referendum to reinstate affirmative action, banned in the state since 1996. Polls show that many more Americans oppose taking race into account for admissions than favour it. That is true also of Asian Americans, who typically lean left but bear the heaviest cost of race-based admissions because they are deemed “over-represented” (despite suffering discrimination in their own right).

The court’s decision could be the catalyst for fairer admissions. The extraordinary benefits that Harvard and Yale shower upon the children of alumni and donors make a mockery of meritocracy and those institutions’ self-professed progressivism. Those practices should go.

Universities that wish to do their bit for social justice should stop using race as an (often inaccurate) proxy for disadvantage and start looking at disadvantage itself. Instead of giving a leg-up to members of groups that are on average badly off, they should favour individuals who are actually poor. One randomised controlled trial found that simply offering application-fee waivers to promising students from poor backgrounds dramatically increased the chance of their applying to, and attending, highly selective universities.

There is reason to worry that elite universities will seek stealthy ways to preserve racial preferences. Many are dropping requirements for standardised tests, which would make quiet discrimination against members of unfavoured groups who do well on such tests harder to detect. Some are busily searching for loopholes. In a letter sent to its students and alumni, Harvard, which was party to one of the Supreme Court cases, quoted a portion of the majority opinion that opens the door to considering race if an applicant were to write about it in a submitted essay. “We will certainly comply with the Court’s decision,” its leadership wrote, impishly.

Rather than coaxing a generation of minority students into drafting adversity statements—and continuing to admit the hereditary mediocracy through the backdoor—schools like Harvard would do well to try to craft a fairer system of admissions. These universities should not be proud of the well-monied (albeit multicoloured) monoculture they have inculcated. They should take the opportunity to become the progressive institutions they claim to be. 

Saturday 17 June 2023

A Level Economics Essay 16: Immigration and Labour Markets

Evaluate the impacts of an increase in immigration on labour markets. 

An increase in immigration can have various impacts on labor markets. Here's an evaluation of the potential effects:

  1. Increased labor supply: Immigration results in an increase in the number of workers available in the labor market. This can lead to a larger labor supply, which may affect wages and employment levels.

Positive impact:

  • Greater labor supply can address labor shortages in certain industries or regions.
  • Increased competition for jobs may lead to greater efficiency and productivity as firms have access to a larger pool of skilled workers.

Negative impact:

  • In sectors where immigrants are concentrated, increased labor supply may lead to downward pressure on wages, particularly for low-skilled jobs.
  • If there is a mismatch between the skills of immigrants and the demand in the labor market, it can result in unemployment or underemployment.
  1. Skill complementarity and specialization: Immigrants often bring unique skills and knowledge to the labor market, complementing the skills of the domestic workforce. This can contribute to specialization and increased productivity.

Positive impact:

  • Immigrants with specialized skills can fill gaps in the labor market, especially in sectors that face skill shortages.
  • Diversity in skills and perspectives can stimulate innovation and entrepreneurship.

Negative impact:

  • If there is a significant wage differential between skilled and unskilled immigrant workers, it can create income inequalities within the labor market.
  1. Impact on native workers: The presence of immigrant workers can have both positive and negative effects on native workers.

Positive impact:

  • Immigrant labor can fill positions that native workers may not be interested in, allowing native workers to pursue higher-skilled or higher-paying jobs.
  • Immigrant entrepreneurs can create new businesses and job opportunities for native workers.

Negative impact:

  • In certain cases, native workers may face increased competition for jobs, especially in sectors where immigrants are overrepresented.
  • Native workers with lower skills or education levels may experience wage pressures or displacement.
  1. Fiscal impact: Immigration can have fiscal implications, as immigrants contribute to tax revenues while also utilizing public services and welfare benefits.

Positive impact:

  • Immigrants can contribute to economic growth and tax revenues through their participation in the labor market.
  • Younger immigrants can help support an aging population and alleviate the burden on social security systems.

Negative impact:

  • If immigrants have limited access to social benefits or face barriers to employment, there may be a strain on public services without commensurate contributions.

Overall, the impacts of increased immigration on labor markets are complex and multifaceted. They depend on factors such as the skills and qualifications of immigrants, the structure of the labor market, and the existing economic conditions. Policy interventions, such as ensuring appropriate skill matching, promoting integration programs, and addressing wage differentials, can help maximize the positive impacts and mitigate potential negative effects on labor markets. 

Sunday 22 October 2017

Oxbridge bashing is an empty ritual if we ignore wider social inequities

Priyamvada Gopal in The Guardian

The numbers are clearly unacceptable. Several colleges in both Oxford and Cambridge frequently admit cohorts with no black students in them at all. Roughly 1.5% of total offers are made to black British applicants and more than 80% of offers are made to the children of the top two social classes. With offers made overwhelmingly to those in London and a handful of the home counties, both universities are consistently excluding entire ethnic and regional demographics. They also continue to admit a grotesquely disproportionate number of privately schooled students. In effect, the two ancients are running a generous quota scheme for white students, independent schools and the offspring of affluent south-eastern English parents. 

There is undoubtedly a great deal that both institutions can and must do to remedy this. Our admissions processes at Cambridge are not sufficiently responsive to the gravity of the situation. Despite periodic panics in response to such media “revelations” or staged political scolding, and notwithstanding the good intentions of many involved in admissions, questions of diversity and inclusion are not taken seriously enough in their own right.

The focus on educational achievement, itself defined in purely numerical terms and worsened by internal league tables, means there is little sense of meaningful diversity as an educational and community good in its own right. Despite having contextual indicators that would allow us to diversify our admissions, we balk at non-traditional attainment profiles for fear that the student will not be able to cope once here.

For any Oxbridge college to not have a single black student at any given point in time, where they would rightly not tolerate having low numbers of women, is not just about looking institutionally racist but also impoverishes the educational and social environment we provide. The same holds true for regional and class exclusions.

When I first came to Cambridge in 2001, having taught at different institutions in the US, I was struck by the relative whiteness and sheer cultural homogeneity of this university. Even the minimal improvements I’ve seen since then in some years – more students from ethnic minority backgrounds, more young women from northern comprehensives – have made a huge difference both to me as a teacher and, more importantly, to what students are able to learn from each other.

Not all of them will get first-class marks, but they both gain a lot from and have a great deal to give to the educational environment here, not least by expanding the definition of what counts as achievement. We need more of them. (At Cambridge, in recent years, a quantum of vocal BME students as well as students from northern comprehensives has demanded change, often to good effect. There is some cause for hope.)

There is also undoubtedly a culture of denial when it comes to matters of race and racism, which students speak of both in class and privately and which I have experienced when I’ve tried to draw attention to them. And more than one student from northern comprehensives has told me about being discouraged by teachers from applying and feeling amazed to have received an offer only to feel alienated by the stultifying class conformity of the affluent south-east once they get here.

It is simply not good enough for Oxford and Cambridge to say that they are welcoming of diversity and in effect blame certain demographics for not applying despite their outreach programmes. It is Oxbridge that must change more substantially to provide a better environment for a diverse student body. The two ancients must be held to account; homogeneity must fall.

But should they be the only ones held to account? In having a necessary conversation about elitism and exclusion, are we forgetting – or being encouraged – to not have a larger one about wider deprivation and systemic inequality? It is striking that some quarters only too happy to periodically attack Oxbridge for its failings, from rightwing tabloids to Tory ministers, are rarely interested in the roots of inequality and lack of opportunity of which Oxbridge exclusion is a symptom but is hardly the origin.

We should be careful that a headline-friendly focus on these two institutions alone does not become an easy way to avoid even more painful and challenging questions. It seems somewhat selective and inadequate to focus on what David Lammy rightly calls “social apartheid” at Oxbridge without discussing the widespread and worsening economic apartheid in this country.

We know that access to university education in general is sharply determined by school achievement that, in turn, is shaped by parental income and education levels. In an economically stratified society, it is inevitable that most young people from economically deprived backgrounds have a substantially lower chance of achieving the kind of marks that enable access to higher education.

Hence it is incoherent to have a discussion about access to higher education without having one simultaneously about economic disadvantage, which, in some cases, including British Caribbean and Bangladeshi communities, has an added ethnic minority dimension to it. In a context of worsening economic fault lines, there’s a whiff of something convenient about only attacking the admissions failings of top universities.

The other obvious missing dimension to this discussion is the existence and encouragement for independent schools. It’s somewhat contradictory to encourage a market culture where money can buy a deluxe education and then feel shocked when the well-off get their money’s worth by easily meeting the requirements for offers from high-status institutions. It’s worth saying that as long as independent schools, hardly bastions of ethnic diversity, exist, there will remain a fundamental apartheid between two kinds of students.

Oxbridge, or even the Russell Group of universities more broadly, can only do so much to mitigate this state of affairs, which lifting the tuition fee cap will only worsen. Lammy notes that more offers are made to Eton than to students on free school meals.

But why not also question the very existence of Eton and the lamentable state of an economic order that necessitates free school meals for many? Add to this the parlous condition of state education with its chronic underfunding, inflated classroom sizes, an undermining testing and target culture and difficulties in recruiting and retaining good teachers.

The same politicians who rightly point to Oxbridge’s demographic narrowness are rarely willing to grasp the nettle of a two-tier educational structure in which some are destined to do much better than others. Who, for instance, would be willing to call for the abolition of private schooling, subject as such a suggestion would be to shrill denunciations about how individual choice, personal aspiration and the workings of the market are being interfered with?

There are other tough discussions that could be had if the aim truly is to address and undo inequalities in university demographics. Would politicians and institutions be willing, for instance, to impose representational quotas for both ethnic minorities and state-educated students that reflect the national pie-chart?

Currently, the Office for Fair Access (Offa) makes some toothless demands around “widening participation”, a rather feeble phrase, which are not accompanied by penalties for failure. Lammy, whose suggestion that admissions be centralised has some merit to it, not least towards undoing the unhelpful internal collegiate caste system at Oxbridge, has made also a comparison between Oxbridge’s abysmal intake of black students and Harvard’s healthy numbers.

Would the political and intellectual classes be willing to have a discussion about something like “affirmative action” in the US, a process of “positive discrimination” by which underrepresented ethnic minorities and disadvantaged groups are given special consideration? We must hope so. For failing a wide-ranging discussion aimed at radical measures, all the huffing and puffing about Oxbridge is destined to remain a yearly ritual, each controversial headline simply making way for the same unsurprising headlines every year.

Monday 8 June 2015

Why Virat Kohli has to rid Indian cricket of bad habits

Suresh Menon on BBC website

In cricket, as in any sport, there are two kinds of mistakes.
The bad mistake arises out of confused thinking, lack of focus and a poor understanding of tactics. The good mistake, on the other hand, implies a well-thought out plan gone wrong or an attempt to force the issue backfiring.
Increasingly as his captaincy progressed, India's most experienced and successful Test captain Mahendra Singh Dhoni kept making bad mistakes. Giving his bowlers one-over spells, for instance. Or wasting a fielder at leg gully.
Good fortune and hunches can take you only so far - every captain in the game's history has taken chances with an inexplicable bowling change or an illogical batting line-up and surprised everybody by winning. But that cannot be the basis for captaincy.

Positive attitude

Virat Kohli, at 26, younger than Dhoni by seven years, is not yet tactically sound but has two important things going for him: a positive attitude and enormous self-belief.
Not since Tiger Pataudi has an Indian captain been willing to risk defeat in the pursuit of victory like Kohli in the December 2014 Adelaide Test against Australia.
The essential difference between the past and future of Indian cricket is that while Dhoni was clearly on his way down, Kohli can only improve.
He will face many of the problems Dhoni did - a poor bowling attack, especially abroad, the pressures of being on the field for beyond 50 overs or a single day, the hope that victories in the shorter format will make up for their absence in Tests.
India had caved in without a fight in 13 of 17 Tests abroad before the last Australian tour. They lost the 14th in Adelaide, where Kohli led for the first time, but the texture of the defeat was different. The Anna Karenina Principle applied. "All happy families are alike," wrote Tolstoy in his novel, "each unhappy family is unhappy in its own way."
Similarly, all victories are alike but defeats are wildly different.
India's Virat Kohli, right, is congratulated by his captain MS Dhoni after they defeated Ireland by eight wickets in their Cricket World Cup Pool B match in Hamilton, New Zealand, Tuesday, March 10, 2015.
Kohli is younger than Dhoni by seven years

India went down in a blaze of glory, attempting to make 364 runs in a day and coming startlingly close.
Playing for a draw was never an option, said Kohli, perhaps aware that India had the batting to win the Test, but not to draw it. Still, there was promise of a change in the standard narrative. Optimism is infectious, and it is easy to catch it off a captain who is full of it.
Kohli projected that optimism and spirit right from the days when he led India to the Under-19 World Cup win. He was marked out as future captain.
The IPL has a lot to answer for. But in Kohli's case, it actually helped.

Finding a balance

After initially tasting its many enticements, Kohli settled down. In his corner was his team Royal Challengers Bangalore coach Ray Jennings, who told him that the Under-19 triumph would soon be forgotten, and that he would be judged as an adult cricketer. Anil Kumble helped to channelise and focus all that energy. And he was made captain in anticipation of the bigger job to come.
While Kohli's captaincy in the one-day format has been aggressive and focused on winning, in Tests he will have to learn - as his bowlers too will - the virtues of patience and long-term planning.
Indian cricket will have to find a balance between Dhoni's tendency to let things drift and Kohli's impatience with uneventful overs and sessions. There is an element of fishing in the longer format. You put out your bait and wait. Kohli will have to learn the waiting game.
Whether it is a reflection of the times, a consequence of playing too many matches in the shorter formats of the game or a question of temperament, India's cricket is currently characterised by an impatience that makes them perform well below potential.
Bowlers are in a hurry to take wickets or simply run through their overs, batsmen seem to have forgotten how to play session-to-session. Kohli will have to rid the team of bad habits.
While many believe that a captain is only as good as his team, the best ones have inspired their teams to play above themselves. Pataudi for one, Mike Brearley or another.
Kohli's advantage is that he is the best batsman in the side, and there are no immediate candidates for his job. In other words, he will be left alone to develop his full potential as captain, unhampered by the need to constantly watch his back - an occupational hazard with Indian captains of the past.
He has it in him to stamp his name on an era.