Economics: Difference between revisions
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=== Shareholder Theory === | === Shareholder Theory === | ||
* for criticism of ESG and support of Shareholder Theory see: [https://www.theepochtimes.com/the-long-term-negative-effects-of-esg-will-be-catastrophic_5032320.html The Long-Term Negative Effects of ESG Will Be Catastrophic] | |||
=== Stakeholder Theory === | === Stakeholder Theory === |
Revision as of 22:23, 5 February 2023
Economics
- See also [Social Studies Skills|Social Studies Skills]
[Category:Social Studies]
Economics point of view
Economists look at human relations and outcomes through certain lenses, including:[edit | edit source]
- values & exchange
- utility
- incentives
- impacts
Useful Economic vocabulary, models & theories[edit | edit source]
Cost[edit | edit source]
- sunk cost
goods[edit | edit source]
- Complement good
- Coordination good
- Free goods
- Inferior goods
- Normal goods
- Public good
- services available to all that have no competition, such as utilities
- use of a public good by one person does not reduce its availability to another
- services available to all that have no competition, such as utilities
- Substitute good
labor[edit | edit source]
- division of labor
- flexibility of labor
externalities[edit | edit source]
- = impacts or consequences upon others (external)
- externalities have an inherent duality
- the external actors must be present for the external impact
- i.e., if nobody lives near the factory, its noise won't bother anyone
- the noise is an externality only because people can hear it
- however, those people living near it may have a benefit that is greater than the externality
- such as jobs, whatever the factory is making, etc.
- i.e., if nobody lives near the factory, its noise won't bother anyone
- from economist Cose
- the external actors must be present for the external impact
Opportunity cost[edit | edit source]
Prisoner's Dilemma[edit | edit source]
- the "prisoner's dilemma" represents a clash of individual versus group interests
- "dilemma" = a problem for which the solutions all reach a negative outcome
- as opposed to a "paradox"
- "dilemma" = a problem for which the solutions all reach a negative outcome
- in the prisoner's dilemma, two prisoners must select between 1) confess to the crime or 2) remain silent
- each is held separately and does not know what the other will choose
- Option 1 choices:
- Prisoner 1 (P1) confesses
- Prisoner 2 (P2) remains silent
- outcome: P1 goes free & P2 serves the worst jail sentence with no chance for parole (no chance to be let out of jail early)
- Option 2 choices
- P1 remains silent
- P2 confesses
- outcome: P2 goes free & P1 serves the worst sentence
- Option 3 choices:
- both confess
- outcome: both serve the worst jail sentence but will be allowed "early parole" (let out early)
- Option 4 choices:
- both remain silent
- outcome: both will face a lesser charge and less jail time
Option | Best outcome
individually |
Worst outcome
individually |
Worst outcome
collectively |
Best outcome
collectively |
Highest risk
indivdiually |
Lowest risk
individually |
---|---|---|---|---|---|---|
Option 1:
|
P1 goes free | P2 serves longest term | ✔ | ✔ | ||
Option 2:
|
P2 goes free | P1 serves longest term | ✔ | ↑ | ||
Option 3:
|
↑ | |||||
Option 4:
|
↑ | ↑ | ||||
- the most potentially beneficial option for themselves individually, they both will serve the longest jail term
- however, if both choose the
- even if choosing collectively would be more rational & mutually beneficial
- see https://plato.stanford.edu/entries/prisoner-dilemma/
rationing[edit | edit source]
scarcity[edit | edit source]
- aggregate supply
Supply & demand[edit | edit source]
- Say's Law
- from Jean-Baptiste Say, "A Treatise on Political Economy" (Traité d'économie politique), 1803
- states that production is the source of demand
- production = making things, providing services or things of value)
- i.e, demand for things necessarily follows their production or offering
- demand may pre-exist something, but nothing of value is exchanged until that thing is produced and offered
- Say's law is criticized for ignoring "gluts" (supply exceeds demand) and monetary impacts (such as inflation or deflation, which can impact demand outside of supply)
- in general, Say's law correctly identifies the source of exchanged value: something must be offered for value
Tragedy of the Commons[edit | edit source]
Corporate governance[edit | edit source]
ESG[edit | edit source]
[edit | edit source]
- for criticism of ESG and support of Shareholder Theory see: The Long-Term Negative Effects of ESG Will Be Catastrophic