Econ PDF

NEC: Cigarettes in Australia - In 2000 21% of adult population smoke, dropped to 11% in 2020 Indirect Tax - Tax in 2010 of 25%, increased by 12.5% each year until 2020 Pros - Adult smoking rate 2008 = 19%, in 2018 = 14%, following the tax - Tax revenue was 9 billion AUD in 2020 Con...

NEC: Cigarettes in Australia - In 2000 21% of adult population smoke, dropped to 11% in 2020 Indirect Tax - Tax in 2010 of 25%, increased by 12.5% each year until 2020 Pros - Adult smoking rate 2008 = 19%, in 2018 = 14%, following the tax - Tax revenue was 9 billion AUD in 2020 Con - Lowest socioeconomic areas are more likely to be daily smokers compared to those in the highest socioeconomic areas (17% vs. 7% in 2018). Lack of education, social norm, financial stress, coping mechanisms, limited access to support Plain Packaging Pro - Smoking rate among teens dropped significantly, from 30% in the 1990s to under 10% in 2019 Con - Data from tobacco companies says it doesn't impact sales or smoking, although this is not a very trustable source it does provide evidence which may go against this, which is likely a somewhat costly thing for the government to implement Eval: - Magnitude- despite PED being low for cigs, 125% increase over 10 years, enough to make a difference in consumer behaviour. However this has lead to illegal markets being more prevalent as some consumers look for cheaper tobacco - Workers- Can harm society in jobs available as tobacco farming used to be a prevalent industry in Australia, but has dropped off a lot due to the drop off in the quantity demanded and supplied, loss of jobs - There are two sides to consider when looking at the progressiveness of the tax, as even though this tax may have negative effects on people from lower socioeconomic backgrounds, this also affects teenagers as they have low income. - Perspective of teenagers if very important as for both tax and packaging they help deter teenagers from consuming and becoming addicted to cigarettes, which attacks the root of the issue, leading to a slow filtering out of people who consume cigarettes over generations in the long run - Another good thing about the tax specifically in the long run is how it allowed time for consumers to react and anticipate future price, which we know is a determinant of demand, thus this should deter consumers from consuming as much or at all as higher prices are expected and they can find time to slowly quit or find substitutes - Although plain packaging is not strong alone and may not be strongly supported by evidence, it can be a good option in conjunction with the tax, as stated early it is good with teenagers due to the stimulus which is avoided from being activated with plain packaging as well as the absence of advertisements to influence them when young - Though in the short run, it may not have made the most significant impact, even a 25% tax had decreased consumption by 11%, however in the long run this proved to have  been a great option, it is expected to take a while to influence the population with demerit goods as they are typically addictive NEP: Carbon Emissions in EU and Finland - Carbon emission externality in Europe and Finland specifically - The World Health Organization estimates that CO2 contributes to around 7 million premature deaths each year, meaning approximately 48 deaths in Finland per year. Carbon tax - Since 1990, Finland has implemented an indirect tax on carbon dioxide (CO2) emissions. In 2021, they charge about a 60Euro tax per ton of CO2. - This is a piguovian tax which specifically attacks the NEP and is aimed to internalise it, directly incentivising reduction in harmful activities such as this in emitting carbon Pros: - Reduction of carbon emissions: The Finnish government estimated that the country’s CO2 emissions were reduced by around 4 million metric tons between 1990 and 1998 due to the carbon tax - Government revenue generated from the tax: in 2021, the tax raised about €1.63 billion from the carbon tax - €200 million was allocated towards promoting renewable energy sources, another €200 million was allocated to climate change mitigation and €70 million was designated for climate-related research and innovation. Cons - Finnish industries which may be reliant on use of electricity through fossil fuels will have far greater costs of production than international competition, hurting the Finnish economy as a whole. - Due to this, Finland has seen multiple exemptions to lessen the blow for key industries from the carbon tax - a large one being Peat which was exempted between 2005-2010 and which has a greater level of carbon emissions than even coal per unit, which is contradictory to their goal EU ETS Tradable Permits - Looks to internalise the externality through making firms pay for their own production of CO2, with a fixed supply with decreases by 2.7% each year, forces firms to pay the costs, or change their ways Pros: - Since its launch in 2005, emissions from sectors covered by the ETS have fallen by 42.8%. - EU ETS helped to reduce emissions by 1.1 billion tonnes of CO2 - EU ETS has created over 2 million jobs in the clean energy sector Cons: - Market volatility- In moments such as the 2008 financial crisis or the Covid crisis between 2019-2020, price fell drastically and completely destabilized and invalidated the market, with prices for permits even dropping to zero at some point with a large surplus  of them, showing the reliance of this policy on the health of global/European economy. Eventually they fix it back up to match their plans, but still. Eval: - Magnitude for both, relatively low, you are only as well off as your neighbour is, change is hard when EU is only 8% of carbon emissions, Finland even less. This is not only a NEP for the EU, but one which is global, and one which everyone will need a hand in making a change, or else these efforts will prove to be pointless. Thus this may be a good step and they may be role models for change, but as the air and our atmosphere is a common pool resource, everyone needs a hand in making things better to truly reduce the NEP of carbon emissions. - Both can especially harm lower revenue firms and/or firms which are high in energy use BUT Finland has partially addressed this through revenue recycling and social welfare systems. - Short vs long term- factors of production fixed vs can change; additionally, firms may relocate, carbon leakage PEC: Vaccinations in Hong Kong Subsidy: - Launched in 2023 - Vaccination subsidy scheme”, where those between the ages of 18 and 50 will receive a $90 HKD subsidy when they purchase the vaccine. - Welfare loss is occurring at area (abc) due to the lost potential of positive spillover on third parties. This external benefit could positively affect third parties through: Pros - Reduced Healthcare Costs: potentially saved $630 million Hong Kong Dollars in healthcare costs by preventing an estimated 630,000 cases of influenza. - Potentially saved over 1 million working days, translating to an economic benefit of approximately $500 million HKD in reduced productivity losses. Cons - It is estimated the vaccine subsidy will cost Hong Kong $180 million HKD. Can have a hand in debt and economic recession, can take a very long time to get out, Hong Kong today has lost many businesses and many high scale economic actors have relocated to other countries to operate Educational Programmes: - 1.5 million people might be hesitant about getting the flu vaccine - The government distributes educational materials (Brochures, Posters, and Leaflets) that provide comprehensive information on flu prevention. These materials are in multiple languages. Pros - A success is changing the behavior of 3-6%. Using the conservative estimate of 4% approximately 60,000 individuals who were initially hesitant might be persuaded to receive the flu vaccine.  - Healthcare cost savings: Approximately 25.2 million HKD - Productivity savings: Approximately 20.16 million HKD Cons - Changing behaviours- According to a 2019 study, despite public health efforts, only about 35% of adults in Hong Kong received the flu vaccine. - Over-reliance on digital platforms- According to a 2021 report, about 10% of the population in Hong Kong does not use the internet, and this percentage is higher among older and lower-income populations. Eval: - Subsidy: - Inefficiency: Subsidies could lead to inefficiencies in the market. For example, vaccine manufacturers might become reliant on government funding and lose the incentive to innovate or reduce costs. - - - Vaccine hesitancy: Subsidising flu vaccines may not address underlying vaccine hesitancy or concerns about vaccine safety and efficacy. Some individuals may still choose not to get vaccinated, even with subsidies in place. - Could be due to asymmetric information, where consumers have information gaps or lack areas of knowledge regarding vaccines and possible side effects or risks, and as a result choose not to be vaccinated - - The vaccine industry (in regards to market structures) is an oligopoly, which is an industry dominated by a handful of major firms and companies. - Entry barriers to the pharmaceutical industry are huge - require all sorts of capital, land, labour (skillsets), etc - Therefore only a handful of firms benefit from the subsidy - - only about 35% of adults in Hong Kong received the flu vaccine. To enhance the effectiveness, methods of behavioural nudges may need to be implemented: - - - Automatic Enrollment: Make vaccination the default option in healthcare settings, where individuals are automatically scheduled for vaccinations unless they opt out. This leverages inertia, as many people will stick with the default choice. - Peer Influence: Highlight stories of community members or trusted figures who have been vaccinated. Showcasing high vaccination rates within a community can create a social norm that encourages others to follow suit. - Countering Misinformation - Fact-Checking Initiatives: Promote platforms that provide fact-checked information about vaccines. Collaborate with social media companies to flag misinformation and direct users to credible sources. - Engagement with Trusted Sources: Utilize respected community leaders or healthcare professionals to disseminate accurate information and directly counter false claims.  - Education and Awareness: - Long run - Preparedness for Future Pandemics: By educating the public about the flu, such a program could also inadvertently increase preparedness for future pandemics. People would have better knowledge about how viruses spread and how to protect themselves and others. - Chain effect - educated people would then go on to share this information with others that they care about as they want them to get vaccinated to ensure that they are healthy and protected PEP: Honey Production in Europe Subsidy - 2020-2022, 240 million euros (80 per year) Bees pollinate 80% of crops in Europe, According to market prices, pollination by animals improves the global crop output by an additional USD 235–577 billion annually. Pros - Bees pollinate 80% of wild plants in Europe, maintaining and supporting local biodiversity - Pollination overall improves global crop output by an additional USD 235–577 billion annually. Cons - Costs €80 million per year. Only 78% of the government funding was used in 2021 - International competition: €1.6/kg in China versus €4.5/kg in Europe Research and Development: - Working with Israeli firm Beewise Technologies - With new technologies to ensure hives are maintained well and if any unexpected issues arise, there are sensors to alert personnel to help out immediately - Can also automatically help with feeding and pest control, humidity and temperature control Pros - The cost of the investment in the new technology is low at €2.5 million - Reduced colony collapses by 90% Cons - Uncertainty of success - With research and development there is always an uncertainty of the success of the exploration. - Also bad for local companies as they are investing in an Israeli company instead of a European one, money for R+D is going outside of local firms Eval: - Biodiversity: Pollination by bees supports the reproductive processes of wild plants, contributing to the maintenance of diverse ecosystems. (more generally nature is the third party but this extends into society as the health of nature is closely tied into the wellbeing of a society) - Research and Development program only costs €2.5 million, whereas the subsidy is an annual cost of €80 million. - Subsidy has the effect of reducing the costs of production - Comparative advantage of China - means when a country can produce a good at a cheaper price, has more factors of production. Govt would need to work towards lowering the costs of production to the point which EU honey prices can be the same or lesser than China’s, which is very hard as it is 3 times more expensive to produce rn - Short vs long run: As the EU imports honey from China, in the short run consumers benefit from immediate access to cheaper honey options - Long Run: Dependency on Imports: If European markets become heavily reliant on cheaper honey imports, this can undermine local production capabilities. In the long run, this dependency may threaten food security and the sustainability of local agriculture. - Market Share Loss: As consumers gravitate toward cheaper Chinese honey, EU producers may lose market share, making it harder for them to sustain their businesses. - Long term - comparing policies - Subsidy may be ineffective in the long run if the government does not change the policy as China will be dominant in the honey market in the EU - Long-term for R&D programme - possible long term success with the new beehive design, leading to increased sustainable bee populations and increased supply of honey, leading to decreased price per unit of honey, help EU compete with China - - EU can re-work subsidy: currently only 14% of the subsidy is allocated towards restocking of hives and purchasing of new bees (specifically queen bees) to increase bee population → maybe purchase more bees? - Subsidize major individual local honey firms in the EU. Economies of scale; Firms can enjoy an economy of scale in its subsidized costs of production or increased factors of production, which can in turn lead to increased production of honey and lower unit costs, becoming more competitive with China in the honey market while simultaneously increasing the positive effects enjoyed by the local third party firms.