Reading assignment for Wednesday Feb. 10
Read the following articles, 1. Economic Doctrines and Approaches to Climate Change Policy by Atkinson and Hackler, (pgs. 1 – 9; 15 – 16; 22 – 23 and 33 – 36) and 2. Why Emissions Trading is More Effective than an Carbon Tax by the International Emissions Trading Association and comment/answer any two of the following questions by 11:59 pm Feb. 8.
Atkinson-etal-2010-econ-climate-change_theories
Why Emissions Trading is More Effective Than a Carbon Tax_session1
In pages 1 â 9, the authors discuss their views of how Neoclassical, Neo-Keynesian and Innovation Economics would design economic policies to address the issue of climate change. Discuss your answers to any two of the following questions:
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
2. What assumptions does neoclassical economics make about human behavior? Are these assumptions realistic? Explain
3. According to Atkinson and Hackler, what are two or three arguments made by neo-Keynesian economics? What policy does neo-Keynesian economics see as most effective in addressing the challenges of climate change? Describe
4. What are the principal problems the authors have with both neoclassical and neo-Keynesian economic proposals for resolving climate change? Clearly explain.
5. The authors discuss their theory of âInnovation Economics.â What reasons do authors cite as to why Innovation Economics offers a more effective framework for addressing the economic realities of the 21st century.
6. Describe the policy advocated by the IETA and why they believe this policy to be effective.
Weekly Reading Response to questions 2 and 4
2) Neoclassical economics makes the assumption that “economic growth is achieved by maximizing allocative efficiency”, according to the article. The article goes on to explain the idea that consumer demand should match the supply if resources are distributed to result in a desired quantity of goods. Government interference is considered unnatural and will make it harder to see the natural ebb and flow of market prices. The market will react to the price the consumers are willing to pay, and will adjust itself accordingly. A way to increase output in a more environmentally efficient way would be to create incentives for doing so, and in the journey to satisfy one’s own needs one will unknowingly work to achieve the needs of the general public (not always, but this is a principle of this view).
4) Neoclassical economic proposals include taxes on carbon dioxide emissions, believing that it will create an incentive for innovation and invention of greener production.
Neokeynesian economics proposes regulation and policy implementation, which would create a more “level playing field”, according to the article. The article goes on to state the fact that climate change is an unpredictable and complex issue, so any large scale action has the potential to cause market failure.
1. neoclassical economists believe that setting a price on carbon through a carbon tax or cap the trade is the principal and often sole policy response needed to address climate change.
2. “individuals act in response to incentives to rationally maximize their own self-interest” a new research in behavioral economics is showing that it is not always the care. yes it is realistic. for example, Elon Musk the CEO of tesla, his self-interest is into making an electric vehicle that is affordable and also wants the world to drive electric based vehicle and not gas. because of his self-interest in making electric vehicles the world is starting to focus on electric vehicles.
1. Neoclassical economists believe that setting a price on carbon through a carbon tax or cap and trade is the most important and often sole policy response needed to address climate change.
6. The policy urged by the IETA was that “a cap and trade system is the best means to establish a quantifiable, legally enforceable limit on emissions which will ensure that essential climate change targets are met at the lowest possible cost”.
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
Neoclassical economists believe that setting a price on carbon, either through cap & trade methods or a carbon tax is the most efficient way to address climate change.
6. Describe the policy advocated by the IETA and why they believe this policy to be effective.
The policy advocated by the IETA is the cap-and-trade method of carbon dioxide management. Cap & trade is a method of carbon management in which certain industries (mining, electricity production etc) are penalized for their emissions by means of carbon credits. Projects which sequester or offset carbon emissions are granted carbon credits. Together, these allow the open market to efficiently agree upon a price for carbon based on the penalization for negative carbon credits, which should be equivalent to the externality of allowing the carbon into the atmosphere.
-Elliot Raskin
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
3. According to Atkinson and Hackler, what are two or three arguments made by neo-Keynesian economics? What policy does neo-Keynesian economics see as most effective in addressing the challenges of climate change?
Neoclassical economists view the urgency to take responsibility for the environment, exceeding the minimum to produce goods or services required for society imposes the need to consider environmental aspects in management systems, establishing a symbiosis between economic and financial objectives and those of social and environmental nature. They consider a discipline that strengthens environmental awareness in business scenarios.
Neoclassical economics consider the environmental dimension by preventing situations of permanent resources scarcity to occur. They study how to prove the obligation of individuals to rationally manage natural resources and to integrate the environment into the economic analysis, its importance in sustaining life. There is the relationship between economic development and natural resources management. The goods are scarce and society should use them efficiently. In fact, the economy is an important discipline because of the scarcity and the desire to be efficient.
Neo-Keynesian economics focuses on how and why people make decisions that have environmental consequences. In addition, it is devoted to study the ways, addressing the challenges of climate change can difference the political and economic institutions in order to balance a little more these environmental impacts to human desires and needs of the ecosystem itself. It also focuses on the optimal allocation of exhaustible resources related to obtain optimal prices that indicate the optimal path to follow to remove the unit resource.
For Question 1: According to Atkinson and Hackler the most effective policy in addressing climate change for the neoclassical economists is that they believe setting a price on carbon through a carbon tax or cap and trade I the principal and sole response to climate change.
For Question 2: The assumption that neoclassical economists make about human behavior is that individuals act in response to incentives to rationally maximize their own self-interest. In my opinion this holds true as all humans want to gain for themselves in the beginning then help others , so It would be fair to say that any incentives given to them would make them think about changing their habits towards the environment. The important thing is that the self-interests should coincide with that of the whole society they live in. Then that would be an efficient way to help the environment.
3. According to Atkinson and Hackler, economic growth in neo-Keynesian economics is due to three interconnected forces. The government spends money to support economic growth, which flows money into the less afluent producing a surplus of money for non-basic expenditures. The increase in consumer spending will encourage businesses to invest. This cycle produces economic growth.
Neo-Keynesian economics see the “equitable distribution of wealth and the achievement of social policy objectives. Neo-Keynesian policies focus on whom is receiving the benefit, preferring to be fair rather than to directly support innovation through allocative efficiency.
5. According to Atkinson and Hackler, Innovation Economics offers a more effective framework for addressing the economic realities of the 21st century. Knowledge, technology, entreprenuership and innovation is recognized as the primary economic factors for growth. Innovation economics does not seek to manipulate capital and/or labor to keep an economic equilibrium. It focuses on the institutional and technological factors that fuel growth in different countries during different time periods. It suggests an organization’s productive efficiency and an institution’s adaptive efficiency are the key components to understanding economic growth through innovation.
Kenneth Henley
Question 2:
Neoclassical economists asserts the notion that that âeconomic growth is achieved by maximizing allocative efficiencyâ. This suggests the notion that consumer demand should be proportional to supply only if the proper resources are distributed to result in a desired quantity of goods. This conservative notion also suggest that governmental regulation is considered unnatural and will negatively disrupt the natural order of market prices.
Question 4:
Neoclassical economist propose that taxes should be placed on carbon dioxide emissions, with the theory that it will create an incentive for innovation and invention of greener more sustainable production
Neokeynesian economist propose more governmental regulation and policy implementation, which would create a more a better balance of power.
1. According to Atkinson and Hackler, the most effective policy in addressing the challenges of climate change is that âeconomic growth is achieved by maximizing allocative efficiency.” When the distribution of resources results in a desired quantity of goods, society receives the highest net benefit. Their theory is that supply equals demand across all markets in the economy. In other words, the price that consumers are willing to pay for the goods being produced is the same or equal to the marginal costs of production.
5. Innovation Economics offers a more effective framework for addressing the economic realities of the 21st century. As stated in the passage, ânone of the three prevailing doctrines offers the kind of economic policy framework suitable to the new economic realities.â There are a few factors that contribute to this issue. First, each doctrine focuses on keeping the economy in equilibrium by adjusting the demand or supply of capital and labor. Another factor concentrates on the macroeconomic aspects such as prices, rather than concentrating on the change of technology that could potentially lead to growth in the economy. The doctrine of innovation economics changes the traditional standards of economic growth. In their eyes the primary factors for economic growth arenât the independent forces in the economy but the recognition of knowledge, technology, entrepreneurship, and innovation.
To: S. Macdonald
From: Carlos Vasquez, Student
Date: 2/10/2016
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
âPolicymakers informed by conservative neoclassical economists, such as Greg Mankiw, a former chair of the Council of Economic Advisors under former President George W. Bush, are more likely to favor a simple carbon tax, while liberal neoclassicalists favor cap and trade as a way to set a price on carbon as Lawrence Summers, Director of the National Economic Council and Assistant to President Obama for Economic Policy, has suggested. Both believe that once the price is right, the market will respond appropriately and develop the needed technologies.â
3. According to Atkinson and Hackler, what are two or three arguments made by neo-Keynesian economics? What policy does neo-Keynesian economics see as most effective in addressing the challenges of climate change? Describe
âThose informed by neo-Keynesian perspectives favor a more direct response such as setting a limit on GHG emissions through emission caps and renewable energy portfolio standards, and subsidizing current generators of renewable energy. Environmentalists like James G.â
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
Neoclassical economists believe that setting a price on carbon emissions, either through a carbon tax or a method called cap and trade in which corporations buy and sell each other’s permits to pollute the air. This method is used to gradually decrease overall emissions
4. What are the principal problems the authors have with both neoclassical and neo-Keynesian economic proposals for resolving climate change? Clearly explain.
Neoclassical economic proposals include taxes on carbon dioxide emissions, and cap and trade which supposedly will give incentive to invest in greener earth friendly technologies. However its used more as a deterrent rather than an incentive.
Neokeynesian economics proposes regulation which make for a more ‘level playing field’ however too much regulation can cause stagnation in a dynamic economy like the USA. This may actually encourage more corporate inversion in which companies outsource their jobs where there is less regulation
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
They believe on setting prices on carbon emissions through a tax called carbon tax and also it can result in a climate change .
4. What are the principal problems the authors have with both neoclassical and neo-Keynesian economic proposals for resolving climate change? Clearly explain
Neoclassical includes taxes and carbon dioxides emissions and in its theory it will create more greener products and will have a good impact on the enviornment
Neo- Keynesian is more effective on regulations and policy implementation, which would create a more âlevel playing fieldâ. Usually as an economist most busineeses will be affect by these regulations and therefore it will cause alot of busineeses to decrease.
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
Conservative neoclassical economists, such as Greg Mankiw, are more likely to favor a simple carbon tax, while liberal neoclassicalists favor cap and trade as a way to set a price on carbon as Lawrence Summers has suggested. In over words, they all think, that financial instruments the best way for regulation.
6. Describe the policy advocated by the IETA and why they believe this policy to be effective.
IETA believe that a cap and trade policy is the best, because it is flexible and has proven to it is efficiency in the US Acid Rain Program. Cap-and-trade can achieved emission reduction in a shorter time then carbon tax. Emission trading can establish rigorous, measurable, and enforceable targets across the globe. Also, business have a choice âmake or buyâ.
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
According to Atkinson and hackler, neoclassical economists believe that setting a price on carbon, or/and through cap & trade methods or a carbon tax is the most effective way to address climate change.
2. What assumptions does neoclassical economics make about human behavior? Are these assumptions realistic? Explain
According to the authors, they state as that one of the principle of Neoclassical Economics of human behavior is:
a) Individuals act in response to incentives to rationally maximize their own self-interest,
b) That the collective pursuit of individual self-interest will also maximize public interest
I believe that Both(A and B) assumptions are invalid and false. The assumption of A is invald and False due to the fact that Individuals are Rational in their own perspective while Irrational in the perspective of others. This leads to make the statement more subjective then objective. An example is Drug Abuse, to us it is Irrational to make such a choice, while to them, it is rational if they are making that type of choice with it obvious draw backs.
The Statement of B is invalid. This is due to it canât be considered True or False since it lacks the necessary information required to reach such conclusion.
It would be true if all interesting within the Public were equal and werenât harm by other interest(by devouring/seizing the resources needed to fulfill that interest)
It would be false if all Individuals were looking to maximize their own interesting which may cause harm to other individual and stop form fulfilling their interest due to the lack of resources. An example is a ticket, if an Individual(A) is issuing a ticket to another Individual(B) who is barely making it to survive and pay their bills. Individual(A) is looking to maximize his own interest (making money) thus leading him to charge the highest he can. This leads to devouring resources form Individual(B), which may be needed to maintain one of their tools needed to complete their work(Car). This will lead to the individual(B) getting fired form their Job (due to loss of car or other matters). This leads the Individual(B) turn to violence in a desperation to keep on living.