Class Summary #4, 9/9/11

To begin class, Prof. Rizzo once again began with the differences between micro and macro economics. Micro is "the study of small things" and focuses on analyzing individual choices, while macro is the "study of big things" and is the study of consequences of individual choices. Macro also involves analyzing the unintended consequence of our behavior.

Prof. Rizzo's example of an unintended consequence/macro-economics/cost-benefit was one relating to obesity in America.

Prof. Rizzo talked about how the negative impact of eating unhealthy nowadays is much less than it was 50-60 years ago simply because of the fact that in today's day and age, medical technology is much improved.

If a person got a clogged artery many years ago, it would be much more difficult to fix than it is nowadays, which could explain why in the current era, there is more widespread obesity than in the past.

So basically, the cost of being unhealthy is less than it was in the past because there is less of a risk, and there is more of a benefit because there is better health-care to take care of unhealthy patients.

He used this example to explain that as an economist, it is important to consider how to make a problem better.

So, Prof. Rizzo suggested the idea that by putting a tax on soda, less people will buy soda, which in turn may help reduce obesity since soda is such a significant part of our obesity problem.

But as Prof. Rizzo points out, putting a tax on soda probably won't do anything because people will then turn to a boatload of other sugar drinks as a replacement.

As an economist, we apply these types of theories to all things. Prof. Rizzo then explained that the reason for the study of economics is:

1. To know how processes work to fix problems when they work well and to have an idea of the processes/ideas that do not work and cause more problems

Prof. Rizzo concluded class by discussing how intentions don't equal results. For example, just because we as a society care about endangered species doesn't mean that an animal will be preserved. 

This is clearly the case because animals have gone extinct over time, or continue to barely avoid extinction, despite our desire to keep certain animals alive.