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Group 7: The Killer Ducks Krista Leahy, Connor Gibson, Drew Holbrook, Katherine Duhaime, Lindsay Kolb, Lindsay Stephens and Pam Coggins Module 2 Outline Topic: Market Assumptions Objective: Currently our economic policies operate under the assumptions of neoclassical economics [link to module on neoclassical economics]. You will examine the different values at play in deciding how to allocate resources. You will learn how intertemporal discounting influences these decisions, why the values and ends of major corporations are often at odds with communities and why GDP may not be the best indicator of economic welfare. Themes: Empty-world mind set vs. full-world mind set, neoclassical economics vs. ecological economics, characteristics of resources and how they affect allocation of resources, values of the market, and human desires in relation to intertemporal discounting. Introduction: This module focuses on Market Assumptions. The activities available illustrate how our economy is structured and run based on the assumptions of neoclassical economics. Ecological economics takes a step back and questions whether or not our economy is really working efficiently. The module explains the two ways to gage the success of an economy. The first is by looking at a country’s annual GNP and GDP, and the second is by looking at a country’s HDI (a measure of well-being). When reviewed side by side, it is clear that even if a country’s GDP and GNP are high, the national HDI can still remain low. The module explains why neoclassical economics and its assumptions cannot support and sustain happy and healthy communities and environments. The module also covers the idea of inter-temporal discounting. This is the idea of valuing the present over the future. Our activities will show how the media bombards us with images and messages that encourage people to spend now and save later, leading the majority of people with a sense that personal well-being is gained through material and monetary wealth. This mind set also leads to an irresponsible and unsustainable allocation of natural resources. Hopefully this module will leave you with an understanding of the discrepancies between GDP and human welfare, and how a move away from the assumptions of neoclassical economics could increase human welfare in the long run. Activities: 1. Advertising and Market Values: Objective: To demonstrate how companies create advertisements to perpetuate consumption of their products, often using psychological methods. To demonstrate how these tactics place value on material and monetary wealth as a means to social and personal well-being. Directions: Search through web pages, magazines, newspapers, television broadcasts, films, or any other form of advertisement vessel for 5 different advertisements, and explain what tactics are used attract the consumer. Try to find instances where sexual references are used to reel in the male (or female) audience- sometimes this is not easy!: http://www.artistmike.com/Temp/SubliminalAd.html Deeper Analysis: how could the production of the advertised product demonstrate the concept of intertemporal discounting? What resources are required to create the product? Are they renewable (to some degree?) or are they nonrenewable? Are there any missing markets involved in the production?* Do the ads reflect a full-world mindset or an empty-world mindset (this will probably be easy). *For example, an advertisement for computer software assumes the consumer owns or has access to a computer, and therefore assumes they have an electrical energy supply, and are wealthy enough to consider buying this product instead of focusing on basic needs like food, water and shelter. The following videos also provide good examples of advertising techniques: http://www.youtube.com/watch?v=_FpyGwP3yzE http://video.google.com/videoplay?docid=-1993368502337678412 http://www.youtube.com/watch?v=E9JtYaCrRag 2. Objective: To understand the similarities and differences between gross national product (GNP), also referred to as gross domestic product (GDP), and the human development index (HDI) and how they apply to decisions being made pertaining to an alteration in a natural landscape. What are GNP and GDP? They reveal the market value of goods and services that are purchased by households, by government, and by foreigners in the current year. What is HDI? It is a measure of well-being. This includes measures of life expectancy, literacy rates as well as standard of living as measured by GDP. Directions: Read through the interview with Amartya Sen paying close attention to his ideas on making human welfare an aspect of neo-classical economics. After reading through the interview, take a stance on the issue choosing whether or not you empathize with neoclassical or ecological economics in terms of GNP/GDP and HDI. Next, reflect on your local government and how it interacts with the environment. Write a letter to your congressman expressing the changes that should be made in order to make the relationship ecologically sound. Use the below definitions of the World Bank and the IMF to aid you in your discussion. Also, see module on neoclassical economics for further help. INSERT LINK TO INTERVIEW HERE What is the World Bank? “The World Bank is a collection of international organizations to aid countries in their process of economic development with loans, advice, and research. It was founded in the 1940s to aid Western European countries after World War II with capital.” http://economics.about.com/od/economicsglossary/g/worldbank.htm http://sarasota.indymedia.org/files/images/protest.jpg Above left: http://pro.corbis.com/images/CB010011.jpg?size=572&uid=%7B7CC85533-DB58-4786A29B-3B8BB4A9A5DA%7D) Above right: http://www.unep.org/OurPlanet/imgversn/161/images/tibaijuka.jpg What is the IMF? “International Monetary Fund: An organization set up in 1944 to lower trade barriers between countries and to stabilize currencies by monitoring the foreign exchange systems of member countries, and lending money to developing nations.” http://www.investorwords.com/2373/IMF.html