UEP 251: Economics for Planning and Policy Analysis Spring 2015

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1 UEP 251: Economics for Planning and Policy Analysis Spring 2015 Instructors Mary Davis Urban and Environmental Policy and Planning Office location: 72 Professor s Row mary.davis@tufts.edu; Brian Roach Global Development and Environment Institute Office location: 44 Teele Ave. brian.roach@tufts.edu; Teaching Assistants Breann Jeffries Caitlin Bettisworth Class Meetings Lecture (required): Tuesday/Thursday 10:30-11:45 (location) Lab (optional): Monday 4-5:30 (location) Office Hours Mary: Mondays 3-4pm Brian: Thursdays 2-3pm TA: TBD Course Description The purpose of this course is to provide a basic understanding of economics as a tool for planning and policy analyses, with an emphasis on microeconomics. Ideally, this one-semester course will help you understand the economic context within which you work, and provide tools for assessing policy options. This course will discuss economic approaches and techniques that can inform current policy debates such as global climate change, health care, unemployment, and economic inequality, among many others. The class will also demonstrate the limitations of economic analysis in guiding policy making. Through the group project, students will have an opportunity to explore sub-topics more deeply to understand how economics has been applied across a broad range of policy-relevant issues. Other Course Information A proficiency in basic algebra is required to take this class. No knowledge of more advanced mathematics, such as calculus, is needed. If you need help with basic algebra beyond the available office hours, you are required to obtain such assistance on your own, such as hiring a tutor. 1

2 All students are expected to maintain a high standard of academic honesty according to the pamphlet Academic Integrity at Tufts. While you are welcomed and encouraged to work in groups on homework assignments, all interpretations and final answers must represent your own work. If you need accommodations due to a disability, please contact me as soon as possible to discuss appropriate arrangements. Labs The Monday labs are intended to provide a structured review of the material presented in class, and will be led by the course instructors. We will review the material covered during the lecture, explore additional examples, as well as have time for Q&A. Attendance is not required, but it is strongly recommended for those students struggling with the concepts or math covered during the lecture. Course Textbook/Readings Microeconomics in Context, 3 rd Edition, by Goodwin, et al., is the primary textbook for the course. The textbook is available to purchase online, and also as an e-book. A reserve copy will be available at the Brown and White houses. All supplementary readings will be made available on the Trunk site. Grading Policy Grades will be based on two exams, six homework sets, and a group project. Your course grade will be determined based on the following allocation: Exams 25% each Homework sets 25%, calculated as the average grade for all six assignments Group project 25% Exams There will be one in-class exam that will take place before spring break, and a second take-home exam that will be due on a date to be determined during the final exam period. The exams will only test material covered during that section of the course and therefore will not be cumulative. However, some concepts presented during the course will build upon previously-learned material, and this knowledge of the material from the first half of the course will be needed to do well on the final exam. Homework Sets Homework sets are to be turned in at the beginning of class on the day they are due in hardcopy form. Please realize that no late assignments will be accepted without prior permission. 2

3 Group project Economics as a discipline is more flexible than most people realize, and the general framework of economic thought has been used to tackle a broad range of problems social, political, environmental, personal, etc. The group project is designed as an opportunity for students to delve deeper into topics that are a bit off the beaten path of mainstream economics. Groups will consist of 4-5 students each, and the group project work will be evaluated as follows: Written component (50%) Conduct a literature review of your group topic. Write a summary (10-15 pages including references, double spaced, 12-point font, and 1-inch margins) describing the key contributions that the discipline of economics has made to your topic. Describe the pros and cons of the approach that economists have taken towards your topic, and provide an overall opinion of the strength (or lack thereof) of economics in this area. If you are having trouble finding citations for a relatively narrow topic, come see us and we can help your group widen the net a bit. Appropriately cite your summary document using in-text citations. Your citations can come from a range of sources, including the academic literature, newspapers, magazines, and the internet, but should not be dependent on one specific type of source (e.g. do not rely primarily on internet-based sources). Provide a reference list (minimum of 10 citations) using the APA style. The summary and citation list must be posted on Trunk one week in advance of the class in which your group will be presenting. We also strongly recommend that groups submit a draft of their summary for feedback to the instructors before the required posting date. A grading rubric for how the paper will be evaluated is available on Trunk. Presentation component (30%) Prepare a 15 minute presentation describing the results of your summary document outlined above. Develop a list of discussion questions to help guide an additional 10 minute open discussion period to follow your presentation. There is no need for every member of the group to participate in the presentation, but all members should be prepared to actively participate in the follow-up discussion. A grading rubric for how the presentation will be evaluated is available on Trunk. Individual component (20%) Groups can decide to delegate the work among group members in any way see fit, as long as everyone in the group feels that the workload is fair. For example, different members of the group may separately handle the literature review, summary write-up, citation formatting, and/or presentation, or your group may decide that some combination of tasks is more appropriate. In addition to the project score assigned by your group for the written and presentation components of your project outlined above, individual scores will be assessed based on a rating of your contribution by other members of your group. 3

4 Course Outline: Topics, Readings and Assignments Date Topic Required Readings* Assignments Due Jan. 15 Introduction Jan. 20 Introduction contd. Chapter 7 Jan. 22 Inequality Chapter 10 Jan 26 Optional lab Jan. 27 Inequality contd. Case study readings Jan. 29 Markets Supply and Demand Chapter 3 HW#1 Feb. 2 Optional lab Feb. 3 Markets Supply and Demand contd. Chapter 4 Feb. 5 Markets Supply and Demand contd. Case study readings Feb. 9 Optional lab Feb. 10 Welfare Analysis Chapter 5 HW#2 Feb. 12 Consumer Behavior Chapter 8 Feb 17 Consumer Behavior Chapter 8 Feb. 23 Optional lab Feb 24 Market Structure Chapter 16 HW#3 Feb. 26 Market Structure contd. Chapter 17; Case study readings Mar. 2 Optional lab Mar. 3 Taxation and Regulation Chapter 11 Mar. 5 Taxation and Regulation contd. Case study readings Mar. 9 Optional lab Mar. 10 The New Economy Presentation HW#4 Mar. 12 In-Class Midterm Exam Mar. 23 Optional Lab Mar. 24 Topics in Urban Economics Sims, 2007; Glaeser, et al., 2007 Mar. 26 Topics in Urban Economics Sullivan, et al., 2013; Hwang and Sampson, 2014 Mar. 30 Optional lab Mar. 31 Labor Economics Chapter 9; Schmitt and Jones, 2013 Apr. 2 Environmental Economics Chapter 12 Apr. 6 Optional lab Apr. 7 Environmental Economics / Cost- OIRA, 2011; HW#5 Benefit Analysis Haughton, et al., 2004 Apr. 9 Common Property / Public Goods Chapter 13 Apr. 13 Optional lab Apr. 14 Group presentations (3) Group lit reviews HW#6 Apr. 16 Group presentations (3) Group lit reviews Apr. 21 Group presentations (3) Group lit reviews Apr. 23 Capstone class TBD Apr. 27 Optional lab TBD Take-home final exam *All non-textbook readings will be available on Trunk 4

5 Topic Learning Objectives Introduction Describe the principles of microeconomics as a policy and planning tool and understand the basic definitions of micro theory Describe the strengths and limitations of economics as a social science Understand the fundamentals of the neoclassical model, and be able to engage in an informed debate of the pros and cons of the underlying assumptions Explore the concept of value, neoclassical definitions of value, and alternative concepts of value pluralism Understand and construct Production Possibilities Frontier Inequality Explore inequality using Lorenz curves and Gini coefficients Describe post-wwii trends and sources of inequality Understand the difference between income and wealth as it relates to inequality Understand the impact of income redistribution in the context of the big-tradeoff Describe standards of equity to judge whether a society has reached equality goals Markets Supply and Demand Understand and derive market demand and supply curves Calculate equilibrium price and quantity Understand the impact of changes in price and income on consumption behavior Calculate elasticities of price and income Understand the difference between types of goods (inferior/normal) and differentiate between substitution and income effects Apply demand and supply principles to real-world scenarios Welfare Analysis Describe the strengths and limitations of using economic measures of welfare to evaluate policy alternatives Understand the differing goals of efficiency vs equity Use supply and demand curves to calculate producer and consumer surplus Compare efficient and non-efficient market outcomes and calculate deadweight losses Understand the policy inferences of welfare analysis Consumer Behavior Understand the basic principles of traditional utility theory Use indifference curves and budget constraints to understand and calculate consumption choices 5

6 Describe the impact of changes in price and income on consumption choices View consumption through historical, social, and environmental lenses Study the relationship between consumption and well-being, including the role of public policy Market Structure Competition vs Monopoly Understand the economic measures of cost, revenue, and profits, and how they are defined across different market structures Describe the behavior of firms under different market structures Describe short and long run equilibrium scenarios under different market structures Taxation and Regulation Understand the purpose and impact of government taxation/regulation Understand differences in tax structure and how this impacts equity Evaluate the effects of regulation/taxes on market outcomes (price/quantity), and social welfare (consumer/producer surplus) Understand the role of elasticities in maximizing tax revenue and on who ultimately pays the tax Urban Economics Summarize the broad range of issues covered under urban economics Consider in more detail four papers that address several of these issues, including the relationship between poverty and transportation policies, the impacts of rent control, racial inequality, and the relationship between gentrification and race Labor Economics Understand the traditional economic view of labor markets Consider various explanations for variations in wages Explore labor market policies, including those to create good jobs Environmental Economics / Cost-Benefit Analysis Evaluate welfare consequences of externalities, environmental damage, and other environmentally attributable market failures Describe the role of government to right market failures by the provision of public goods, taxation, regulation, and property rights enforcement Understand the use of valuation techniques and cost-benefit analysis to interpret policy alternatives Explore the challenges in assessing value of the environment and ecosystem-based services 6

7 Common Property Resources and Public Goods Understand why markets are inefficient in the provision of artificially scarce goods Summarize the economic model of common property resources, including policy prescriptions Understand why public goods must be provided through public provision Readings Sims, David P Out of Control: What Can We Learn from the End of Massacgusetts Rent Control? Journal of Urban Economics 61: Glaeser, Edward L., Hatthew E. Kahn, and Jordan Rappaport, Why Do the Poor Live in Cities? The Role of Public Transportation, Journal of Urban Economics 63:1-24. Sullivan, Tim, Maz Ali, Carlos Perez de Alejo, Brian Miller, and Nicole Marin Baena. State of the Dream 2013: A Long Way from Home, United for a Fair Economy. Hwang, Jackelyn, and Robert J. Sampson Divergent Pathways of Gentrification: Racial Inequality and the Social Order of Renewal in Chicago Neighborhoods, American Sociological Review 79: Schmitt, John, and Janelle Jones Making Jobs Good, Challenge 56(4):6-21. OIRA (Office of Information and Regulatory Affairs) Regulatory Impact Analysis: A Primer, Washington, D.C. Haugton, Jonathan, Douglas Giuffre, John Barrett, David G. Tuerck An Economic Analysis of a Wind Farm in Nantucket Sound, The Beacon Hill Institute, Suffolk University, Boston, MA. 7

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