Trade-Offs: An Introduction to Economic Reasoning and Social Issues, Second Edition

Trade-Offs: An Introduction to Economic Reasoning and Social Issues, Second Edition

Harold Winter

Language: English

Pages: 192

ISBN: 0226924491

Format: PDF / Kindle (mobi) / ePub

When economists wrestle with issues such as unemployment, inflation, or budget deficits, they do so by incorporating an impersonal, detached mode of reasoning. But economists also analyze issues that, to others, typically do not fall within the realm of economic reasoning, such as organ transplants, cigarette addiction, overeating, and product safety. Trade-Offs is an introduction to the economic approach to analyzing these controversial public policy issues.
Harold Winter provides readers with the analytical tools needed to identify and understand the trade-offs associated with these topics. By considering both the costs and benefits of potential policy solutions, Winter stresses that real-world decision making is best served by an explicit recognition of as many trade-offs as possible. This new edition incorporates recent developments in policy debates, including the rise of “new paternalism,” or policies designed to protect people from themselves; alternative ways to increase the supply of organs available for transplant; and economic approaches to controlling infectious disease.
Intellectually stimulating yet accessible and entertaining, Trade-Offs will be appreciated by students of economics, public policy, health administration, political science, and law, as well as by anyone who follows current social policy debates.















I value the book at a minimum of $25. Certainly, I’d like to pay as little as possible for the book. The less I pay the more gains from trade I get. But if I actually purchase the book, I must be getting some gains from trade. On the other hand, if you value the book less than $25, you won’t buy it, because you wouldn’t realize any gains from trade from the transaction. Thus, there are two types of consumers we have to distinguish between: those who purchase the product at the monopoly price and

studying the HIV/AIDS epidemic. To be expected, economists have some unusual ideas, at least when compared to health research undertaken by scholars in several other disciplines. The goal here is to highlight just a sampling of these ideas. A Little Knowledge Can Be a Dangerous Thing One of the leading weapons in the fight against the spread of HIV is information. To encourage individuals to get blood tests, one form of social intervention is to have the government subsidize the cost of the

accident, and you don’t purchase the model with the safety feature, your expected damages are $300. In other words, if you face a 5 percent chance of suffering damages of $6,000, on average your damages are (5%)($6,000), or $300. With the safety feature, your expected damages are zero (that is, there is no longer a chance of the accident occurring). From your perspective, the full price of the garage door without the safety feature is $1,300, that is, $1,000 monetary price and $300 in expected

modification. Using a liability amount of $200,000 for each person killed, and another amount of $67,000 for each person injured, they totaled their overall liability at approximately $50 million. (This also included a small amount for the cost of the damaged Pintos.) Because the former figure dwarfed the latter one, Ford concluded that it would be cost effective not to use the modification but rather to pay civil liability when required to do so. Even if you accept the cost-benefit analysis and

ask you, what is the minimum annual wage premium you would need to take that risk, how would you answer? If your answer is $500, this information tells me you need to be compensated $500 per 1/10,000 increase in the risk of dying. Now, if we think about 10,000 workers each giving an identical answer to the question, we have a total of ($500)(10,000), or $5 million, the workers are willing to pay to face, on average, one death from their group. (We say that there is on average one death in the

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