Subject Specific Values EducationSubject Specific Values Education

Let’s examine some examples illustrating how the core values can be integrated into Year 1 Economics courses.

Year 1 EconomicsYear 1 Economics Example 1:

Collusion: In markets with insufficient competition (e.g., very few sellers of a product), it is possible that sellers can collude together explicitly or implicitly in order to keep the price “high”.

Businesses need to resist the temptation to make profits by such collusion.

Which sectors in HK have too little competition? Do we need effective anti-trust laws to enforce

competition? Values Illustrated:

Year 1 EconomicsYear 1 Economics Example 1:

Collusion: In markets with insufficient competition (e.g., very few sellers of a product), it is possible that sellers can collude together explicitly or implicitly in order to keep the price “high”.

Businesses need to resist the temptation to make profits by such collusion.

Which sectors in HK have too little competition? Do we need effective anti-trust laws to enforce

competition? Values Illustrated: Honesty/Integrity

Year 1 EconomicsYear 1 Economics Example 2:

Economists measure a country’s Standard of Living by per-capita Real GDP. However, this measurement ignores

“Non-market goods” and services. the environmental damage caused by the pollution which

accompanies production of output. The water supply in HK is subsidized. Nearly 40% of the

water is lost due to leaky pipes. Consumers also use water carelessly as they do not have to pay the “full” price of water. The water supplies department of the government loses HK$ 2 billion/year.

Values: Respect (for people and the environment)

Year 1 EconomicsYear 1 Economics Example 3: Informal evidence suggests that income inequality in

HK has been growing since the 1970’s. Should the government be concerned about the

distribution of income? The HK government does not collect or analyze any

data on inequality in HK. Value:

Year 1 EconomicsYear 1 Economics Example 3: Informal evidence suggests that income inequality in

HK has been growing since the 1970’s. Should the government be concerned about the

distribution of income? The HK government does not collect or analyze any

data on inequality in HK. Value: Fairness

Year 1 EconomicsYear 1 Economics

Example 4: Warren Buffett Started an investment partnership in 1956. Earned a 29.5% annual return (compound) until

1969. In 1969 he found the market highly speculative, with

P/E ratios of 50 or 100 quite common. He dissolved the investment partnership with the

following statement to his partners:

Example 4 ContinuedExample 4 Continued

“I will not abandon a previous approach whose logic I understand, although I find it difficult to apply, even though it may mean forgoing large and apparently easy profits to embrace an approach which I don’t fully understand, have not practiced successfully and which could lead to substantial permanent loss of capital.”

Year 1 EconomicsYear 1 Economics Example 5: In 1971, Richard Titmuss published “The gift of

relationship: from human blood to social policy” The book compares different systems by which

human blood was collected for transfusions. In Britain, blood was collected through voluntary

donations, while in the U.S., there was a “market” for blood.

Year 1 EconomicsYear 1 Economics In which country do we expect shortages of blood to be

more severe? In which country do we expect the quality of blood to be

better? The existence of a market for blood actually reduces

people’s willingness to donate blood With a market for blood, people no longer feel that they are

donating the “gift of life” – rather they feel that they are donating the equivalent of the “price of blood”.

a) People’s moral beliefs affect economic outcomes.b) Social and Economic Institutions affect people’s moral

commitments Value:

Year 1 EconomicsYear 1 Economics In which country do we expect shortages of blood to be

more severe? In which country do we expect the quality of blood to be

better? The existence of a market for blood actually reduces

people’s willingness to donate blood With a market for blood, people no longer feel that they are

donating the “gift of life” – rather they feel that they are donating the equivalent of the “price of blood”.

a) People’s moral beliefs affect economic outcomes.b) Social and Economic Institutions affect people’s moral

commitments Value: Benevolence