Evaluation in Economics - Important for essay writing!!!

Evaluation is a very important concept in economics. It is what you need to do when you have finished analysing. By analysing we mean giving your Definitions, Explanations, Examples and Diagrams (DEED). Show how the theories relate to the question and explain the theories. Basically analysing is drawing out the theory and then evaluation is discussing the benefits and drawbacks and then drawing your conclusions and also challenging the analysis.

The hard part about all of this is making sure that you say enough in your analysis and in your evaluation. So you don’t forget, remember to “Do the DEED” when you analyze and then “CLASPP it all together” when you’re evaluating.

On your essay questions and data response questions (usually the last question) you’ll need to evaluate.

CLASPP

(d.) – A clasp is something that holds things together. But (spelled with 2 P’s) it’s also an acronym for the 6 types of evaluation in A Level Economics.

Use at least 3 of these in your Part B questions. Personally, I recommend to my students that they try use Stakeholders, Assumptions each time and include a third one of their choice. We always care a lot about stakeholder effects and assumptions is impressive because it shows that you really understand the theory.   

Conclusions

-What can we conclude from the theory (that you’ve explained in your analysis)?

Long-term and short-term effects

-Is the change good in the short-term, but over in a few years it will have undesirable consequences?
-Will the policy be really hard on people in the short-run, but it fixes the long-term problem?
-Will this policy fix one problem, but create another?

Assumptions

-Are there some assumptions being made, that the theory depends on that may not hold true? This is the same as “ceteris paribus” –the assumption that all other things are being held equal, when in fact they might not stay constant. Explain what might change and how that would affect your analysis.
-Tell us the weaknesses in the theory?
-What is unrealistic about the theory?

Stakeholders

-What effects would this policy (i.e. an indirect tax) have on the government, consumers, producers and the rest of society?
-Policies (i.e. price ceilings) are often made with particular stakeholders in mind, so are there undesirable effects on other parties (i.e. price increases for consumers)?
-Is the policy great for some groups, but bad for others?

Priorities

-Discussing the priorities of a society, or the government is also a good way to keep things in perspective. A policy like subsidising schools is good for families, good for the long-term macro economy, but bad for tax payers who don’t have children, what are the priorities as a society?
-Is there an important normative (i.e. values aspect) that the theory doesn’t consider?

Pros and Cons

-What are the advantages and disadvantages of this policy?
-What are the costs and the benefits of this policy?
-What are the arguments for and the arguments against this policy?
-This one is to double-check that you haven’t left anything out in the preceding ones.

Credit to Mr. Tim Woods

www.timwoods.org

How to write an essay

Introduction

Definition. Give examples (if any).

Paragraphs

Point
This is because...
This means that...
Therefore...
However...
This means that...

For example,

An increase in interest rates may lead to a reduction in inflation. This is because an increase in interest rates may act as an incentive for people to save. This means that less money is being spent into the economy. Therefore, the general level of prices may reduce. However, if interest rates increase, this may lead to an increase in the amount of people's savings. This means that people may have more disposable income to spend back into the economy and therefore the general level of prices may increase.

Conclusion

Summarise the essay and give overall point (based on question).

Division of Labour & Specialisation

Specialisation occurs when workers are assigned specific tasks within a production process. Workers will require less training to be an efficient worker. Therefore this will lead to an increase in labour productivity and firms will be able to benefit from economies of scale (lower average costs with increased output) and increased efficiency.

Example of Specialisation and Division of Labour

In the process of producing cars, there will be a high degree of labour specialisation.

• Some workers will design the cars
• Some will work on testing cars
• Some will work on marketing
• Some workers will work on different sections of the assembly line. Their job may be highly specific such as putting on tyres e.t.c.

Specialisation within economies

Specialisation can also mean that individual countries can produce certain goods that they are best at producing and then exchange them with other countries.

The theory of comparative advantage states countries should specialise in producing those goods where they have a lower opportunity cost (relatively best at producing)

Specialisation requires trade. Specialisation and trade means that countries that produce no oil can consume oil products and countries with large reserves of raw materials can export them in exchange for other goods that they need. This helps reduce the problem of scarcity in individual countries and enables countries PPF to shift outwards.

If there is increased trade there will also be increased competition. This means that domestic monopolies will now face competition from abroad therefore they have increased incentives to cut prices and be efficient.

Problems of Specialisation

However there are problems of specialisation. Firstly if workers do specific tasks it may become boring and their productivity may fall as a result.

Secondly poor countries may be encouraged to use up their non-renewable resources to sell to developing countries, therefore in the long term we could run out of non-renewable resources

Over specialisation in one country can lead to countries becoming over dependent on one particular commodity, e.g. if a developing country specialises in the production of a primary product their income may be adversely effected by bad weather conditions.

Critics of free trade argue that with increased specialisation there will be intense competition to cut costs and therefore wages will have to fall. However this point is not necessarily true because firms can compete by producing capital-intensive goods with better technology.