I definitely think so, the concepts do have general applicability. While I
can't think of an example off hand right now, I'm certain I have compared
phenomena to income and substitution effects in my head. One of the big
payoffs to an advanced degree in economics is that you get to use terms
like these gratuitously in otherwise normal conversation. It was always
part of the appeal of econ. to me. Good to teach these general concepts
early on.
-Bill
William M. Butterfield
Analyst
MultiState Assoc. Inc.
Phone: (703) 684-1110
[EMAIL PROTECTED]
"Alex T
Tabarrok" To: armchair <[EMAIL PROTECTED]>
<atabarro@gmu. cc:
edu> Subject: income and substitution effect
Sent by:
owner-ARMCHAIR
@gmu.edu
02/11/2003
11:39 AM
Please respond
to ARMCHAIR
Almost every intermediate micro text spends a great deal of time on
income versus substitution effects. This is a somewhat tricky concept
for students to understand so one would hope that the payoff to learning
the idea is high. But what is the payoff? One of the few applications
is to labor supply which most textbooks put much later in the text and
don't connect to the income and substitution effect anyway. Most
textbooks don't do any sophisticated welfare analysis either. So is it
really worthwhile to learn this material?
Alex
--
Alexander Tabarrok
Department of Economics, MSN 1D3
George Mason University
Fairfax, VA, 22030
Tel. 703-993-2314
Web Page: http://mason.gmu.edu/~atabarro/
and
Director of Research
The Independent Institute
100 Swan Way
Oakland, CA, 94621
Tel. 510-632-1366
