Week In Review (10/3 - 10/7)

           This week in economics we had a student led class taught by Claire and Beatrice on socially responsible investing. We also continued our discussion on supply and demand and explored elastic and inelastic goods, something that we applied to our later discussion on the economics of health care. This week Adolfo has maintained his first place position in the stock market game, continuing with his strategy to invest in oil. Meredith has not had her baby yet, but Ralph did make an appearance in class on Thursday.

Key Terms:

Socially Responsible Investing: Socially responsible investing (SRI) is broad term for an investor that invests only in companies that promote socially responsible actions (green energy, human rights, etc) or invests in companies that follow socially responsible practices. A SRI usually avoids investing in taboo industries such as alcohol, fast food, gambling, oil, and others. SRI is a broad term that covers a range of different degrees of social responsibility.

CSR: CSR or cooperate social responsibility describes a company that is focused on making socially responsible decisions. This depends on the company, just like with investors, but usually this focuses on the internal operations of the company.

Elasticity of demand: The response of the change in quantity demanded to the change in price. Elastic goods are good that have substitutes, so a change in the price will greatly affect the demand. Inelastic goods are goods that are necessities with no substitutes, so there is little change in demand with a price change.

Ped: The price elasticity of demand is a way to determine the elasticity of demand. It is measured in the percent change of quantity demanded divided by the percent change of the price.

Deductible: The out of pocket expense for health care that you pay before insurance pays for your treatment.

Premium: The monthly insurance payments that allow you to use your insurance to pay for treatments.

Out of pocket max: The maximum amount of money that you pay for an entire year before insurance pays for all health related expenses. A lower out of pocket max is better, but usually comes with higher payments.

HMO: A health management organization is where one network of hospitals is in charge of your medical records and you can only go to those specific hospitals.

PPO: A preferred provider organization is where you can go to any hospital or company and your insurance will cover your treatment.

Human capital: Human capital is the sum of skills and positive traits that a person possesses. Items that impact your human capital include education, intelligence, charisma, creativity, work experience, vigor and more. A higher human capital usually makes someone more desirable to an employer.

Productivity: Productivity is how efficient someone is at making things. An increase in productivity usually results in economic growth.

Affordable care act: The affordable care act or Obama care is a new policy created in 2010 and implemented in 2014 to allow greater access to health care for Americans who don’t have a full time job or are not offered health care benefits through their employer. Many new policies were implemented with the ACA including individual mandate to have insurance, increased medicade access, no bias for preexisting conditions, a greater range of options, minimum standards, and deductible limits. These new changes to health care have increased the demand and possibly lowered the supply, causing the price of health care to continue to grow.

Current Events 1:

http://www.nbcnews.com/politics/2016-election/bill-clinton-attempts-clarify-scathing-obamacare-comments-n659411

            This article discusses Bill Clintons response to his comment about Obama care being the craziest thing in the world. This article clearly describes how people who are able to qualify for medicade or who meet the requirement for subsidies are able to benefit from Obama care. He also explains that the wealthy who are able to afford insurance are able to benefit from Obama care, but he describes how people who make just enough money to not be eligible to subsidies are being screwed in the process. Obama care makes health care more expensive for people who have high enough incomes so that they have to pay for insurance themselves, but not quite high enough to be able to truly afford this extra cost. He points out that many people have other expenses. This article seems to clearly tie into our class discussion of health care since it expands on this idea that health care is continuing to get more and more expensive. The point made by Bill Clinton, although widely criticized, makes the point that the health care system is flawed. Bill Clinton clearly didn’t mean to insult the entire ACA, but seems to point out a reoccurring theme that we are seeing in our article: the health care system is flawed and there needs to be some sort of major reform to make a difference.

Current Events 2:

http://footwearnews.com/2016/focus/opinion-analysis/body-positive-movement-shoe-companies-footwear-brands-fashion-analysis-266260/

            This article discusses how shoe company, Reebok, is starting a new advertising campaign that focuses on body positivity in a “be more human” campaign. I thought that this article was interesting because it brought this idea of social responsible into perspective. There are many things that a company could do to become more socially responsible. Reebok seems to be trying to support women in accepting their bodies. This idea seems super relevant today as there is a huge discussion in the media about body positivity, since we are bombarded with many unrealistic expectations. This company is trying to start this campaign in an attempt to be more socially responsible. This is an interesting application of the ideas that we learned about in class since it focuses on developing a framework in the advertising model that supports people of all different body times and helps them to embrace it.  

Takeaways:

            We started off this week by talking about socially responsible investing. We began to think about how we could invest in ideas that we think are morally strong, while still making an investment. We saw how this idea was interpreted differently in various index funds which each invested in different types of socially responsible companies. This idea focused mainly on making decisions that you morally agree with, so you are only supporting companies that you agree with. I thought that this was a great way to start the week since we then shifted our discussion to health care.

Although I initially thought that healthcare would be moral since hospitals just want to help people get better, this week opened my eyes into how expensive and unclear the health care system is. The health care system charges extreme amounts of money and provides poor customer service. The health care system can get away with charging exorbitant amounts of money because it is not a moral system. In fact, this system is considered a moral hazard, since patients have no reason to consider prices since an insurance company is paying for the treatment. This lack of morals in communicating clearly with the patients about the price of a procedure causes many patients to be left completely out of the loop on their health care treatment. Additionally, the high price creates a barrier for many people who are in need to medical care. This division between those who can and cannot afford to pay for health care is not moral because everyone should have equal access to health care.

The transition from a teach a class on investing responsible to learning about the completely flawed healthcare system creates an interesting point of comparison. I was thinking about why some people decided to invest so responsibly, while there is no focus on investing in the systems we have in place. Lots of the SRI companies are wind or solar companies focused on environmental issues in the future, while there is little emphasis on investing in a health care system that will benefit our country. I thought that this dramatic difference between socially responsible investing and the moral hazard of the health care system made an interesting point of comparison this week in economics class.