Looey's Consumption Inefficiency Theory

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    19-Jun-2015

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A quick project about inefficiency in human consumption. Economics these days.Although it looks funnier with the animations on the slides, anyway. Enjoy

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<ul><li> 1. By Luis F Igniguez </li></ul> <p> 2. If we divide the world of economics, we can talk about Two big schools: CLASSICAL KEYNESIAN ..NOT 3. Again!! If we divide the world of economics, we can talk about Two big schools: SCI FI School! Realistic Sounds pretty much economics to me 4. Sci Fi School: o Classical Model o Free-market o Self-balance o Invisible hand o Invisible friends o Flux capacitors o Laser sabers o Perfect competition 5. Reality Classical Model Again! SCARCITY Recessions Keynesian economics Unemployment AD, Gov. Spending, etc 6. Either Classic or Keynesian we would agree that everybody (every country) is toward its economic growth. 7. Despite the contrasts betwen Classical and Keynesian: 8. The consumption is the factor that must be present always in order to boost any economy. It is simple: without consumption, production is pointless. Therefore we tend to consumism (if you get the misspelled meaning)s in a macro perspective. 9. The more we produce, the more we tend to consume. It is not a coincidence that the economic powers in the world have the biggest consumption ratio. Developing economies with a high growth ratio increase consumption ratio as well. 10. Production, income, and consumption might have different ratio, but if one slope is positive, then another is positive too. 11. So we produce effitiently more and more! Here we go!! we can consume more! 12. But while consumption increases there is one factor we forcefully forego. The consumption efficiency 13. Last year you made $20 a week o From time to time you used to buy 2 yogurts. o None of your yogurts ever spoiled because: 1. It was the exactly amount of yogurt you needed 2. You could not afford more yogurt, and so you did not let it spoil because it was your concern. 14. o Now you make $70 a week, a lot more ca$h o From time to time you buy 10 yogurth. Maybe you consume more yogurth, maybe the same amount and do not go to grocery store that often, but 15. NOW ONE YOGURT SPOILED!!!!!! 16. Well its not that bad, because: It was only 1 out of 10 yogurth, not like you wasted half of the money you expended on them Now you produce more, so you can afford buying another extra yogurth You did increase your productivity, but now you consume less efficiently 17. We will see this pattern of loss in most of individuals. Maybe your loss ratio will be smaller, but at some point when your wage raises, you will waste a yogurth. 18. But the thing gets more interesting when you observe this happening not only on individuals: Corporations Goverments Evil babies 19. They all will waste yogurt at some point. Paper Ink Fuel Dolphins etc 20. High volumes of production focus us on the factors of production, rather than consumption, as long as this inefficient consumption does not decrease our production output significantly 21. The higher the consumption amount is, the harder to get control of its effectiveness or efficientcy is. 22. As consumers, producers, individuals: we just have too many reasons to let our consumption efficiecy decrease as we go bigger What!?? I need some help! 23. I was told about some guys that would probably support me. Unfortunatelly theyre all dead Oops this last ones alive! 24. Ronald H. Coase Transaction costs He stated how organizing additional transactions will raise costs. That would explain a lot of the Significant reasons why we are not as efficient as we can while we consume. Once again, Opportunity costs 25. Simon Smith Kuznets The Kuznets Curve He would defenitely believe!... 26. The Kuznets Curve He observed how the enviorement is degradated while an economy grows. But there is one turning point where the degradation decreases and after the industrial period, things would get better. 27. The Kuznets Curve But we can tell that this turning point is not present in all cases. If we look at the oil market, there was never a turning point for its exploitation. And Speaking about oil (sorry about this microeconomics intermission) I will get some more help on the next slide. 28. The following dude noticed something very important and I am pretty sure he would totally believe! William Stanley Jevons The Jevons Paradox 29. The Jevons Paradox It explains how technology improvement will raise the demand of fuel instead of decreasing it as we would have expected 30. The Jevons Paradox For example: we get better engines, much more efficient but more and more people buy cars using these engines and speaking about paradox.. 31. A very simplistic representation could be modeled by a negative exponential function where: Where CE is the Consumption efficiency f(x) being x the productivity unit (say income, GDP etc), P is the efficiency peak r is the decreasing ratio where 0</p>

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