SOCI 235 Study Guide - Fall 2018, Comprehensive Midterm Notes - Western World, Water Wheel, Jews
12 Oct 2018
School
Department
Course
Professor
SOCI 235
MIDTERM EXAM
STUDY GUIDE
Fall 2018
Lecture 1: September 5th, 2018
- Output is measured in aggregate with GDP
- We are interested in productivity growth because it has implications about living
standards
- Main point: productivity has risen a lot in the last century
- Is productivity a good measure of living standards?
- There is a problem with the measure of GDP
- GDP measured by:
- Expenditure = C + I + G
- Income
- Expenditure approach has many issues:
- 1) Effects of gov. Expenditure are not as directly related to life expectancy
- 2) What does the rise in expenditure in education do to GDP?
- Problems with connections
- 3) Quality improvement
- What are the implications for quality improvement on living standards?
- We can conclude that GDP numbers underestimate quality improvement
because only a limited number of products have had hedonic indexes
developed for them
- I.e. surgery has improved but there are no hedonic indexes for
them
- 4) Large difference between median and mean income - what does this mean?
- What causes the two to diverge?
- Income inequality
- A common view is that rising inequality means that, in the US, living
standards has not risen as much as GDP per capita
- Government expenditure is less closely related to personal preferences than private
expenditure
- Rise in share of gov. Means that connection between GDP per capita and living
standards is weaker
find more resources at oneclass.com
find more resources at oneclass.com
Lecture 2: September 7th, 2018
- Issues with GDP:
- 1) Valuing gov. expenditure
- 2) Expenditures that don’t contribute to living standards
- 3) Homeownership after mortgage
- 4) Quality improvements
- There are hedonic indexes (for example, with computers)
- Quality improvement is a big problem between the association between
living standards and GDP
- It means our work underestimates productivity growth
- 5) Inequality
- 6) Durable goods
- housing
- Capital investment involves manufacturing durable goods
- Firms buy machines that have value over a bunch of years
- Value for durable goods is spread over lifetime of the equipment
- But over time, the value depreciates due to wear and tear
- Involves a way of depreciating the purchase, but that depreciation
requires an estimated procedure that is likely to include a lot of error
- Because deciding the right rate of depreciation is difficult
- 7) Intellectual property (IP)
- Issue of double counting, so you overestimate GDP
- 3 kinds of IP:
- Patent, copyright, trademark
- Patent
- Must get a patent approved by the gov.
- Criteria of approval:
- Not a copy, is it new?
- Is it useful?
- IP comes from:
- Argument 1: research by firms, individuals → IP → products
- IP has become an intermediate good, which means we do
not count the money spent on IP in the calculation of GDP
because we assume the price of all that comes out in the
price of the final product
- This might be unsatisfactory because IP can also be an
investment
- Once you have the IP knowledge, it can be used
over time (at depreciated value)
- Therefore it has durable value, though not infinitely
durable
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Output is measured in aggregate with gdp. We are interested in productivity growth because it has implications about living standards. Main point: productivity has risen a lot in the last century. There is a problem with the measure of gdp. Expenditure = c + i + g. Expenditure approach has many issues: effects of gov. We can conclude that gdp numbers underestimate quality improvement because only a limited number of products have had hedonic indexes developed for them. A common view is that rising inequality means that, in the us, living standards has not risen as much as gdp per capita. Government expenditure is less closely related to personal preferences than private expenditure. Means that connection between gdp per capita and living standards is weaker. Issues with gdp: valuing gov. expenditure, expenditures that don"t contribute to living standards, homeownership after mortgage, quality improvements. There are hedonic indexes (for example, with computers)
