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Econ2D03 Assignment 1, Yang, Zhi Xing 0966680.pdf

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Department
Economics
Course
ECON 2D03
Professor
Rashid Khan
Semester
Spring

Description
Econ2D03Yan Ling, Zhen1055775 ECONOMIC 2D03 ASSIGNMENT #1 Student:Yang, Zhi Xing Student ID:0966680 Date:2012-05-07 Question #1: What is social capital? What are the components of social capital? Compare and contrast social capital from economic capital? (a) Social capital refers to the norm of trust and networks possessed by individuals and their communities; it’s extent and nature are often measured by the number and strength of interpersonal contacts. (b) The components of social capital are many and varied. For example, first one is group characteristics, which involves degree of membership homogeneity/heterogeneity, large or small group, frequency of participation and participation in decision-making and source of funding. Second one is the generalized norms, which contains trustworthiness of people, helpfulness and fairness of people. Third one is togetherness, such as neighborhood connections in situation of sickness and calamity, how well they interact with each other, sociability and volunteering. Last one is trust that included trust of family, trust of community people, trust of business owners, and trust of government officials and so on. (c) Economic capital is generally referred as tangible and durable object, such as building, equipment and machinery, houses, etc. On the other hand, social capital is intangible. The components of social capital are many and varied and intangible, and it is not measurable. Investment in economic capital is expensive, but an investment in social capital does not cost so much, and it brings long-lasting return. Physical capital in economic is viewed as technical relationships between capital and labor and output and its rate of return is judged in monetary terms. Social capital is not measured in monetary or units. It depends on use to which they are put to, the worth of social capital depend on the kind of activities in which the members of the networks are engaged. In common, Economic capital and social capital are both can have good used and bad used. Econ2D03Yan Ling, Zheng1055775 Question #2: What are the flaws and omissions in conventional GDP accounting? What modifications are needed to make GDP a good proxy of economic progress? (a) There are some important flaws of conventional GDP accounting are: 1. It ignores pollution- damages, resource depletion and environmental degradation; 2. It emphasizes current production, rather than consumption and sustainability; 3. It emphasizes quantity of output, rather than quality; 4. It ignores income-distribution and poverty; 5. It ignores non-market activities, like services of home - maker; 6. It ignores the value of leisure; 7. It defines investment narrowly. Spending on health, education and human capital is not considered as investment spending. And conventional GDP accounting of investment also excludes spending on: Human capital, education, research; Health or Recreation; Physical and
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