Beginner’s Guide to Microeconomics for the Public Sector
Course participants will develop an understanding of the key insights from economics and how they can be applied in policy and government settings. The economic approach to understanding decision-making will be examined in detail with special attention paid to key concepts such as: opportunity cost; incentives; trade-offs; markets and market failure. A key aspect of the course is developing a framework to think about how to blend markets with government to achieve the best outcomes for society. The importance of government in a strong modern economy is emphasised. We consider “good” and “bad” government intervention and provide participants with tools to determine what kinds of government intervention might be appropriate (or inappropriate) in their particular sector.
The course is broken up into 6 distinct units:
- Key insights and introduction to the economic way of thinking [1 hour]
- Markets and prices: demand, supply and elasticities [2 hours]
- Government intervention: price controls [30 minutes]
- Government intervention: taxes [45 minutes]
- Government intervention: market failure, externalities and public goods [75 minutes]
- Summary: role of government [30 minutes]
I use power point slides. We play two or three role-playing games where I put participants in different roles as actors in the economy to help them understand markets, public goods and government price controls. We break into small groups to do practical exercises. I use a variety of case studies which are renewed each year, drawing on current policy debates in Australia and articles from media such as the Australian Financial Review. I am a very interactive facilitator and encourage questions. Participants always respond well to this and it generates a very high level of participant-to-participant interaction and participant-to-facilitator interaction.
Students will learn:
- Key insights from economics
- Application of those key insights to government and policy-making
- The role of markets and the importance of prices * * Why economists believe that markets create value for society
- Why economists worry about interfering in markets * * What is market failure and what economists think should be done about market failure
- The main types of market failure: market power, externalities, public goods, missing insurance markets and asymmetric information
- The costs and benefits of taxation and how to think about optimal taxation
- An economic framework for thinking about “good” and “bad” government intervention
- An economic framework for thinking about the role of government in the economy
- We finish the day by drawing it all together to think about how to blend the role of government with markets so that, as a society, we can reap the benefits of what markets have to offer and reap the benefits that government has to offer by bringing the two together, using the best of both.