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How do economic theories affect Government policy-making during a pandemic, and how can behavioural economics be used so the policies actually work?
borrowing down to 3.3% of the UK’s GDP, as in the past two years we have had the highest ever rate of borrowing in peacetime.
Rishi Sunak has also announced plans for the government to increase departmental spending by £150bn, the largest increase in a century. In terms of real time this means that departmental spending will increase by 3.8% a year. Sunak said, “If anybody still doubts it, today's budget confirms it. The Conservatives are the real party of public services". This statement may be seen as unbelievable, considering that the Tories have been in power for ten years and in that time have been cutting the public sector budget in the wake of the 2007-2008 financial crisis. So where will this money come from, and how can we keep inflation low at the same time? However, this policy still benefits many parts of the public sector including the NHS, TfL and schools around the country which have been struggling with the austerity programme from 2010. Also, raising the minimum wage from £8.91 an hour to £9.50 has a positive outcome for many people around the country. As I mentioned before, funding for schools is to be increased and restored to 2010 levels. A return to 2010 levels means an additional £1,500 for every student, going to show just how much money the Conservatives have cut from schools in the past ten years.
As well as increased departmental spending, Rishi Sunak announced a plan for “levelling up”. They are allocating money to constituencies to help with the economic effects of covid and to lower unemployment rates. Sunak even said that they were so committed to “levelling up” that “We are even levelling up the opposition of the front bench”, meaning all constituencies including ones held by Labour. This is, quite obviously, Sunak relaying Johnson’s message, hoping to retain the seats they’ve won in the north and in the Midlands.
In terms of the public sector, Sunak announced plans for libraries to be “renovated, restored and revived”, though have not indicated how they will achieve that. It was announced that the government was going to invest £21bn on roads and £46bn on railways. This is a large amount and should go a long way to improving transportation in the UK as many people frequently complain about the state of Britain’s roads. The government’s target for hitting research and development funding and investment of £22bn is planned to be reached by 2026-27, two years later than planned.
The chancellor says the government will raise government spending on skills and training by £3.8bn over the parliament, an increase of 42%. The government is to set up a national skills training program to increase the skills of adults, particularly numeracy skills. Skills is not a particularly popular topic among voters, but the Conservative Party is very adamant about increasing the skills of citizens, something that should also help adults to get more jobs.
The chancellor also confirmed the national living wage will increase from £8.91 to £9.50 an hour from April. At the same time however, Sunak also said that his goal was to reduce taxes by the end of parliament. Another thing that the Tories like to lean towards.
However, there were a couple of things that Sunak noticeably did not mention throughout his speech. Most notably, he did not announce any measures that the UK would be taking to reduce climate change or anything regarding the new high-speed rail that has been discussed. This silence on green measures is particularly worrying along with the cancellation of fuel duty, because while it is good for struggling families, it will encourage people to drive more which is bad for the environment.
Beatrice Cook, Year 8
This article was an entry for the 2021 ISRSA essay competition.
Meditation is listening to the world around you. It comes in many forms: breathing, awareness of the senses, focusing on something or emptying the mind of thoughts all together. Prayer, on the other hand, is talking, the part of religion where you communicate with the higher power, the God or spirit. In some ways they go hand in hand: to pray and to meditate are similar things. You concentrate on the world and try to connect with nature, a higher power, or even the universe.
The act of prayer is very effective, as Dr Speigel says, “Praying involves the deeper parts of the brain: the medial prefrontal cortex and the posterior cingulate cortex — the mid-front and back portions, these parts of the brain are involved in self-reflection and self-soothing.” The act of praying can calm you more than the act of meditation.
In many other ways too, prayer is more effective: it can help you to feel happy and at peace and can be a way to reflect on the world around you that you wouldn't be able to do if you were meditating. Prayer helps you to assess your day-to-day life and to be thankful and appreciative for what you have. For different religions, the form of prayer changes. Some forms involve listening to the world around you, others involve meditation. For Christians, praying is talking to God: thanking him or asking him for something specific which is very different to meditation, during which you listen. However, although it may seem that meditation is less effective than prayer, for many people, it is more effective. For those who are not religious, prayer would not help them become calm or purified. For these people, therefore, meditation would be the solution.
One main type of meditation, ‘appreciative meditation’, involves the limbic system and anterior insula which are connected to emotional wellbeing and awareness. Meditation for mindfulness involves the prefrontal cortex and parietal lobes, which relate to focus and attention. To meditate you must be at total peace and unity with the world around you. You have to accept the troubles you may face, and you must listen to the Universe. The act of meditation can make one feel satisfied and content with life; it helps you to understand the world. In this sense, meditation has more of an effect, it teaches you to be at peace and understanding with the life you have - unlike prayer in which you may ask for something more. Meditation has been proven to improve concentration and brain power as well as increasing memory capacity and helping you to feel calm. Therefore, meditation is still incredibly effective, whether it is more or less effective than praying.
In conclusion, it is impossible to have a singular correct answer to this argument. Every person is different, and for some it can be hard for them to meditate and empty their minds of thoughts. For others, they may struggle to connect with a God or a higher power through prayer and therefore feel as if meditation is the only way to feel calm and at peace. Prayer and meditation are both similar and different things, they involve different senses and evoke different emotions but in many religions the form of prayer is meditation. You cannot say that one is more effective than the other if it is different for everybody.
Saying Grace (1951) by Norman Rockwell
How do economic theories affect Government policy-making during a pandemic, and how can behavioural economics be used so the policies actually work?
Lily Sideso, Year 13
Prime minister Boris Johnson addressing the nation on Coronavirus measures
Nothing could have prepared the world for COVID-19; both the pandemic's economic and social impacts have been drastic, leaving consumers, producers, and governments uncertain about how to manage it and what is to come. In 2020, there were roughly 81 million cases of COVID-19 worldwide; the global economy shrank by around 4.2%.
COVID-19 spreads through respiratory droplets, especially when people are in close contact. Therefore, the best way to limit the spread is by social distancing, wearing a mask, and staying home - as is heavily advocated by governments. Economic activity was brought to a halt when the pandemic first hit at the start of 2020; business closures and declines in GDP worldwide saw economic agents struggling to cope. The UK's GDP fell 19% in Q2 of 2020 after the first national lockdown, the largest decline in its history, resulting in a decrease in infection rate to prelockdown levels. Given the health risk, it is incumbent on the government to encourage and sustain the public's cooperation to minimise the infection rate whilst also minimising impact on the economy.
Fairness and reciprocity have been a defining aspect of how people and governments respond to COVID-19. The idea that people are considerate of others and want to reciprocate support is not considered in mainstream economics when understanding human behaviour. Policymakers need to build trust with citizens to overcome barriers such as optimism bias and ‘moral hazard’. A survey conducted in December 2020 revealed that 57% of people in the UK said they did not trust the government to control the spread of COVID-19. Figuring out the best way to ensure that the general population follows government guidelines and rules requires balance. If governments are too lenient about regulations, fewer people will cooperate; if too much fear is induced, it would not be easy to convince people to return to normalcy so that the economy can pick up again. A balance between enforcement and encouragement needs to be found to reduce the spread of the virus without diminishing people's confidence in policymakers.
To achieve this, nudge theory is used: adverts promoting mask-wearing, evoking sympathy, and building a sense of "we are all in this together" - such as 'Protect the NHS' - help incentivise cooperation. Human beings are influenced by how things are presented when making decisions as emotions greatly influence beliefs. The UK utilises the framing effect during daily COVID-19 briefings to evoke caution as well as reassurance. The scientific advisors accompanying the UK prime minister indicate that the government trusts the science and therefore the population should too. Additionally, a sense of fear is created by mentioning the death toll and the number of cases first, discouraging people from breaking the rules and going out.
COVID-19 has negatively impacted nations and the global community both socially and economically. Policy making during this time is difficult as there is so much uncertainty surrounding the pandemic; governments need to decide what to prioritise, and people have less confidence in governments and are less incentivised to listen. To combat this, governments can use economic theory like Nudge theory to encourage following policies to mitigate the pandemic's effects.
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