RMI 2302 Exam 2 Questions And Answers (Verified And Updated)

RMI 2302 Exam 2 Questions And Answers (Verified And Updated) free market - answerfails to protect consumer interests requiring the government to find appropriate ways to protect us from ourselves; rewards those people who understand consumer behavior and can exploit consumer's weaknesses In a world dominated by rational behavior... - answerthe government could focus on externalities and focus less on consumers Jeremy Bentham - answer(19th century) Urged politicians to design policies that maximized peoples happiness, increasing their pleasures and reducing their pains. No good way to measure people's hedonic wellbeing Daniel Kahneman - answer(recent years) Due to the fact that scientific measurement of wellbeing has advanced significantly, Kahneman is trying to bring policy making back to Bentham Who are the supporters of Kahneman? - answerEd Diener and Martin Seligman and Barry Schwartz Ed Diener and Martin Seligman - answer(Supporter of Kahneman) Proposed that we develop national measure of wellbeing, akin to GDP measures. If money doesn't necessarily make people happy, why should we emphasize ramping up GDP? Barry Schwartz - answer(Supporter of Kahneman) Wrote in New Republic that happiness research has shown us that "we know there is some significant subset of people likely to be made better off through heavier taxation, and that these people reside at the top end of the wealth distribution" Societal Happiness Line of Thinking - answerWay of thinking is a great threat to libertarians. Replaces an individualized version of wellbeing with what seems to be a very top-down approach that looks at the wellbeing of society as a whole. It also opens the door to to all kinds of government intrusions. John Stuart Mill - answerChild prodigy and protege of Bentham, was homeschooled by James Mill (father) and Bentham. James Mill and Bentham decided to conduct an experiment where John Mill's childhood would be dictated with extreme level of control. He was not allowed to have friends, could not write poetry or do arts, and his daily schedules were monitored, etc. Reading Greek at the age of 3 and wrote a 1500 word history of Rome at the age of 6. John Stuart Mill believed... - answerHappiness is not found by seeking ordinary pleasure, but instead by striving for loftier goals The goal of moral and political action should be to maximize people's happiness Didn't reject utilitarianism but tried to make it compatible with a broader view of human nature than Bentham "Some kinds of pleasure are more desirable and more valuable than others." - answerJohn S. Mill "It is better to be a human being dissatisfied than a pig satisfied." - answerJohn S. Mill Nobel Laureate Amartya Sen - answerA critic who believed that if people can achieve moment-to-moment happiness in horrible circumstances, what does that say about Bentham's world? Who believed that poverty doesn't make people nearly as miserable as one would think, liberty was one of the things that should guide policy decisions (not strict libertarian), that we needed to promote what he called "capabilities" and need to maximize what people are capable of doing, and was an aggressive advocate for gov'nt intervention in health care and education, and in redistributing wealth to try to equalize opportunities? - answerNobel Laureate Amartya Sen "Happy Slave" Problem - answerIf one has been a slave since birth and has known no other life, should we accept his slavery because he is happy? (Under Nobel Laureate Amartya Sen) Policy Decisions - answerThere needs to be a balance between competing objectives when making policy decisions. Essentially, there is no simple solution... What do Kahneman's ideas ignore? - answerThe things people care about in life beyond moment-to-moment good mood. His ideas imply that there is nothing wrong with a world fully of happy slaves. What are some competing objectives? - answerFreedom, Happiness, Health, Education Economists Measurement Input - answerIncome distribution, Unemployment, GDP, Infant mortality, Crime, Air Quality Economists Measurement Output - answerModels of how individuals and organizations make decisions What is the problem with the models? - answerWe don't have a very good model of how governments make decisions. We hope that our models focus on externalities, public goods, fairness, competition, and regulation What is the role of government? - answerTo provide legal structure, maintain competition, redistribute income, and reallocate resources