Economics, Finance, and Money Matters - Live Session - School Connect - October 11

TLDR;

The session is an interactive intro to economics, finance, and money matters. The instructor, Arti Agarwal, encourages questions and clarifies that the course is light on math but uses it for better understanding of concepts. The session uses Menti meter for interactive polls and discussions, covering topics like the definition of economics, the role of money, and the concepts of supply, demand, and surplus. Key points include:

• Economics is more than just earning money; it involves resource allocation and social welfare.
• The objective of economics is to move towards societal well-being, though individual actions may not always align with this.
• Understanding the difference between shifts in supply and movement along the supply curve.
• Consumer and producer surplus and how they contribute to total surplus.

Course Introduction and Technical Details [0:00]

Arti Agarwal welcomes everyone to the new course in the School Connect program, emphasizing that the sessions will be interactive and encouraging participants to ask questions. The course is designed to be less math-heavy, though some mathematical concepts will be used for better explanations. Participants who have reviewed the week one lectures are asked to give a thumbs up. Any technical issues with the portal or videos should be reported to the email ID shared in the live chat and Google group.

Instructor Intro and Menti Meter Introduction [4:04]

Arti introduces herself as a PhD scholar at IIT Kanpur and shares her experience with NPTEL and her work in economic policy. She introduces Menti meter as an interactive tool for the classes, where participants can share their thoughts and answers. The presentation includes questions to initiate discussion, but participants are welcome to ask their own questions as well.

Defining Economics: Initial Responses and Clarifications [6:06]

Participants use Menti meter to share their understanding of economics, with common answers including scarcity, choices, demand and supply, and resource allocation. Arti clarifies that economics is not just about getting rich or money, but also involves studying human behavior in a limited way, focusing on choices and resource allocation. The concept of "homoeconomicus" is introduced, which follows certain rules about human behavior in economic models.

Narrowing Down the Definition of Economics [12:15]

Participants are asked to choose the best definition of economics from four options. The correct answer is "It is about equitable and fair society and well-being." Arti explains why the other options are incorrect: economics is more than just earning money, it's not just about counting resources but allocating them, and it's not about predicting the weather. She uses the example of dividing a pie to illustrate resource allocation and the goal of making it equitable through various means like subsidies and taxes.

Addressing Annotations Issue and Continuing Discussion on Equitable Society [16:46]

Arti addresses the issue of participants annotating on the screen and works with the Zoom host to disable annotations. She reiterates that the goal of economics is to attempt to make society equitable, even if it is not always achieved. The discussion touches on the question of why prices are not always aligned with value, using the example of water versus Coca-Cola.

Transactions, Value, and Resource Allocation [22:57]

Arti explains that economics involves transactions where each side gains some value. She emphasizes that economics plays out in everyday life, such as allocating time to different subjects, which involves optimizing resources. Subsidies and taxes are discussed as tools to move society towards growth. Individual decisions may not always align with what is best for society.

Traditional Indian Thought vs. Western Economics [31:47]

Arti explains that in traditional Indian thought, "artha" (economics) is one component of a larger framework that includes dharma, kama, and moksha, all of which explain how a human being needs to function in a society. She contrasts this with Western economic thoughts, including Marxist views and other schools of economics. The course will cover the evolution of economic thought and how different schools have influenced modern economics.

Addressing Misconceptions and Introducing Law of Supply [35:55]

Arti addresses the common misconception that studying economics makes people selfish and greedy, which is one of the reasons for the course. She then introduces the law of supply with the question of why mango prices fall during the harvest season. Participants respond with various answers, and Arti clarifies the difference between demand and supply in this context.

Explaining Supply and Demand with Mango Example [38:55]

Arti explains that the fall in mango prices during harvest season is due to excess supply. She uses the example of broccoli prices in and out of season to further illustrate this point. The key factor is the change in supply, not demand. During harvest season, suppliers lower prices to sell their stock before it goes bad, illustrating the law of supply.

Nuances in Demand and Supply, and Shift of Supply Curve [42:29]

Arti addresses questions about the quality of mangoes and their impact on demand, clarifying that the discussion focuses on the general trend and assumes homogeneous goods. She explains that the harvest season causes a shift in the supply curve to the right, rather than a movement along the curve. Examples of onion shortages and GST changes are used to illustrate shocks to the supply curve.

Consumer Surplus Explained [52:34]

Arti introduces the concept of consumer surplus with an example: if you're willing to pay 60 rupees for a mango but buy it for 40 rupees, your consumer surplus is 20 rupees. She explains that value or utility is difficult to measure directly, but willingness to pay is one way to gauge it.

Producer Surplus Explained [56:14]

Arti explains producer surplus, using the example of a seller willing to accept 30 rupees for a mango but selling it for 40 rupees, resulting in a producer surplus of 10 rupees. This is the flip side of consumer surplus.

Total Surplus Explained [57:43]

Arti explains that total surplus is the sum of consumer surplus and producer surplus. In the mango example, the consumer surplus is 20 rupees and the producer surplus is 10 rupees, making the total surplus 30 rupees.

Income Effect Explained and Class Conclusion [1:00:22]

Arti explains the income effect, which occurs when the price of a good decreases, increasing your ability to buy more of it. She uses the example of a pen becoming cheaper, making you feel richer and able to buy more pens. Diminishing marginal utility is also briefly explained. The class concludes with Arti answering questions and thanking the participants for joining. She encourages them to use the Google form and discussion forum for further questions.