Economics for Leaders Lesson 6: Incentives, Innovation & the Role of Institutions

Economics for Leaders ~1750 Population Growth and Important World Events

Economics for Leaders Economic Reasoning Principle # 3: People respond to incentives in predictable ways. Choices are influenced by incentives, the rewards that encourage and the punishments that discourage actions. When incentives change, behavior changes in predictable ways.

Economics for Leaders Economic Reasoning Principle # 4: Institutions are the “rules of the game” that influence choices. Laws, customs, moral principles, superstitions, and cultural values influence people’s choices. These basic institutions controlling behavior set out and establish the incentive structure and the basic design of the economic system.

Economics for Leaders ERP-5: Understanding based on knowledge and evidence imparts value to opinions. Opinions matter and are of equal value at the ballot box. But on matters of rational deliberation the value of an opinion is determined by the knowledge and evidence on which it is based. Statements of opinion should initiate the quest for economic understanding, not end it. Economic Reasoning Principle #5: Understanding based on knowledge and evidence imparts value to opinions.

Economics for Leaders Please use the slides before this one in your presentation. The slides following this one are provided as options.

Economics for Leaders

Cell Phone Use in Africa on the Rise as Mobile Carriers Return By Narayan Bhat TMCnet Contributing Editor, June 25, 2007 A few years ago, it was believed that mobile services were a luxury for the poor, who make up most of the population in Africa. But now millions of people are being added to the lengthy list of cell phone consumers. African farmers once faced long journeys, braving potholed roads and bandits, to check export prices for their goods. Now they just phone the port to ensure they get a fair price, says the Reuters report. More than anything else, analysts say, the availability of mobile services and devices has really increased productivity in Africa. For people working in the informal sector, mobile phones allow them to stay in touch with each other and thereby organize work smoothly. the-rise-as-mobile.htm

Economics for Leaders

Economics for Leaders Technology & Productivity

Economics for Leaders Soviet Social Indicators, 1990 Acute shortages of medical supplies; Fewer than one-half of draft age men were fit for military duty; Illness kept an average of 4,000,000 workers from their jobs each day (as opposed to 287,000 in the US); Infant mortality rates had risen from 22.9 deaths per thousand in 1971 to 33 deaths per thousand in 1989; In rural areas, where one-third of Soviets lived, half the hospitals had no sewer connections, and eighty percent had no hot water.

Economics for Leaders Soviet Line for Shoes

Economics for Leaders Soviet Line for Oranges

Economics for Leaders Top 25 (non-medical) Innovations of the Last 25 years 1.The Internet 2.Cell phone 3.Personal computers 4.Fiber optics 5. 6.Commercialized GPS 7.Portable computers 8.Memory storage discs 9.Consumer level digital camera 10.Radio frequency ID tags 11.MEMS 12.DNA fingerprinting 13.Air bags 14. ATM 15. Advanced batteries 16. Hybrid car 17. OLEDs 18. Display panels 19. HDTV 20. Space shuttle 21. Nanotechnology 22. Flash memory 23. Voice mail 24. Modern hearing aids 25. Short Range, High Frequency Radio

Economics for Leaders /cnn.25/interactive/gallery.innovatio ns/frameset.exclude.html has pictures of the top 25 innovations

Economics for Leaders Profit attracts resources

Economics for Leaders Profit attracts resources

Economics for Leaders

Ease of Doing Business, 2009 Most Difficult Niger Eritrea Venezuela Chad Sao Tome & Principe Burundi Republic of Congo Guinea-Bissau Central African Republic Dem. Rep. of Congo Easiest Singapore New Zealand United States Hong Kong, China Denmark Ireland Canada Australia Norway Iceland Source:

Economics for Leaders