Economics Internal Assessment SL/HL

First examinations 2013

Requirements

You must produce a portfolio of three commentaries based on articles from published news media. Each article must be based on a different section of the syllabus.

Microeconomics Macroeconomics International economics Development economics

Each portfolio must contain:

a summary portfolio coversheet a commentary coversheet for each commentary three commentaries, accompanied in each case by the relevant article.

How to choose an extract

The nature of articles

The choice of an appropriate article is the most crucial aspect of writing a successful commentary. The article used does not have to be purely economic, as the application of economic theories and concepts can be observed in many areas. Articles without any obvious economics are sometimes the most effective, allowing students to introduce economic analysis where it is not immediately apparent.

Articles that include substantial economic analysis, such as in The Economist, while allowable as a source, may leave little opportunity for further analysis.

Suitable articles

Articles must be chosen from the news media: newspapers, magazines or the internet. Students need to look for articles relating to current events, and these must be published no earlier than one year before the writing of the commentary.

News media websites are the only appropriate sources. The use of blogs is not allowed for internal assessment unless these are associated with recognized news organizations. Students must take care to record correctly the actual date the article was published, not just when it was posted on the internet.

Graphic sources (for example, pictures, cartoons and advertisements) are not to be used as source articles: these do not qualify as articles for the purpose of this internal assessment.

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Students must take care not to choose articles where there is little room for their own analysis and evaluation.

Time period of articles

Commentaries must be written within a year of the published date of the article.

Length of articles

Shorter articles are often a good choice as they tend to be focused on just one or two economic theories/concepts. A rough guide is approximately one full side of A4/letter-size paper (in font 10–12 with normal line spacing) and no longer than two sides of A4/letter-size paper. It is important to note that moderators (external examiners) will not read beyond two sides of text.

Articles that are too short will not usually provide enough interesting issues for students to analyse.

If students wish to use a long article, they must include the original article in its entirety, with the selected part(s) highlighted. This helps students to stay focused. Students must remember that the teacher and moderator will only read the highlighted section(s) and it is crucial, therefore, to highlight all the relevant sections in the commentary.

Language of articles

In most cases the article chosen will be in the same language as the commentary. If an article in another language is used, the student must provide an accurate translation of the whole article. Students must also include the original article in their portfolio.

If students wish to use a long article, the selected part(s) must be highlighted, both on the translation and the original. (See “Length of articles”.)

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Internal Assessment main Requisites

Number of Commentaries and Word Limit

Students must produce a portfolio of three commentaries. Each commentary must not exceed 750 words.

Word limit conditions

The following are not included in the word count.• Acknowledgments• Contents page• Diagrams• Labels—of 5 words or fewer• Headings on diagrams—of 10 words or fewer• Tables of statistical data• Equations, formulae and calculations• Citations (which, if used, must be in the body of the commentary)• References (which, if used, must be in the footnotes/endnotes)

Footnotes/endnotes may be used for references only. Definitions of economic terms and quotations, if used, must be in the body of the work and are included in the word count. A citation is a shorthand method of making a reference in the body of the commentary, which is then linked to the full reference in the footnotes/endnotes.

Articles

Must be chosen from the news media. Published no earlier than one year before the writing of the

commentary. Taken from different sources. They must be approximately one full side of A4/letter-size

paper and no longer than two sides. If students wish to use a long article, they must include the

original article in its entirety, with the selected part(s) highlighted.

Focus Each article must be based on a different section of the syllabus.

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Academic honesty and referencing

The following information does not require referencing:

information and analysis based on standard economic theory quotations from the article upon which the commentary is based (see below).

Anything that does not fall into the above categories must be cited consistently by the student using the recognized academic reference system.

Students may use quotations from the articles but students must be careful not to include too many quotations, leaving little room for their own analysis. Quotations from the article do not need to be referenced, although these must be identified clearly by using inverted commas and by, for example, giving a line or paragraph number.

References from the internet must be cited fully, including the full web address and the date the site was accessed.

Sometimes students use sources that are from a news agency, for example, Thomson Reuters or Associated Press, and these appear in another publication. Students must cite the final publication, not the news agency, as the source.

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Internal assessment criteria—SL and HL

Overview

There are five internal assessment criteria for each commentary:

Criterion A Diagrams 3 marksCriterion B Terminology 2 marksCriterion C Application 2 marksCriterion D Analysis 3 marksCriterion E Evaluation 4 marks

Total 14 marks

There is one internal assessment criterion for the whole portfolio:

Criterion F Rubric requirements 3 marks

Each commentary is assessed individually for the first five assessment criteria (criteria A–E) and then criterion F is applied to the whole portfolio.

The maximum for the portfolio is 45 marks: (14 marks x 3 commentaries) + 3 marks = 42 + 3 marks.

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IA Assessment Criteria SL/HL

Criterion A: Diagrams

This criterion assesses the extent to which you are able to construct and use diagrams. These must contain the following:

Clear title with axes fully labeled Arrows showing direction of any shifts or changes Full explanations of how the diagram relates to dynamic changes in your article. A

limited explanation is one that may not refer to dynamic changes in the article. A limited explanation may also indicate that the diagram has not been explained in adequate detail to make it relevant, for example, by making no reference to specific points on the diagram.

Level Descriptor0 The work does not reach a standard described by the descriptors below.1 Relevant diagrams are included but not explained, or the explanations are incorrect.

2 Relevant, accurate and correctly labelled diagrams are included, with a limited explanation.

3 Relevant, accurate and correctly labelled diagrams are included, with a full explanation.

Criterion B: Terminology

This criterion assesses the extent to which you use appropriate economic terminology. You must define key terms.

Level Descriptor0 The work does not reach a standard described by the descriptors below.1 Terminology relevant to the article is included in the commentary.2 Terminology relevant to the article is used appropriately throughout the commentary.

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Criterion C: ApplicationThis criterion assesses the extent to which you recognize, understand and apply economic information in the context of the article. Application is how well the analysis links to the specific article. It measures the degree to which your questions and analysis are relevant to the article you have chosen.

Level Descriptor0 The work does not reach a standard described by the descriptors below.1 Relevant economic concepts and/or theories are applied to the article.

2 Relevant economic concepts and/or theories are applied to the article appropriately throughout the commentary.

Criterion D: AnalysisAnalysis means using economics to express economic understanding. This criterion assesses your ability to explain and develop appropriate economic theories and/or concepts in the context of the article. It measures the quality of your arguments, the logical presentation of your discourse, and the consistency of your commentary. You must be able to address essential elements or the structure of a specific economic issue using economic theory.

Level Descriptor0 The work does not reach a standard described by the descriptors below.1 There is limited economic analysis relating to the article.2 There is appropriate economic analysis relating to the article.3 There is effective economic analysis relating to the article.

Criterion E: EvaluationThis criterion assesses your ability to synthesize your analysis in order to make judgments that are supported by reasoned arguments. “Evaluation” implies a judgment of a theory and an application of the theory to a given situation, with awareness that the theory may not provide an accurate description.

reasoned arguments considering different sides of an issue assess short-term and long-term implications of strategies or decisions examine the impact on different stakeholders / groups identify the most important consequence, impact, advantage, disadvantage, and/or

solution, justifying the reasons for your choice question the validity of data or a particular theory, in terms of whether it is appropriate,

reliable or relevant

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examine the real-world effectiveness of policies though limitations of non-economic constraints upon specific economic theory in reality

Level Descriptor0 The work does not reach a standard described by the descriptors below.1 Judgments are made that are unsupported, or supported, by incorrect reasoning.2 Judgments are made that are supported by limited reasoning.3 Judgments are made that are supported by appropriate reasoning.4 Judgments are made that are supported by effective and balanced reasoning.

Criterion F: Rubric requirements

This criterion assesses the extent to which the student meets the five rubric requirements for the complete portfolio.

Each commentary does not exceed 750 words. Each article is based on a different section of the syllabus. Each article is taken from a different and appropriate source. Each article was published no earlier than one year before the writing of the

commentary. The summary portfolio coversheet, three commentary coversheets and the article for

each commentary are included.

Level Descriptor0 The work does not reach a standard described by the descriptors below.1 Three rubric requirements are met.2 Four rubric requirements are met. 3 All five rubric requirements are met.

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Sample commentariesBelow, two examples of commentaries are provided, both based on the Microeconomics section.

Example 1__________________________________________________

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Example 2__________________________________________________

IB Economics Internal Assessment

School code

000512

Name of school

United World College Maastricht

Candidate name

Candidate number

Teacher Mrs. C. Bordoy

Title of the article Unhealthy foods ‘should be taxed’

Source of the article The Telegraph

Date the article was published 18th of April 2012

Date the commentary was written 18th of May 2012

Word count (750 words maximum) 749

Section of the syllabus the article

relates to (please tick the one that

is most relevent)

Section 1: Microeconomics

Section 2: Macroeconomics

Section 3: International

economics

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Section 4: Development

economics

Unhealthy foods 'should be taxed'Unhealthy foods should be taxed to encourage healthy eating and halt Britain’s growing obesity epidemic, a leading academic claims.

Photo: AP

By Nick Collins, Science Correspondent - 18 Apr 2012

Dr Mike Rayner, of the Oxford University Department of Public Health, said ministers should increase VAT on fizzy drinks, chocolate and even pasties.

About one in four British adults is either overweight or obese, and our weight problem costs the NHS more than £5 billion pounds a year, he said.

He told the BBC: “We are in the grip of an obesity epidemic. We as a nation are eating too many calories.

“We use taxes to discourage drinking and smoking. It raises lots of money for the treasury and prevented people from dying too early. There is now lots of evidence that manipulating food prices could promote healthy eating.”

The government last month announced a 20p VAT hike on hot takeaway food – sparking the "pastygate" controversy – but Dr Rayner said the system of taxing food is still "very muddled".

The levy raises the cost of some healthy foods like fruit and vegetable smoothies, but not certain junk food items like doughnuts and cold sausage rolls, he said.

Some countries such as Denmark have introduced a “fat tax” on items that are high in saturated fat, but the system would be too crude for Britain because many of our low-fat foods are still very high in salt, Dr Rayner said.

Instead we need a system where all unhealthy foods are taxed, he added, starting with a levy on fizzy drinks which would add 12p to the price of a can of cola.

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The measure would be significantly stricter than a similar law in France which adds just two euro cents to a cola, he said, and would have the potential to reduce obesity cases by 400,000 a year and save 2,000 lives annually.

Dr Rayner added: “I don’t care whether it is hot or cold, whether we get it from a shop or takeaway, what I want is a tax on all unhealthy food from butter to biscuits. “That way we will be tackling a problem that will only go on expanding otherwise.”

Commentary

The UK is currently facing great health issues due to unhealthy food. Not only is this a growing problem, but according to Dr. Mike Rayner, it is costing ‘the NHS more than £5 billion pounds a year’. Unhealthy food is therefore a demerit good; it is considered to be undesirable for consumers and overprovided by the market (Tragakes 2009, p. 173). Because the actions of consumers cause negative side-effects on society as a whole through expenses, a negative consumption externality occurs. This type of market failure has the following effect on the market.

In the case of the consumption of unhealthy goods, the MSB curve does not equal the MSC curve. This indicates that allocative efficiency is not achieved, as too many or too few goods or services are produced and consumed in relation to what is socially most desirable (Tragakes 2012, p. 101). In the diagram above, the buyers of unhealthy goods are represented by the demand curve (MPB) and society by the MSB curve. By gaining extra healthcare costs, society is negatively affected, causing the MSB curve to lie below the MPB curve. The vertical difference between MPB and MSB (E) represents the external cost. Due to the negative consumption externality, the market equilibrium given by the intersection of the demand (MPB) and supply (MPC) curve produces Qm units of output, whilst the social optimum is given by Qopt.

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Price

P1

QuantityQmQopt

Marginal social benefit (MSB)

D = Marginal private benefit (MPB)

S = Marginal social cost (MSC)

The effect of unhealthy goods

E

Since Qm is greater than Qopt, the market demonstrates overallocation of unhealthy goods, meaning that too many resources are allocated to the production (Tragakes 2012, p. 101).

Reducing consumption of this good, will correct the negative externalities. To do this, the government is considering imposing an indirect tax on all unhealthy products. Indirect taxes, which involve payments by consumers, to the government authorities by the suppliers (Tragakes 2009, p. 85), cause a shift in the supply curve.

The article states that it wishes to increase the value added tax (VAT), which is known as an ad valorem tax. The VAT is tax paid on the value added by each producer in the production process (Tragakes 2009, p. 86). When the unhealthy good reaches the market place, its price includes the VAT that has been paid by all the firms involved in its production. As the price of the unhealthy good increases, the tax increases. By imposing a tax, the government allows the supply to curve to shift as following, correcting the negative externality.

The effect on Coca Cola due to the VAT

The increase in price paid by consumers for Coca Cola according to the article is 12p, therefore P1 +12p = P2. Before the tax was imposed, the market equilibrium was positioned at Qm and P1. However the VAT caused the supply curve to shift, allowing the quantity produced and consumed to drop to Qopt for a higher price (P2). The new equilibrium permits allocative efficiency to be achieved, meaning that the firms produce the particular combination and quantities of goods and services that consumers mostly prefer.

Governments prefer market-based solutions to solve negative externalities as they internalise the externality. Indirect taxes create incentives for consumers to change their consumption patterns

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Amount of

Quantity

Price

E

tax

by changing relative prices. However, there are a number of difficulties in this approach (Tragakes 2012. p.111)

In order for allocative efficiency to be achieved, the tax must equal the negative externality. Yet, calculating the precise value required is almost impossible. Therefore, the economy can only be moved into the direction towards correction of the externality, rather than achieving a precise allocation of resources where Qopt is produced and consumed. (Tragakes 2009, p. 166)

Furthermore, the consequences on various stakeholders must be acknowledged. Consumers are worse off, because they are charged a higher price for a lower quantity of the good. Producers are worse off, because economic costs increase for a lower output.

The fall in output results in an increase in unemployment, making workers worse off (Tragakes 2012, p. 90). The government will have gained revenue because of the tax, and therefore is better off. Furthermore, society as a whole is also better off as the negative externality is reduced.

The effectiveness of the tax may also be questioned. The percentage of tax imposed is so small, that the price change shall have little effect. The consumers shall not have the incentive to switch to healthier goods such as fruit or vegetables as unhealthy goods will still be cheaper than most healthy goods.

Perhaps the additional revenue gained by the government from the tax, should be invested into advertising and campaigns to persuade consumers to buy fewer unhealthy goods. By spreading more awareness of the dangers and demonstrating to the public how these goods impact their health, they may be convinced to purchase healthier goods.

Bibliography

Collins, N., 2012. The Telegraph. [Online] Available at: http://www.telegraph.co.uk/health/healthnews/9212498/Unhealthy-foods-should-be-taxed.html[Accessed 18 May 2012].

Tragakes, E., 2009. Economics for the IB diploma. Cambridge: Cambridge University Press.

Tragakes, E., 2012. Economics for the IB diploma. Cambridge: Cambridge University Press.

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