A quick project about inefficiency in human consumption. Economics these days.Although it looks funnier with the animations on the slides, anyway. Enjoy

1. By
Luis F Igniguez

2. If we divide the world of economics, we can talk
about Two big schools:
 CLASSICAL
 KEYNESIAN
…..NOT

3. Again!! If we divide the world of economics, we can
talk about Two big schools:
 SCI FI School!
 Realistic…
Sounds pretty much economics to me…

4. Sci Fi School:
o Classical Model…
o Free-market
o Self-balance
o Invisible hand
o Invisible friends
o Flux capacitors
o Laser sabers…
o Perfect competition

5. Reality
 Classical Model Again!
 SCARCITY
 Recessions
 Keynesian economics
 Unemployment
 AD, Gov. Spending,
 etc…

6.  Either Classic or Keynesian we would agree that
everybody (every country) is toward its
economic growth.

7.  Despite the contrasts betwen Classical and
Keynesian:

8.  The consumption is the factor that must be
present always in order to boost any economy.
 It is simple: without consumption, production is
pointless.
 Therefore we tend to consumism (if you get the
misspelled meaning)s in a macro perspective.

9.  The more we produce, the more we tend to
consume.
 It is not a coincidence that the economic powers
in the world have the biggest consumption ratio.
 Developing economies with a high growth ratio
increase consumption ratio as well.

10.  Production, income, and consumption might have
different ratio, but if one’ slope is positive, then
another is positive too.

11.  So we produce effitiently more and more! Here
we go!! we can consume more!

12. But while consumption increases there is one
factor we forcefully forego.
• The consumption efficiency

13. Last year you made $20 a week
o From time to time you used to buy 2 yogurts.
o None of your yogurts ever spoiled because:
1. It was the exactly amount of yogurt you needed
2. You could not afford more yogurt, and so you did
not let it spoil because it was your concern.

14. o Now you make $70 a week, a lot more ca$h
o From time to time you buy 10 yogurth. Maybe
you consume more yogurth, maybe the same
amount and do not go to grocery store that often,
but…

15. NOW ONE YOGURT SPOILED!!!!!!

16. …Well it’s not that bad, because:
 It was only 1 out of 10 yogurth, not like you
wasted half of the money you expended on them
 Now you produce more, so you can afford buying
another extra yogurth
 You did increase your productivity, but now you
consume less efficiently

17.  We will see this pattern of loss in most of individuals.
 Maybe your loss ratio will be smaller, but at some
point when your wage raises, you will waste a
yogurth.

18. But the thing gets more interesting when you observe this
happening not only on individuals:
 Corporations
 Goverments
 Evil babies

19. They all will waste yogurt at some point.
 Paper
 Ink
 Fuel
 Dolphins
 etc

20.  High volumes of
production focus us on
the factors of
production, rather than
consumption, as long
as this inefficient
consumption does not
decrease our
production output
significantly

21.  The higher the
consumption amount
is, the harder to get
control of its
effectiveness or
efficientcy is.

22.  As
consumers, producers,
individuals: we just
have too many reasons
to let our consumption
efficiecy decrease as
we go “bigger”
 What!?? I need some
help!

23. I was told about some guys that would probably
support me….
 …Unfortunatelly they’re all dead
 Oops this last one’s alive!

24. Ronald H. Coase – Transaction costs
He stated how organizing additional
transactions will raise costs….
That would explain a lot of the
Significant reasons why we are
not as efficient as we can while
we consume. Once again,
Opportunity costs…

25. Семён Абрамович Кузнец
Simon Smith Kuznets
The Kuznets Curve
 He would defenitely believe!...

26. The Kuznets Curve
 He observed how the enviorement is degradated while an economy
grows.
 But there is one turning point where the degradation decreases and
after the industrial period, things would get better.

27. The Kuznets Curve
 But we can tell that this
turning point is not present in
all cases.
 If we look at the oil
market, there was never a
turning point for its
exploitation….
 And Speaking about oil (sorry
about this microeconomics
intermission) I will get some
more help on the next slide….

28. The following dude noticed
something very important and
I am pretty sure he would
totally believe!
 William Stanley Jevons
 The Jevons Paradox

29. The Jevons Paradox
 It explains how technology improvement will
raise the demand of fuel instead of decreasing it
as we would have expected…

30. The Jevons Paradox
 For example: we get better engines, much more
efficient… but more and more people buy cars
using these engines… and speaking about
paradox..

31. A very simplistic representation could be modeled
by a negative exponential function where:
Where CE is the Consumption efficiency f(x) being
x the productivity unit (say income, GDP etc),
 P is the efficiency peak
 r is the decreasing ratio where 0<r<1
 B is the inefficiency bottom

32.  For example (89-75)*(0.8)^x+75
 Our peak of efficiency will be 89%, we can’t be
more efficient in this example.
 The efficiency bottom is 25% we can only afford
less than 25% of inefficiency.
 A lot of assumptions….

33.  Scarcity is the fundamental economic problem of
having humans who have wants and needs in a
world of limited resources. It states that society
has insufficient productive resources to fulfill all
human wants and needs.
 But the current and real economic behavor leaves
out the scarcity problem while we consume.

34. This paradox will lead us to two possible ends:
Again…
Realistic
SCI FI!

35. ….Where…..
Realistic:
eventual wars pursuing control for scarce basic
elements
Apocalypse!!!

36. ..or SCI FI can come true:
 Amazing inventions will solve scarce
problem, such as:
Flux Capacitors!
Mr. Fusion
If you watched part I
( you should have)
You would know that
The doc needed uranium as fuel…