RPWelcome to week 15 of your course. In this discussion question you have the opportunity to be creative and to relate what you have learned to your professional lives. Please explore and critically think about some of the learning objectives and concepts presented in this course. Please effectively communicate how you would lead an organization (or a group of people within the organization) by applying the knowledge you have learned ethically and responsibly. Your discussion should also include innovative thinking, and information-technology aspects (such as the Internet, social-media, computers, and so forth) that may assist you in decisionmaking. You may frame your discussion around any functional component of business, and in any context; problem-solving, management, leadership, organizational behavior, and so forth.

Consider an economy with two individuals, a poor individual whose income level is given by L>0 and a rich individual whose income level is given by H>L. Both consumers spend their income on a single consumption good (the price of which is normalized to unity) and share the same preferences given by u(c)=c1/2, where c denotes consumption. The government considers implementing a poverty alleviation policy which guarantees a minimum level of consumption of M, where L<M<H, for all individuals at the minimal cost.

1) Suppose first that the government can distinguish between the two individuals. Characterize the optimal individualized transfers set by the government (individualized transfers are denoted by {Note:Tj is T with lower j } Tj ; j=L, H,and are assumed to be nonnegative).

2) Suppose alternatively that the government is unable to distinguish between the two individuals and is hence offering both of them an identical transfer, denoted by T. Formulate the government optimization problem and calculate the optimal universal transfer level and the total government expenditure on the welfare program.

3) Now suppose that c is hot soup (measured in bowls). The government is considering opening a soup kitchen which will provide soup free of charge to all interested individuals. Eating in a soup kitchen entails some stigma costs. Suppose that the utility derived by an individual who eats in a soup kitchen and whose total consumption level is c is given by u(c,s)=c1/2-s (Note:C1/2 means Square root C), where s>0 denotes the stigma cost (entailed by eating in the soup kitchen). A senior economist interviewed for a talk show argued that the whole concept of opening a soup kitchen is flawed and will not save on government expenditure, as both types of agents incur identical stigma costs. Discuss the merits of this argument.

4) Denote by T>0, the number of bowls offered by the soup kitchen. Show that the benefit from eating in a soup kitchen is decreasing with respect to the individual’s level of income (Hint: consider an individual with an income level y, express the benefit, defined as the difference in utility b/w having or not having lunch in the soup kitchen, as a function of y, and show that this function is decreasing in y).

5) Formulate the government constrained optimization problem. You should properly define the objective function, the poverty alleviation constraint and two incentive compatibility constraints.

6) Suppose that H=100, L=36, M=80 and s=5/2. Show that the optimal number of soup bowls served by the soup kitchen would be given by T=44. Further show that the soup kitchen is welfare-superior to the universal transfer system (Hint: what would be the FB solution?)

7) Characterize a threshold level of stigma, above which opening a soup kitchen is welfare detrimental. Explain the underlying economic rationale.

Remark: Intermediate Public Economics, Jean Hindricds and Gareth Myles, MIT Press, 2006 (Main Textbook)

Guidline to the Assignment:(The guidline is from my professor, hope this can help you better understand the assignment)

The assignment focuses on the role of stigma as a welfare ordeal, which serves to separate b/w the low- and the high- skilled types, and thereby enhancing the target-efficiency of the welfare system. The setup is very similar to the one discussed in class, with one simplifying difference – income levels are fixed, that is there is no labor-leisure choice.

A poverty threshold (in consumption terms) is set and there is a well-defined screening issue (only the low-skilled fall below the threshold). In the first part, you are asked to characterize the FB allocation when the government can distinguish b/w the types.

The next step is one in which the government does not have the information but is relying on a universal system with a lump sum transfer accorded across the board. You need to specify the objective and the poverty alleviation constraints for the two individuals (notice that only one is relevant…).

We then turn to the main course, which in our case is a hot soup :-). Going to a soup kitchen is an embarrassing experience and entails some stigma costs (which are the same for the two types). Notice, however, that the marginal utility from consumption is diminishing…. A senior economist argues that the soup kitchen will not help in saving government’s costs as both types incur identical stigma costs. Is this argument correct? In class, we have suggested two ways to screen b/w types – either imposing differential participation costs (like the case of workfare, due to the differences in earning capacities) or designing the system in a way which confers differential benefits from participation (like in the case of in-kind transfers, where we discussed wheelchair as an example that serves to separate b/w the truly disabled and the mimickers). Which one is relevant in our context? In part 4, you are required to show that indeed benefits differ and are lower for the high-income type (which is what we need for screening). Follow the hint to formalize this argument. This relies on the property of diminishing marginal utility. A hot soup is more valuable for individuals with a lower level of consumption! When you are starving, you don’t care about the social stigma. You just need something to eat in order to survive! In part 5, you need to formulate the government constrained optimization problem. The structure of the problem is very similar to the workfare problem we have discussed in class. In the next part, we make specific parametric assumptions. You need to show that the soup kitchen is welfare superior to the universal transfer system. To show this it suffices to demonstrate that the soup kitchen supports the FB allocation (why?). Verify this!

Clearly the latter property depends on the magnitude of the stigma incurred. If the stigma is large enough, the government will need to offer a very generous transfer to induce the poor type to dine at the soup kitchen (to compensate for the entailed embarrassment). Like in the workfare program discussed in class there is a trade-off b/w take-up and targeting. You need to calculate a threshold of stigma costs, above which the universal system will prevail over the soup kitchen.

done

Thesis should be along the lines of … Not enough is being done in the U.S. against child trafficking.

Annotated Bibliography – Alphabetical listing of 5 sources – 2 of which need to be from sites/non-profits National Center for Missing and Exploited Children and Coalition to Abolish Slavery & Trafficking. The remaining 3 can be peer reviewed articles, books, database reports, documentaries, etc. Your choice.

Literature Review – 2 pages, MLA format – Brief objective review of sources. Can report on trends, relationships, and gaps between sources. Need to compare and contrast at least 3 sources chosen. Should give an overview of what has been said, the prevailing theories and hypotheses, the questions that have been asked and answered, and the issues that are being clarified on the subject.

Research/Argumentative paper – Needs to be 6 to 8 pages. Must have in text citations from sources, must note the debate surrounding the topic around child sex trafficking, suggest solutions. Must use a minimum of 5 sources (selected in the annotated bibliography). Must be MLA Format 8, Work sited and with alphanumeric outline

Assignment #3 (Part B): Resume and Cover Letter/Personal Statement. Due by the end of Week 5. You’ve done the research about your job/internship or graduate program, and now you know that you want to apply. The next step is refining your documents to make the best argument for your candidacy.

Whether you are going the Job or Grad Track, you will need to complete a resume. Your areas of focus will differ for each, as the Job Track will focus more on work experience and skills while the Grad Track will focus more on educational background and competency. Consider this when you are arranging the sections of your resume.

If you are going the Job Track, you must then write a one page cover letter that follows the best practices of cover letters you learned through the readings, the samples, and the lectures. I will grade meticulously on the Cover Letter, as it must be revised to perfection (in terms of grammar and mechanics) and it should follow the patterns set forth in the samples.

If you are going the Grad Track, you must write your first draft of the Personal Statement. I say “first draft” because this is a document that will be one of the toughest things you ever write. I will grade far more leniently on the Personal Statement because it is longer, more complex, and will require further work.

*This portion of the assignment is worth 120/150 total points, so take the necessary time to submit something you’re proud of.

SUBMIT BOTH OF YOUR DOCUMENTS (Resume/Cover Letter or Resume/Personal Statement) IN A SINGLE .DOC OR .DOCX FILE! YOU CANNOT SUBMIT TWO SEPARATE FILES!

RESUME

DO: Follow the samples; list all of your experience in reverse chronological order; make your contact information stand out; use white space to your advantage; find specific ways to describe the skills you’ve taken from jobs/experience; revise to avoid ANY errors; utilize text effects such as bold, italic, and underline to help guide your readers’ eyes.

DON’T: Go onto a second page; write your skills as though they only apply to a single job; use too many words to make the page look disorganized; write in complete sentences; use too few words to make the page look bare; rely on vague, trite concepts that others will have (such as “hard worker,” “organized,” etc.).

COVER LETTER

DO: Single-space and skip a line between each paragraph; block the paragraphs rather than indent; include appropriate contact information; sign at the bottom; have clear, focused paragraphs (3 to 4 maximum) that follow the “formula” for good cover letters; give specific examples of your strengths rather than just listing abstract adjectives; revise carefully.

DON’T: Repeat your resume too much; ramble so that your paragraphs read too long; use superlatives to make yourself sound unrealistically good; apologize or admit to weaknesses that they don’t need to know about.

PERSONAL STATEMENT

DO: Stay on-prompt; follow Gotera’s advice for devoting time to important elements; show them how seemingly “unoriginal” traits about you actually make you stand out; start and end with a narrative; research a professor or two and mention your shared interests; account for any gaps in your transcript that may need explanation; show confidence.

DON’T: Write the same thing every other applicant will write; assume that your honest experience isn’t unique or good enough; say what you think the want to hear; focus too much on the negatives of your candidacy (in fact, apart from a brief mention of something you feel sticks out, avoid negativity altogether); make it sound like the statement could have been copy/pasted to another institution.

FORMAT FOR EACH:

Resume must simply be a resume. You can use a template or just a Word document, but know that part of your grade is the aesthetic. Good looking resumes turn heads. Do not include references – they can ask for those if they need to.

Cover letter must follow cover letter format. It should have contact information at the top, a proper greeting, clearly defined block paragraphs, and a sign-off at the bottom.

Personal statement can be formatted however you find most appropriate. I prefer double-spaced, like an academic essay, for my grading. Be sure you have your name at the top.