Unit 2

Sociologists define three major levels of society. They use data to

understand types of behavior that occur at the different levels and the
interconnections of these levels. Micro-level analysis, detailed
examination of one-to-one interactions between individuals, includes
studying people's behavior during negotiations, confrontations, and
everyday conversations. Micro-level analysis allows for nuanced analysis
of particular dynamics of social phenomena but may fail to consider
broader social forces that impact such processes. Meso-level analysis,
detailed examination of a specific group, community, or organization,
studies certain parts of a society. Also referred to as network analysis,
this approach examines the patterns of social ties among people in a
group and how those patterns affect the overall group. Macro-level
analysis, examination of society as a whole, looks at the broad systems,
institutions, hierarchies, and patterns that shape a society. Macro-level
analysis takes into account the social, political, economic, and other
forces that impact societies and individuals but might not capture
important facets of social interactions that occur on the micro level.
Macro-level analysis is used to look at societies at large. Meso-level
analysis involves the study of groups, communities, and institutions.
Micro-level analysis focuses on the social interactions of individuals or
very small groups.

The macro-level study of widespread social processes has been the more
dominant approach, and has been practiced since sociology’s origins in
the founding work of figures like Emile Durkheim. Durkheim, for
example, studied the large-scale shift from homogenous traditional
societies to industrialized societies, where each individual played a highly
specialized
Compare the Difference Between Similar Terms
Difference Between Micro and Macro Sociology

8 years ago

Micro vs Macro Sociology

Both, Micro Sociology and Macro Sociology, are major study points
in sociology, but what is the difference between micro and macro
sociology? Micro sociology deals with the nature of human behavior
and human social interaction, based on uismall scale studies. On the
other hand, macro sociology analyzes the social system and
population studies in a larger scale. Usually, micro sociology focuses
on the individual face to face interactions whereas in macro
sociology, the small concepts are converted into wider social
processes. In this article, we are going to discuss these two terms,
micro and macro sociology.
What is Micro Sociology?
Micro sociology, as mentioned above, is concerned about the studies
of people in face to face interactions. This basically studies the day to
day connections of individuals with each others in a smaller scale.
Since micro sociology is mostly dealing with individual interactions, it
uses interpretation methods to analyze the collected data. It is
difficult to use empirical data analysis or statistical methods in micro-
sociological studies. In addition, the most common research method
in this subject field is symbolic interactions. By observing the
different methods of interactions among individuals, the micro
sociologist can come into a conclusion.
Moreover, the subjects like social psychology,
social anthropology can be considered as subdivisions of micro
sociology. These subject fields focus more on individuals, thinking
patterns in a smaller scale. When we consider about the micro level
of a society, status of the society’s members, social roles are the most
important phenomena in a particular social structure. Though the
micro social analysis is important in understanding micro social
interactions, it has its drawbacks as well. For example, we cannot
determine the larger forces that might influence on individual
behavior and interactions. However, micro sociology has been
developed as a significant field in Sociology.
What is Macro Sociology?
This study area focuses on the social structure on a larger scale.
Usually, macro sociology analyzes the social system as a whole and
also it focuses on the whole population as well. Through macro
sociology, we can come into broader concepts, unlike in micro
sociology, and also macro studies can be applied to individuals as
well. That means, macro sociology sometimes studies on the
individual phenomena since individuals and their interactions are a
part of a broader social system. Macro sociology deals with statistical
analysis and also it incorporates empirical studies to come into
conclusions. Further, macro-sociological studies focus more on the
broad subject areas but later on the findings can be applied to small
phenomena as well. For example, a macro sociology study can be
based on the English speaking people as a whole and though they are
scattered around the world, the final results are able to relate even
to the smaller groups of people in a particular area who speaks
English. However, the most common topics of macro sociology are
war, poverty, social change, etc.
What is the difference between Micro and Macro Sociology?
When we look at both micro and macro sociology, we can identify
differences as well as similarities. Both these fields are very
important subject areas in Sociology. Also, they analyze the human
behavior in the society in different angles. Both micro and macro-
sociological theories can be applied to individual interactions.
• When we look at the differences, the major difference is that micro
sociology deals with small scale human interactions whereas macro
sociology focuses on wider social systems and structures.
• Moreover, micro sociology uses symbolic interpretation method in
research and contrast macro sociology uses statistical and empirical
analysis in its findings.
• Micro sociological results cannot be applied to broader concepts,
but macro-sociological theories can be applied to the individual level
as well.
• Macro sociology is more concerned in broad topics, such as war,
gender relations, law, and bureaucracy whereas micro sociology is
mostly interested in topics like family, social status and individual
interactions.
• However, both micro and macro sociology are very important in
understanding and analyzing human behavior and the society.
 Methods of Policy Analysis

Political Science

581. Statistics for Social Research. (4)

Provides intensive experience and lab instruction in quantitative
techniques employed in political science research, including
descriptive statistics, statistical inference, hypothesis testing,
measures of central tendency, crosstabulation, differences between
means, bivariate regression, correlation and multivariate analysis.
Required of M.A. and Ph.D. students.

681. Advanced Statistical Analysis for Social Science Research. (3)

Focuses on a variety of advanced econometric methods. Beginning
with a review of matrix algebra and math for the social sciences, the
course provides an in-depth examination of multiple regression and
more advanced econometric models. Required for Ph.D. students.

Sociology

581. Advanced Social Statistics I. (3)

Examines theory (assumptions, properties of estimators) and
application of multiple regression. Introduces matrix notation and
generalized least squares.

582. Advanced Social Statistics II. (3)

Additional methods for quantitative social research: regression
diagnostics, logit and Poisson regression, principal components,
correspondence analysis.
580. Methods of Social Research I. (3)
Analytical examination of traditional methodological issues including
measurement, experimental design, sampling, theory construction,
role of statistics and nature of probability.

585. Qualitative Research Methods. (3)

Intensive practicum on research fieldwork, including research design,
human subjects review, the ethics/politics of fieldwork, and
fieldwork implementation. Focuses on ethnographic and interview
methods; some attention to focus groups and archives.

Economics

508. Statistics and Introduction to Econometrics. (3)

Discrete and continuous probability distributions; expectations;
joint, conditional marginal distributions; hypothesis testing; least
squares estimators; violation of the least squares principle.
Econometric software with applications

509. Econometrics I. (3)

Theory and applications: ordinary and generalized least squares,
hypothesis testing, dummy variable and distributed lag models;
simultaneous equation and two stage least square models;
forecasting. Emphasis on computer modeling.

Geography

486L / 586L. Applications of GIS. (3)

Selected applications of Geographic Information Systems, including
anthropology, business, crime, ecology, engineering, health,
planning, water resources and others. Covers analytical techniques
specific to selected applications.
487L / 587L. Spatial Analysis and Modeling. (3)
Spatial analysis and modeling techniques using Geographic
Information Systems. Includes a lab component that covers the use
of GIS and other software to carry out analysis projects.

Public Administration

597. Program Evaluation

This course is intended to provide an advanced introduction to the
theory and practice of program evaluation, along with policy analysis
and evaluation.

Public Health

684. Advanced Health Policy Analysis

This course discusses and explores theoretically driven methods in
applied policy analysis through equity and social justice lens.
Students will learn the application of five-steps in policy analysis from
the approach of evidence informed policy making.

Statistics

440 / 540. Regression Analysis. (3)

Simple regression and multiple regression. Residual analysis and
transformations. Matrix approach to general linear models. Model
selection procedures, nonlinear least squares, logistic regression.
Computer applications.

476 / 576. Multivariate Analysis. (3)

Tools for multivariate analysis including multivariate ANOVA,
principal components analysis, discriminant analysis, cluster analysis,
factor analysis, structural equations modeling, canonical correlations
and multidimensional scaling.

Features

Quantitative methods of policy analysis require an in-depth

knowledge of statistics, research design and the ability to use
spreadsheets and other statistical software. Methods such as
regression analysis, for example, estimate the effect of variables on
outcomes. This type of analysis requires comprehension and
application of such concepts as correlation, variance and statistical
significance. Qualitative methods, meanwhile, require a careful eye
for detail, as analysis often requires repeated reading of field notes
and other written materials to uncover patterns and relationships
within the data.

3 Benefits

Qualitative methods of policy analysis reveal rich, descriptive detail

on policy operations as well as the experiences and perceptions of
people involved in the policy, including program operators and
intended beneficiaries. Quantitative methods allow for more precise,
scientific analysis. Not surprisingly, many policy analysts and scholars
prefer quantitative methods. Policy analysts use a combination of
qualitative and quantitative methods to report on policy
implementation, policy goals and objectives, assess the extent to
which policies achieved their objectives, estimate the effecs of
proposed policies, and weigh the costs and benefits of various
policies.
4 Considerations

Policy analysts must avoid the “one-size-fits-all” approach when

choosing methods by which to conduct an analysis. A variety of
factors, including type of policy, the time frame for conducting an
analysis, and budget constraints, will limit the methods available for
use. Another consideration is whether the analyst is analyzing an
existing policy or conducting a prospective analysis for the purpose
of recommending a policy action.

5 Time Frame

The amount of time available to complete a policy analysis will help

determine the type of method or methods employed. Policy analysts
employed by legislators, legislative committees and governors’
offices, for example, have a shorter time frame for analysis because
legislators and executives expect information in a timely manner so
that they can make policy decisions. University researchers,
consultants, and analysts with research institutions, in contrast,
often operate with longer time frames, enabling them to conduct
more in-depth analysis.

1. Formulating the Problem

O.R. is a research into the operation of a man, machine, organization
and must consider the economics of the operation.

In formulating a problem for O.R. study analysis must be made of

the following major components:
(i) The environment

(ii) The objectives

ADVERTISEMENTS:

(iii) The decision maker

(iv) The alternative courses of action and constraints.

Out of the above four components environment is most

comprehensive as it provides a setting for the remaining three. The
operation researcher shall attend conferences, pay visits, send
observation and perform research work thus succeeds in getting
sufficient data to formulate the problems.

2. Constructing a Model to Represent the System under Study:

Once the project is approved by the management, the next step is to
construct a model for the system under study. The operation
researcher can now construct the model to show the relations and
interrelations between a cause and effect or between an action and
a reaction

Now the aim of operation researcher is to develop a model which

enables him to forecast the effect of factors crucial to the solution of
given problem. The proposed model may be tested and modified in
order to work under stated environmental constraints. A model may
also be modified if the management is not satisfied by its
performance.

3. Deriving Solution from the Model:

A solution may be extracted form a model either by conducting
experiments on it i.e. by simulation or by mathematical analysis. No
model will work appropriately if the data is not appropriate. Such
information may be available from the results of experiments or from
hunches based on experience.

The date collection can clearly effect the models output significantly.
Operation researcher should not assume that once he has defined
his objective and model, he has achieved his aim of solving the
problem. The required data collection consumes time to prepare if
data collection errors are to be minimized.

4. Testing the Model and the Solution Derived from it:

As has been pointed out earlier a model is never a perfect
representation of reality. But if properly formulated and correctly
manipulated, it may be useful in providing/predicting the effect of
changes in control variables on overall system effectiveness.

The usefulness or utility of a model is checked by finding out how well

it predicts the effect of these changes. Such an analyze is usually
known as sensitivity analysis. The utility or validity of the solution can
be verified by comparing the results obtained without applying the
solution with the results obtained when it is used.

5. Establishing Controls over the Solution:

The next phase for the operation researcher is to explain his findings
to the management. It may be pointed out that he should specify that
condition under which the solution can be utilized.

He should also point out weaknesses if any so that management will

know what risks they are taking while employing the model to
generate results. Thus he should also specify the limits with in which
the results obtained from using the model are valid. He should also
define those conditions under which the model will not work.

6. Implementation of the Solution:

The last phase of the operation research methodology is
implementation of solutions obtained in the previous steps. In
operation research though decision making is scientific but its
implementation involves so many behavioral issues. Therefore the
implementing authority has to resolve the behavioral issues. He has
to sell the idea of utility of O.R not only to the workers but also to
superiors.

The distance between O.R. scientist and management may create

huddles thus the gap between one who provides a solution and the
other who wants to utilize it must be eliminated, to achieve this both
the management and O.R. scientist should play positive role. A
properly implemented solution obtained through application of O.R.
techniques results in improved working conditions and gains the
management support.

Quantitative Methods:

 Confirmatory Statistics: The techniques discussed in this

section are classical statistical methods as opposed to EDA
techniques. EDA and classical techniques are not mutually
exclusive and can be used in a complementary fashion. For
example, the analysis can start with some simple graphical
techniques such as the 4-plot followed by the classical
confirmatory methods discussed herein to provide more
rigorous statements about the conclusions. If the classical
methods yield different conclusions than the graphical
analysis, then some effort should be invested to explain why.
Often this is an indication that some of the assumptions of
the classical techniques are violated.
Many of the quantitative techniques fall into two broad categories:

1. Interval estimation
2. Hypothesis tests
  Interval Estimates It is common in statistics to estimate a
parameter from a sample of data. The value of the parameter
using all of the possible data, not just the sample data, is
called the population parameter or true value of the
parameter. An estimate of the true parameter value is made
using the sample data. This is called a point estimate or a
sample estimate.
For example, the most commonly used measure of location is the
mean. The population, or true, mean is the sum of all the members
of the given population divided by the number of members in the
population. As it is typically impractical to measure every member of
the population, a random sample is drawn from the population. The
sample mean is calculated by summing the values in the sample and
dividing by the number of values in the sample. This sample mean is
then used as the point estimate of the population mean.
Interval estimates expand on point estimates by incorporating the
uncertainty of the point estimate. In the example for the mean
above, different samples from the same population will generate
different values for the sample mean. An interval estimate quantifies
this uncertainty in the sample estimate by computing lower and
upper values of an interval which will, with a given level of confidence
(i.e., probability), contain the population parameter.

 Hypothesis Tests: Hypothesis tests also address the

uncertainty of the sample estimate. However, instead of
providing an interval, a hypothesis test attempts to refute a
specific claim about a population parameter based on the
sample data. For example, the hypothesis might be one of
the following:

1. the population mean is equal to 10

2. the population standard deviation is equal to 5
 3. the means from two populations are equal
4. the standard deviations from 5 populations are equal
Operations Methods

Operations in any organization are responsible for conversion of

inputs into useful products or services and therefore, represent a
basic function in any organization. The area of Quantitative Methods
and Operations Management has an important role in developing
analytical capabilities for effective decision making. The faculty in this
area is a rich mix of academic and corporate experience which is so
very necessary for providing holistic education in business
management. Faculty members are involved in a variety of activities:
education, research and training. Besides regular teaching, faculty
provides training to business organizations through participation in
Management Development Programmes and also by offering open
programmes under the area. The area also offers a unique Certificate
Course in Operations Management of three months duration for
foreign students under the ITEC scheme of the Government of India.
The faculty carries out high quality research which is regularly
published in national as well as international journals and presented
at conferences. Doctoral and Fellow programmes too are being
offered by the area. This area combines subjects from two sub-areas,
viz, Quantitative Methods and Operations Management. Both cores
as well as elective subjects are offered. The subjects offered range
from traditional ones like Statistics, Operations Research and
Operations Management to the contemporary ones like Financial
Econometrics, Six Sigma and Logistics and Supply Chain
Management.
To reject a hypothesis is to conclude that it is false. However, to
accept a hypothesis does not mean that it is true, only that we do not
have evidence to believe otherwise. Thus hypothesis tests are usually
stated in terms of both a condition that is doubted (null hypothesis)
and a condition that is believed (alternative hypothesis).

Environmental Economics

Environmental economics is an economic subdiscipline that deals

with the economic and financial implications of environmental
policies. It is an evolving and widely studies disciplinary area of
economics. The study of the macro-economic impacts of
environmental policies helps governments make the best decisions
for the larger good of society.

The concept of environmental economics focuses on sustainable

development, market failure and externalities, valuation of the
environment, and strategies for environmental issues. It involves
theoretical and empirical approaches to study these areas. Thus, it
gives due emphasis to both environment and economy and their
correlation with each other.

What is the Environmental Economics

Environmental economics is an economic subdiscipline that deals

with the economic and financial implications of environmental
policies. It is an evolving and widely studies disciplinary area of
economics. The study of the macro-economic impacts of
environmental policies helps governments make the best decisions
for the larger good of society.

The concept of environmental economics focuses on sustainable

development, market failure and externalities, valuation of the
environment, and strategies for environmental issues. It involves
theoretical and empirical approaches to study these areas. Thus, it
gives due emphasis to both environment and economy and their
correlation with each other.

Table of contents

 What is the Environmental Economics?

o Environmental Economics Explained
 Current strategies
o Example
o Scope of Environmental Economics
o Importance
o Frequently Asked Questions (FAQs)
o Recommended Articles

Key Takeaways

 Environmental economics is defined as the “field of economics

which is concerned with the financial and economic impact of
the environmental policies on the economy.”
 It is no longer restricted to domestic or national boundaries and
requires global cooperation for efficient functioning.
 Environmental economics promotes sustainable development,
economic valuation of natural resources, and strategies for
stability by addressing issues like externalities and other
environmental concerns.
 Its objective is to balance the sustainability of the environment
and economic development for the benefit of society.
Environmental Economics Explained

Environmental economics originated in the 1950s and 60s in the

West. It became popular due to the increased concerns and
awareness about environmental pollution which resulted from the
nineteenth-century industrial revolution

Its key objective was to understand the correlation between

environment and economy. This would help make better decisions
that are beneficial to the economy and have a minimal negative
environmental impact.

For example, consider the example of highway construction. It will

help the logistics and supply chain in the region but leads to habitat
loss, pollution, etc. However, if the government could provide
another habitat for the wildlife which resembles the existing one, it
would cause little damage. Also, the government can plan to lay the
roads using plastic waste collected around the country.
It sounds like an attractive proposition. But, of course, some would
claim that an artificial habitat for the wildlife would not really
compensate for the original one. Yet, it would be better than just
claiming the land and letting the animals wander. Hence, it is a
strategy that generates minimal impact in the long run.

However, many of the strategies used currently to compensate for

the adverse global environmental impacts are considered ineffective
by most. These strategies include carbon offsetting, cap and trade,
and carbon tax. Let’s look at these in detail:

Current strategies

#1 – Carbon offsetting – The goal here is to offset or compensate for

the carbon emissions. Most factories and consumers offset their
carbon footprint by planting trees or taking up small-scale farming. A
carbon offset credit helps us to measure the magnitude and
effectiveness of this trade.

#2 – Cap and trade – In this method, the companies have permission

to emit carbon up to a certain limit, after which they need to pay tax
for the same. For example, in some countries, companies have
permission to emit a maximum of one-ton carbon. However, it does
not provide certainty in controlling carbon emissions, and some even
worry that it allows big companies to keep polluting the
environment.

#3 – Carbon tax – The government taxes the companies based on the

amount of carbon produced, in an effort to protect the environment.
But unfortunately, the additional price passes on to the consumers,
who end up paying for it. Thus, the companies do not usually take
the burden.
These measures are mere compensation methods, and the harm is
still done. Producing tons of carbon and planting saplings elsewhere
or paying an insignificant amount is not the solution. The key is to
reduce the production of harmful substances.

Using alternative sources of renewable energy, proper waste

management, efficient resource allocation, and conservation of
energy and other resources are the need of the hour. As a result,
natural resource and environmental economics is an area gaining
momentum today.

Example

Here is the latest news on the Cheniere LNG plant in Texas, the
largest exporter of Liquified Natural Gas (LNG) in the United States.
It was established in 2018 and has exceeded the permitted emission
limits many times. Reuters has recently reported that the Texas
Commission on Environmental Quality (TCEQ) has granted
extensions in the permissible limit. Reportedly, the plant now
emits 353 tons of volatile organic compounds per year, double its
original limit. Also, the TCEQ has raised limits on other pollutants by
more than 40%.

Scope of Environmental Economics

Environmental economics extends not just domestically but also

internationally because issues like global warming, climate change,
etc., are not just the problem of a few but affect the world population
as a whole. Therefore, attention to these five areas is essential to
deal with the issue:
 Sustainable development – It is the development strategy that
meets the needs of the present without compromising the needs of
the future. Thus, growth is important, but so is the sustainability of
the environment.

1. Externalities – It refers to the benefits and costs arising from

commercial activities for which the price is unknown. Hence,
they go unnoticed in society but have huge impacts. For
example, the natural resources we use for free and the
pollution we cause to the environment have no association
with a market price.
2. Market failure – Externalities lead to market failure, which
arises when the market doesn’t represent the true cost of a
good or resource. This happens because, more often, people
take environment and its resources for granted.
3. Valuation of the environment – The valuation helps assess the
worth of natural resources and many aspects of environmental
 policies before implementing them. This will help in making
better decisions in the best interests of all.
4. Strategies – By considering all the relevant factors,
environmental economists try to find solutions for the bigger
problem – environmental protection. Some strategies include
taxing parties responsible for the pollution, offsetting, etc. But
still, there’s a long way to go.

Statistical analysis of public policy

INTRODUCTION

The Indian statistical system had its beginning almost

400 years ago. Our statistical System rests on the
Constitutional framework and mandated by several
legal provisions; important among ones being the CS
Act, 1953 Amended in 2008; PC Act 1948; Factories
Act Registration of Births and Deaths Act, Workmen’s
Compensation Act, Payment of Wages Act, etc., that
enabling the collection of data in all social and
economic sectors. Though the framers of our
constitution envisioned the importance of official
statistics and its important role in the development of
the modern India that’s why they enlisted collection
of data in the Concurrent list of the Constitution. India
is federal state that‟s why the authority and
responsibility for the collection, compilation and
dissemination of statistics relating to a particular
subject is determined by allocation of the
responsibility between the Federal and the sub-
national Governments, as per the Constitution. For
this purpose Central Statistical Organization (CSO) is
come in existence to facilitates the users to use the
Statistics efficiently for informed decision, in all
environments; - By Government agency,
Trade/Business/Private Organizations/ Associations,
Academicians/Researchers, Individual Users/Public at
large, etc. The Indian National Data warehouse on
official statistics enables all data users to have an easy
access to the published and un-published validated
data from a single source, on electronic mode,
provides remote access facilities to end users through
a network. It facilitates availability of historical data
set and statistical tools to help plan for the future. A
central tenet of democracy is that civil servants should
be accountable to the ministers, and that ministers
should be accountable to the public. The availability
of information to citizens allows them to monitor
whether the policy made is effective or not. In a
democracy, citizens have the right to know how and
why decisions are taken which affect their lives.
Factual-based policy-making enhances the
accountability of policy-makers. Such factual
Information is an essential part of good governance In
recent years, the world community has increasingly
focused on monitoring and evaluating the areas
where statistics should be used in support of policy-
making. However, it is important to realize that policy
outcomes are crucially affected by the use of statistics
and statistical procedures in „upstream‟ stages of
policy-making, such as issue recognition, program
design, policy choice and accurate forecasting as well
 as monitoring and evaluation. Sound and transparent
statistics are essential for effective policy-making – a
necessary part of the enabling environment for
improving development outcomes. There are rarely a
simple link between statistics and the adoption of a
particular policy. Why factual-based policy-making is
considered so much important. The answer is that it is
the only way of making public policy decisions which
is fully consistent with a democratic political process
characterized by transparency and accountability

Defining The Concept

Policy-making has been defined as the process by which

governments translate their political vision into
programs and actions to deliver 'outcomes' – desired
change in the real world. It ranges from various areas
such as agriculture, health, and the arts to housing.
Public policy is generally regarded as a product of
government or the administrative system. It is often not
seen by the layman as the expression of a democratic
process, expressed through the political system and
democratic institutions. Policy is often seen as
something delivered to the public rather than
emanated from the public. Effective decision/policy
making, be it for an individual or a business or any
national Government or an International agency, is
increasingly using statistical methods to improve the
quality of information/decision. Decisions based on
sound statistical findings are scientific, and hence
enhances desirable outcomes. Many statistical methods
are based on random samples to protect against
personal or environmental biases. Both graphical and
numerical statistics reveal the facts that are often
unavailable in the mess of data. The hidden gold in the
data is exposed by using appropriate statistical methods
for the benefit of mankind. It is like scanning of the data
to rescue apparently unavailable valuables spread
around us. Statistics puts information in the right
perspective so thatit is ready to be used in a decision
making. For achieving the goal of effective
decision/policy making India has 3-tier System
(National, State and District) that is highly de-
centralized and enjoys constitutionally mandated
independence in its working. Whereas CSO works for
planned improvement of the overall Statistical system
in the country, each of the Ministries at the Federal level
have a Statistical Unit, independently collecting,
collating and disseminating their statistical products.
And at the sub-national level, a Directorate of
Economics and Statistics (DES) exists in all the 29 states
and 6 Union Territories heading their respective
statistical system; each of the DESs is functionally
independent (in terms of budget and supervisory
control) from the CSO. In all State Governments, line
Ministries collect, compile and disseminate statistics
relating to their allocated jobs, as per their
requirements
Difference Between micro level and macro levels

Resource Allocation in Economics

Resource allocation is a combination of two words: resource and

allocation. In economics, a resource is anything a business uses
to produce goods or services. Examples of resources include
team members, tools, and the working location. On the other
hand, the definition of “allocate” in economics is the process
through which resources are distributed to people who need
them. Therefore, resource allocation in economics means
deciding where a business’s resources should be used.

Benefits of Resource Allocation

There are various benefits of resource allocation. They include:

Boosts efficiency. Effective resource allocation means that each

team member is given appropriate resources and tools to help
them work more quickly and efficiently, increasing business
productivity. For example, Ken is a project manager at his
company. One essential software that helps his team members
to work more efficiently is the availability of remote desktop
software. This software helps the team to access applications and
files from any location. The software is also very beneficial
because employees can work extra hours during the weekend
without having to report to the office.

Improves team morale. Resource allocation can help a project

manager identify the available resources and distribute them
evenly among the team without overworking one individual.
Sharon is a team leader at a cosmetics company. She is in charge
of distributing cosmetics samples to the team members. The
members are supposed to give out the samples for free so that
models can review the products. Sharon distributes the
cosmetics samples evenly among all members. Sharon requires
her team members to complete this task within two weeks.
Evenly allocating the samples to the members is an excellent idea
because Sharon can easily identify the lagging members and
those leading. Sharon can also help motivate those lagging so
that they can finish the task faster.
Improves cost reduction. Managers who efficiently allocate
resources can help reduce business expenses by utilizing the
existing resources. This means that the business does not have to
purchase expensive materials and equipment and can use the
money in better ways. Cynthia is the head of the IT department
at her company. For the upcoming project, Cynthia is only
interested in working with IT experts with more than two years
of experience in the field. She decides to lay off other employees
and allocate desks and computers to those who meet the
required qualification. This move will help the company save
money because it is not required to buy extra equipment.

Boosts collaboration. Resource allocation promotes transparency

among team members because everyone is updated about the
activities within the project. The members are aware of each
member’s events, milestones, and task status. Ethan is a project
leader at a company that manufactures cleaning products. Ethan
is keen on allocating the company’s resources to employees with
different roles. He also gives all team members software that
allows them to update their progress. This means that each
member can share their progress with others. Members who
need assistance completing their tasks can also ask for help using
the software.

Challenges of Resource Allocation

Effective resource allocation is necessary for any business.

However, things do not always go according to plan. Various
challenges can occur when allocating resources. These challenges
include:
Environmental analysis process (steps)

Environmental analysis is the process of assessing and evaluating

the internal and external factors that can have an effect on an
organization’s performance and strategy. This analysis aims to find
opportunities, threats, strengths, and weaknesses so that the
organization can make a good strategy that fits its goals and
objectives.

The environmental analysis process usually involves the following

steps:

1. Determine the effects on the environment

To begin a business environmental analysis procedure, select

environmental factors evaluating. Your industry determines this.

For example, if you work in a medical facility, you might want to

think about legal implications. Regulations managing healthcare
experience and safety, for example. Choose factors that have the
potential to influence how you make deals.

2. Obtain information

Collect information about your chosen environmental factors once

you decide which ones to evaluate. You can observe your factors
and conduct research here. There are two types of information to
gather: verbal and written data. Hearing is how people obtain
verbal information.
As an example, consider listening to a radio broadcast. They obtain
written information from sources such as newspapers and
magazines.

Using the preceding example, this would involve

conducting research online and in medical magazines.

It will assist you in determining whether or not there have been any
changes to health and safety regulations because this may have an
impact on your healthcare facility.

3. Consider your competitors

You may want to gather information about your competitors. To

see if they pose any threats. You can accomplish this by employing a
technique known as spying. This involves unusually gathering
information.

Using the same example, you could spy on a nearby health facility to
learn about recent activity.

4. Examine your strategies

Finally, evaluate your present and prospective strategies to

determine how future environmental changes will impact your
organization. This assists you in resolving potential issues. These
factors could have been to blame.

For example, the health facility may wish to develop a new strategy.
It will clearly show how they aim to deal with the decrease in clients
caused by their competitor’s new branch.