VETERINARY ECONOMICS

dr Mariusz Maciejczak
Winter 2019/2020
Lecture 1

Principles of
economics as
a social science
 Introduction
• Syllabi
• Materials
• Teacher
• Economy
• Sustainability
 What do we so far understood and
know … – a gallery walk
The ‘Gallery Walk’ is an exercise whereby
small groups of participants circulate
among flipcharts containing key questions
and are invited to contemplate the issues,
discuss them and write their comments
underneath, as well as comment on the
statements of other groups. The groups
will be self-facilitating.
 Issues
1. What is an economy?
2. What is an economic system?
3. What Veterinary Economics is about?
4. What are your objectives while
coming to the VetEcon class?
 Economy
An economy (Greek :οίκος-household
and νέμoμαι - manage) is an area of
the production, distribution or
trade, and consumption of goods
and services by different agents in a
given geographical location.
The economic agents can be individuals, businesses, organizations,
or governments.
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 Economics
Economics is the study of
making (ir) rational choices
(decisions) in the allocation of
scarce resources for the
achievement of competing
goals.
 Economic system
The economy encompasses all sets of inter-
related production and consumption
activities that aid in determining how scarce
resources are allocated in order to fulfil
unlimited needs. This is also known as an
economic system.

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 Allocation mechanism
There are 5 basic questions to be answered with
respect to the use of resources:

1. What goods and services should be produced?

2. How many of each should be produced?
3. What techniques should be used in the production
of the goods and services?
4. When the production or use of the goods and
services take place?
5. Who should get the benefits of the use of each
good or service?
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 The answers to these 5 questions are
determined by a variety of factors:
• the physical characteristic of resources and the nature of the
relationships among them,
• the objectives of society, (which reflect the organization of society
and the institutions that coordinate the preferences and behavior
patterns of individuals within society)
• information about alternative choices and the probable outcomes
of alternative choices,
• values held by individuals,
• perceptions of relationships among the individuals within the
society,
• Other

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 Goals in economic thought

• How does a society develop a

“system” of rules to guide the
allocative decisions?

• What do we “know” about how

those allocative decisions are made
and what are their results?
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 Absolutist approach
The absolutist tends to believe that there
are some objective, absolute “facts or
truths” about the perceptions and patterns
of economic behavior that cross cultural,
temporal and social boundaries.
These beliefs and patterns of behavior are perceived as
universal. They are believed to apply in every society at all
times in similar ways.

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 Relativist approach

The relativist approach to the

economic thought holds that what
is “true,” or useful, in one time or
place may or may not be useful in
some other time or place.
The relativist tends to believe that economic theory is shaped by
technology, social and economic institutions. Economic theory is a
product of its environment.
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 Fundamental components
of human perception and action
Three fundamental components of human perception and action
to be included in a study of history of economic thought are:
• Ideology (consists of values, attitudes, beliefs, and
perspectives that are held in common by a social group),
• Theory (an intellectual construct that consists of a set of
consistent,coherent propositions that explains a particular class of
phenomena),
• Policy choices (the coordination and integration of
individuals’ behavior in a manner consistent with the operation of
a society).

• The outcomes of the policies is a forth item which should be

included since it interacts with the
19 first three.
 Economics

Economics is the study of

making rational choices
(decisions) in the allocation of
scarce resources for the
achievement of competing
goals.
The sustainable growth
 sustainable (adj.)
• 1610s, "bearable," from sustain + -able.

• Attested from 1845 in the sense

"defensible;"

• from 1965 with the meaning "capable of

being continued at a certain level."

• Sustainable growth is recorded from 1965.

• Related: Sustainably.
 Our lifestyle is unsustainable:
1. Over-exploitation of natural resources that
accompanied economic and demographic
growth
2. Market failure - Hidden environmental costs
are not reflected in market prices
3. Accelerating resource depletion, waste
generation, and environment pollution due
to shorten product lifecycles (technology
advances) and changing lifestyles since
industrial revolution
Natural Capitals
 Natural Capital = Natural Resources +
Natural Services

Air
Renewab
Air purification le energy
Climate control (sun,
wind,
UV protection water
(ozone layer) flows)
Life
(biodiversity)
Water Population
control
Water purification
Pest
Waste treatment control

Nonrene Soil Land

wable
minerals Soil renewal Food production
(iron,
sand) Nutrient
recycling
Nonrenewa
ble energy
(fossil
Natural fuels)
resources
Natural
services
Foundations of human well-being
Human well-being is supported by three
pillars:
• economic conditions and processes
employment, income & wealth (magnitude &
distribution), markets, trade…
• sociopolitical conditions and processes
law & order, national & homeland security,
governance, liberty, justice, equity,
education, health care, science, culture & the
arts…
• environmental conditions and processes
air, water, soils, mineral resources, the biota,
nutrient cycles, climatic processes…
 Sustainable development

• meeting the needs of the present

without compromising the ability of
future generations to meet their own
needs.

World Commission on Environment and

Development (1987): Our Common Future
 Definitions
• Reconciliation of society’s development goals with
its environmental limits over the long term .
• Simultaneous achievement of economic
prosperity,
a healthy environment, and social equity for
current and future generations.
• Improving the quality of human life while living
within the carrying capacity of supporting
ecosystems.
• Development based on the principle of inter-
generational, inter species and inter group equity.
AGRICULTURE – AN INDUSTRIAL APPROACH - accents the economics, efficiency,
optimality or efficiency of individual elements - or selected relationships
between these elements
AGRICULTURE - A SYSTEM VIEW - through the prism of the complex system, it
primarily leads to the disclosure of its non-economic functions
Externalities
 Internalizing the externality

– Taxing goods that have negative externalities

– Subsidizing goods that have positive externalities