In-group and Out-Group

Objectives
At the end of this lesson, you should be
able to:
*recognize the existence of in-groups and
out-groups in one’s life and society,
*compare different social groups of a social
organization according to their manifest
and latent functions, and
*discuss the issues surrounding in-groups
and out-groups.
Review!
Social Groups and Organizations
Sometimes, 'organization' refers to
associational groups. It includes
corporations, armies, schools, and banks.
Society is composed of many such
organizations. A state is considered as a
political organization and school may
represent an educational organization.
They are all social organizations
Organization is a state of being or a condition in
which the various institutions in society are
functioning by their recognized or implied
purposes. (Elliott and Merrill, 1950)

A social organization or social system refers to

the interdependence of parts in groups. These
groups may differ in size and nature. It makes
possible the complex activities where members
of a complex society participate in.
Learn about it!

Different Social Groups of Social

Organization

Each community is made up of smaller

groups and associations that are built
on social class, personal interest, or
common goals.
The power elite is run by a small group
representing the wealthiest, most
powerful, and most influential people in
government, business, and the military.

Example:
A generous business person may make
substantial contributions to a political
candidate.
Voluntary associations are groups that
people choose to join, wherein
members are united by the pursuit of a
common goal.

Example:
a parent-teacher association at a
particular school
Formal organizations are secondary groups
organized to achieve specific goals. Legal
organizations tend to be larger and more
impersonal than voluntary associations.

Example:
A corporation is usually a formal
organization. The very specific goal of most
companies is to increase profits.
Bureaucracy is a type of formal
organization in which a rational
approach is used to handle large tasks.
The bureaucratic organization is highly
organized with a high degree of
formality in the way it operates.

Examples:
colleges and universities
Groups within Society
People do not live in isolation. They live in groups.
Social groups consist of two or more individuals who
identify with one another and regularly interact as a
result of shared norms, values, and expectations.
Being in a group entails realizations of activities and
events in one's life that help people build and define
their stories, interests, and contributions to society.
Different group categorization exists in society.

Categories include primary and secondary groups, in-

group and out-group, and reference groups.
In-Group and Out-group

An in-group is an exclusive social group formed out

of shared interest and identity. This is the “we” group
in society from which people’s loyalty is bestowed
upon. This type of group satisfies the old saying "birds
of the same feather flock together.'' It is in this group
where people feel more comfortable and secured,
with no threat, intimidation or conflict of interest.
Members of this group consist of those who share
common experiences or ideas in life.
Examples include friendship groups, families, and
religious groups.
An out-group, on the other hand, is a social
group associated with competition or
opposition as its nature is different from one’s
own. This is the “they” of society, where a
person is not a part of or does not belong to the
group. The formation of out-groups is the result
of perceived differences.
One’s out-group includes those groups one
dislikes or disregards. It is also that group where
one does not feel happy personality-, interest-,
or ability-wise.
It should be noted that out-groups should
not be given negative connotation as they
only involve non-membership to a certain
group. After all, people are created
differently. This should be celebrated in the
same regard as we give to shared interests.
People should respect what others can and
cannot do. That is the very purpose of
recognizing the existence of out-groups.
Learn about it!

Issues Surrounding In-groups and

Out-groups

In-groups and out-groups are

formed as a result of the following:
In-group favoritism happens when a
person favors or offers special treatment to in-
group members over out-group members. This
activity may disregard merit and result to
serious social situations such as corruption,
crime, and padrino system.
Out-group homogeneity is the tendency
of a person to classify those people who are not
in their in-group as being similar to one another.
In short, people overgeneralize and label out-
groups in a negative manner.
Explore!

What are your in-groups and out-

groups? How do you choose your
in-groups? How do you resolve
conflicts with your out-groups?
Try it!

Write three measures or

guidelines on how society and
its people avoid the adverse
effects of the existence of in-
groups and out-groups.
What do you think?

Without the boundaries caused by

in-groups and out-groups, would
the world be a better place? Justify
your answer.
Keypoints

Social groups are a specified number of individuals formed to

interact with one another and other people outside the group
based on the statuses and roles assigned to them.
*There are different social forms of social organization. These
include The power elite, voluntary associations, formal
organizations, and bureaucracy.
*An in-group is an exclusive social group formed out of shared
interest and identity.
*An out-group is a social group associated with competition or
opposition as its nature is different from one’s own.
*In-group favoritism happens when a person favors or offers
special treatment to in-group members over out-group members.
*Out-group homogeneity is the tendency of a person to classify
people who are not in their in-group as being similar to one
another.
Social Organizations: Reference Groups
Objectives
At the end of the lesson, you should be
able to:

*explain how reference groups work in a

person’s life and society, and
*recognize the different types of reference
groups and how they apply to real life
situations
What is a role model for you?

Who are your role models?

How do they influence you in your

daily life?
Groups within Society

People do not live in isolation. They live in groups.

Social groups consist of two or more people who
identify with one another and regularly interact as a
result of shared norms, values, and expectations.
Being in a group entails realizations of activities and
events in one's life that help people build and define
their stories, interests, and contributions to society.
Different group categorization exists in society.
Categories include primary and secondary groups, in-
groups and out-group, and reference groups
Learn about it!

Reference Groups and its Normative Functions

Reference Groups are groups that serve as our

standards in setting and evaluating our own
behaviors and attitudes.
When reference groups serve a purpose of
setting your norms and values, these
are normative reference groups. These groups
directly influence the behavior of a person,
serving as a role model, standard, or base point.
Your immediate family and friends are
considered a normative reference
group. The way they are is the way you
are. Your mentors or celebrity idols
also shape your personality. In hopes
of being identified with them, people
opt to act, speak, dress, and think the
way they do.
Learn about it!

Reference Groups and its Comparative

Functions
Some reference groups exist to provide
people with means of comparison for
behavior, style, and achievement. Such
are comparative reference groups whose
norms and values serve as points of
comparison for certain behaviors.
For body figure, teenagers look up
to supermodels as references. For
skills in basketball, enthusiasts play
by the rules of professional
basketball players from the NBA or
PBA. To check whether he fares well
in his exams, a student may
compare his score from that of his
class's best students.
Learn about it!

Group Influences
It is a natural response of people to
socialize, build connections, and get
influenced. With either good or bad
influence, our social groups or reference
groups play vital roles in shaping who we
are and becoming who we want to be or
what society wants us to be.
Reference groups come in different forms and
classifications.

Aspirational reference groups refers

to people or groups of people with whom we
want to be compared with. Product advertisers
and celebrities like athletes, movie stars, or talk
show hosts are fine examples of this reference
group. People think that by supporting their
favorite celebrity, they become associated with
them.
Associative reference groups refer to groups
where we belong and take part in. These people
include our neighbors, coworkers, club
members, or church members. People have a
tendency to confine with what is on trend in
their immediate community.

Dissociative reference groups refers to groups

that people have no interest in being associated
with. This group of people includes those with
whom we share conflicts in interest, attitude, or
behavior.
Explore!

How do you show your support or

associations to your reference groups?
Do you do what they do? Do you act,
speak, and think the way they do?
What benefits does having reference
groups give you?
Try it!
Give one reference group of yours for each type. Name
the person or the group, describe its nature, and state
your reason for classifying them under such type.

                                                                                                                                   
What do you think?

How do reference groups

change the way people think
about themselves and others?
Keypoints
Social groups consist of two or more people who identify
with one another and regularly interact.
Reference groups serve as our standards in setting and
evaluating our own behaviors and attitudes.
Normative reference groups set a person’s norms and
values.
Comparative reference groups are groups whose norms and
values serve as a point of comparison for certain behaviors.
Aspirational reference groups are groups of people with
whom we want to be compared with.
Associative reference groups are groups where we belong
and take part in our immediate life.
Dissociative reference groups are groups people have no
interest in being associated with.
Social Organizations: Networks
Objectives

At the end of this lesson, you should

be able to:
*discuss what a social network is
and how it works, and
*recognize the role networks play in
a person and in society.
Review!

Social Groups and Organizations

Sometimes, social organizations refer to

associational groups. It includes corporations,
armies, schools, and banks. The society is
composed of many such organizations. A state is
considered as a political organization and a
school may represent an educational
organization. They are all social organizations.
Organization is a state of being or a
condition in which the various institutions
in society are functioning by their
recognized or implied purposes. (Elliott and
Merrill, 1950)
Social organization or social system refers
to the interdependence of parts in groups.
These groups may differ in size and nature.
It makes possible the complex activities
where members of a complex society
participate in.
Learn about it!

Groups Within Society and the Rise of Social Networks

A social group is a team of two or more individuals that are

dependent on one another. Its organization rests on the
purpose of working and achieving the goals of society.
Humans are social beings whoa are constantly longing and
needing association or support.
Different group categorization exists in the society. Categories
include primary and secondary groups, in-group and out-
group, and reference groups.
The existence of different social organizations in society and
the connections or ties that bind them together give rise to a
social network.
Social Networks

A social network is a social structure comprised of individuals

joined by a certain pattern of links or relations. Social
networks are indicative of a person or an organization's
relationships as either casual and informal or personal and
intimate. This is often regarded as individuals' basic tool to
connect to society.
Designed to connect people and make the world seem
borderless, social media websites like Twitter or Facebook are
social networks. In a click, updates about an individual may
reach his friends and friends of friends as well. People listed in
your phone book are your social networks. Membership to
organizations or companies guarantees a social network.
Learn about it!

Ties and Nodes

As mentioned, social networks are

composed of individuals and the
connections or links that bind them
together. These components of a
network are called 'nodes' and 'ties.'
The person or organization playing a part in
a network is known as a node. On the
other hand, ties are the links or
connections that bind individuals or
organizations together.
They may be weak or strong. Measured by
strength, strong ties are the result of
intimate and personal links. Meanwhile,
weak ties are connections caused by
informal, casual, and business-like
relationships.
The Importance of Social Networks

Through networks, social linkages or connections are

formed. It is important to note that these networks serve
a role in the attainment of the goals of society. Through
networks, people get connected, get updated, and
become aware.
Networks are media for the spread and exchange of
ideas. News awareness, information relay, and rumors are
good examples. Some people also use their networks to
obtain a position in a company, to make a business
successful, or to earn a living. Social networks
undoubtedly serve as social support and provide people
with information or guidance in times of need.
Explore!
How do your social networks affect your personal life?
Do they influence your values, behaviors, and
perspectives?
What makes social networks significant in society?
How does their existence achieve the goals of the
community?

Try it!
Name at least three social networks you use. Write a
short description for each. Include their functions and
significance in your life. Also identify the types of
What do you think?

Can a person survive without the

people with whom he or she has
shared his or her life with?
Can society survive without the
existence of social networks?
Tip

In a social network, a node refers to the

individual or organization playing a part in
a network. In a physical system, it is an
active electronic device that is attached to
a network and is capable of creating,
receiving, or transmitting information over
a communications channel.
Keypoints
A social group is a team of two or more
individuals who are dependent on one another.
A social network is a social structure comprised
of individuals joined by a particular pattern of
links or relations.
Nodes are the persons or organizations playing
a part in a network.
Ties are links or connections that bind
individuals or organizations together.
Through networks, people get connected, get
updated, and become aware.
Social and Political Structures:
Political Organizations
Objectives
At the end of this lesson, you should be
able to:
*discuss how political organizations
operate as an entity which maintains
societal functions,
*recognize the differences among different
types of political organizations, and
*analyze social and political structures.
In a classroom setting, what are the
functions of the elected class officers?

Do you believe that their existence is

needed for the maintenance of order
in the class?
Social and Political Structures

Social and political structures are both

constructs formed as a result of large scale ties
and relations in society.

Social structure, in a general sense, refers to

patterned institutions or groups in society
where people work, act, and live together.
Examples: Social class and social institutions like
the government and legal community, LGBT
community, and professional community.
The political structure, on the other
hand, is used to call on the institutions
and political entity organized in
agreement with regulations, laws, and
norms of society or of the entity itself.
A society based on political structure
may follow totalitarianism,
authoritarianism, or democracy.
The Need for Political Organizations

The need for social order, public affairs and

functions, and conflict resolution are perennial
or inevitable. In this premise, the foundation
goals of political organizations are required.
Political organizations are entities in a society
formed for administrative or political functions.
They refer to the scheme or design of power
and authority in society. Political organizations
define the scope and limits of power.
Society, to achieve and maintain its goals and
functions, needs an authority figure to set social
control and lead people. Issues like allocation of social
and political roles, the exercise of political power and
authority, and resolutions for conflict and clash are
among the recurring problems every society faces.

The questions rest on who takes the lead in

addressing such problems. On this ground lies the
need for political organizations. Serving as the
authority, they set rules and roles and direct actions
to take.
Special interests of a particular group may
also be addressed through political
organizations such as labor unions, political
parties, interest or advocacy groups.

Labor unions collaborate or negotiate with

the company administration to raise
employee concerns regarding salary
increase, benefits, and labor rights.
Political parties are formed for staging
interest in the government seat.

Advocacy and interest groups are

designed for campaigning the rights,
privileges, and concerns of a particular
group of people in society. Such group
of people may not be represented in
government.
Types of Political Organization

There are four recognized types of

political organizations. They are
bands, tribes, chiefdoms, and
states.
Band
The band is the most traditional and smallest
type of political organization. Familial ties
connect a band. Politically independent, a band
usually does not recognize the formal
government. There are no written codes or
laws. There is no organized group of leaders.
This is the result of their tendency and nature of
moving from one place to another in search of
food or shelter.
Tribes
Tribes are traditional societies comprised of
people or group of people connected by social,
religious, ancestral, or cultural ties. Bigger than
a band, tribes are usually settled in one place
and do not rely on hunting and gathering but on
agriculture for subsistence. Just like bands,
tribes do not observe formal governments.
Bands and tribes are egalitarian societies. This
means that they see people of the same age
and gender as equals. For instructions and
decision, they rely on group consensus.
Chiefdom

Chiefdom, unlike tribal societies, is a

permanent and formal government.
Chiefdoms are formal political
organizations in a traditional society
based on kinship or the leadership of
selected families.
State
A state is a formal political organization in a
modern or industrial society regarded as an
organized community under a government.
Characteristics of a state include owning a
certain territory, having a particular group
of people to lead it, a group of people to
take administrative roles, and freedom
from external or foreign control.
Explore!
Why does society need an authority figure?
What type of leadership or leaders should
people have to achieve maximum success
in maintaining peace and order?

Try it!
Give at least three political organizations.
Write their objectives and projects in
society.
What do you think?

Imagine the world without political

organizations. What do you see?
What can we expect from people or
from a society which works and
operates without the supervision of
a political organization?
Keypoints
Social structure refers to patterned institutions or groups in
society where people work, act, and live together.
Political structure is used to call the institutions and political
entities organized in accordance with regulations, laws, and norms
of society or of the entities themselves.
Political organizations are entities in a society formed for
administrative or political functions.
A band is a group of nomadic people connected by familial ties.
Tribes are traditional societies comprised of people or groups of
people connected by social, religious, ancestral, or cultural ties.
Chiefdoms are a formal political organization in a traditional
society based on kinship or the leadership of selected families.
A state is a formal political organization in a modern or industrial
society regarded as an organized community under a government.
Social and Political Structures:
Authority and Legitimacy
Objectives

At the end of this lesson, you should be

able to:
*enumerate and explain the three types of
authority,
*discuss how power, authority, and
legitimacy work as essential components of
a social and political structure, and
*analyze social and political structures.
Review!
Social and Political Structures
Social and political structures are both constructs formed as a
result of large-scale ties and relations in society.
Social structure, in a general sense, refers to patterned
institutions or groups in society where people work, act, and
live together.
Examples: Social class and social institutions like government
and legal community, LGBT community, and professional
community

The political structure, on the other hand, are institutions and

political entities organized in agreement with regulations,
laws, and norms of the society or of the entities themselves. A
society based on the political structure may follow
totalitarianism, authoritarianism, or democracy.
Power
According to Thomas Hobbes, power is a natural inclination
that is sought continuously by individuals. In sociology and
politics, power is the ability to get others to do things even
when they might not want to. Put into action either through
coercion or persuasion, power, in simpler terms, is the ability
'to do.' Power may be exercised through coercion or the use
of sanctions, punishment, or threat.
The presence of unlikely consequences may force people to
do things. Sometimes, the use of coercion is not necessary to
get people to work. People may work freely and willingly if
persuasion, reason, and incentives or positive reinforcements
are presented. It is noteworthy that society works based on
power. Ideally, though, a society imposing its power without
the use of coercion is most efficient.
States have power because they can make
laws. The police enforces laws by the use of
force. If you disobey the law, you will be
fined or jailed. However, we want to be
able to make a difference between cases in
which it is right that the state has power,
and cases in which it is objectionable or
wrong in some way. To make this
distinction, the concepts of authority and
legitimacy is needed.
Authority
Authority is the right to command.
Authority is observed when an
individual has a command to make a
person do things. Such act is a
response to that person’s perceived
power. This person can be your boss,
your superiors, or those who hold high
positions in society.
Aside from what has been
mentioned above, authority is
shown when a person is an expert
in a particular matter. We ask
engineers to make our buildings
and structures stand firm. We ask
specialists for some health
concerns. We ask teachers for
learning strategies.
To clarify the concept, take this example.

Public officials are elected by the people and

are bestowed with rights to rule and exercise
administrative roles based on existing societal
laws. Professionals, on the other hand, gain
authority after effectively learning through
years of practice in their respective fields.
Authority is more than power. Authority is
guaranteed by legitimacy or in a formal manner.
Authority is the sum of power and legitimacy.
Legitimacy
Legitimacy gives form to authority.
Together with power, legitimacy
dresses authority. It is said to be a
symbol or representation–like
professionals having their licenses,
employees wearing their uniforms, and
laws being written as formal
documents.
In the most basic sense, a state is said to be
legitimate if it exists and operates according to
the law. If a government is legitimate, then in
some way, the fact that it has power is justified.
If so, then we can argue that we ought to obey
it. If power is objectionable, then we do not
tend to have an obligation to follow it.
Legitimacy is a belief that a rule, institution, or
leader has the right to govern. Legitimacy is the
force that makes an action of a governing body
necessary.
Three Types of Authority

According to the sociologist Max

Weber, there is a category as to how
authority is legitimated as a belief
system.
These are traditional, charismatic, and
rational.
Explore!

In your opinion, which type of

authority or legitimated rule is
more applicable and valid in
modern times?
Try it!

Give two evident examples

(government, religious order, or
scenario) for each type of authority or
legitimate rule.
*traditional
*charismatic
*rational
What do you think?

Why are authority and

legitimacy vital components in
acquiring and maintaining
peace and order in society?
Keypoints
Power can be defined as the ability to get others to do
things even when they might not want to.
Authority is the legitimate or socially approved use of
power.
Legitimacy is the right and acceptance of authority, usually
a governing law or a régime.
Traditional authority is based on a system in which
authority is legitimate because it "has always existed."
Charismatic authority rests on the unique qualities of a
leader who shows that he possesses the right to lead under
magical powers, prophecies, heroism, etc.
Rational authority is based on a system of rules that is
applied administratively and judicially per known principle.
Economic Institutions: Reciprocity
Objective:
At the end of this lesson, you should be able to:
*define and explain the functions of economic
institutions,
*discuss the concepts of reciprocity in line with
sociology and economics,
*analyze the activities of different economic
institutions and their impacts on the global
community, and
*relate the practical application of reciprocity to
one’s daily life.
If you have been given
something, is it expected for
you to return the favor? Why or
why not?
Economic Institutions

The term 'economic institutions' has a broad

meaning. Let us find out.
The term 'economic institutions' refers to:
a network of commercial organizations that
determine how goods and services are
produced, generated, distributed, and
purchased
Examples: producers, manufacturers, retailers,
wholesalers, buyers
*the particular agencies or foundations devoted
to the gathering or studying of economic data,
or authorized with the job of supplying goods
and services that are necessary to the economy
of a country
Examples: the Philippine Bureau of Internal
Revenue, the U.S. Federal Reserve, the National
Bureau of Economic Research
*the popular and thriving arrangements and
structures that are part of culture or society
Examples: competitive markets, the banking
system, a system of property rights.
Reciprocity
What is reciprocity?
In Sociology
It is defined as the a system of voluntary exchange
among individuals based on the understanding
that the giving of favor by one will be reciprocated
in the future either to the giver or to someone
else.
Example:
Filipinos practice utang na loob. This act is part of
our culture. When a person shows you an act of
kindness, it is a must for Filipinos to return the
favor.
In Economics

It is defined as an exchange of equal

advantages.

Example:
Japan and Philippines made an
economic agreement to remove
traveling restrictions to flourish the
tourism of both countries.
Types of Reciprocity
What are the types of reciprocity?
Generalized
Generalized reciprocity is giving something
without the anticipation of an instant return.
Example:
When a friend gave you a birthday gift, it is not
expected that you will also give that friend a gift
in return on the same day, although it is
anticipated that you will give him a gift or token
sometime in the future or when his birthday
comes.
Balanced

Balanced reciprocity is giving out of something

with the anticipation of immediate return.

Example:
When you get something from the store and
walks out without paying for the goods, you will
be stopped by shop employees because you
have not reciprocated with money the goods
that you picked from the store.
Negative
Negative reciprocity occurs when the exchange of
something already involves taking advantage of
someone or the situation. Most of the time, this type
of exchange involves trickery, intimidation, or hard
bargaining.
Example:
Province X has no source of electricity for a long time.
X Electric Company made an agreement with the
officials of the province to provide them with power
supply. In exchange, the whole area should not
entertain any other electric company to offer the
same services to them.
Economic Institutions, Reciprocity, and
the Impacts on the Global Community

We have learned in Chapter 2 that

economic institutions involve activities
such as producing, generating,
distributing, and purchasing goods and
services. These activities have an
impact on the global community.
Legends:
blue: economic institutions
red: activities of economic institutions
yellow: global community
The activities with economic institutions
play vital roles in shaping and maintaining
the stability of world community. If one
system fails to do its activity, there will be
an imbalance that will highly affect the
whole community.
Practical Application
Explore!
Think of at least three scenarios or
situations where generalized
reciprocity can be applied.

Try it!
Compare and contrast generalized
from balanced reciprocity. Give
examples for each.
What do you think?

How does negative reciprocity

affect the activities of different
economic institutions? What do you
think will be the impact of these on
the global community?
Keypoints
Generally, economic institutions refer to the network of
commercial organizations that determine how goods and services
are produced, generated, distributed, and purchased.
In sociology, reciprocity is defined as the system of voluntary
exchanges among individuals based on the understanding that the
giving of favor by one will be reciprocated in the future either to
the giver or to someone else.
In economics, reciprocity is defined as an exchange of equal
advantages.
There are three types of reciprocity: general, balanced,
and negative.
The activities of economic institutions play vital roles in shaping
and maintaining the stability of the global community.
More than economic gain, reciprocity is more of a social benefit.
Economic Institutions: Transfers
Objectives
At the end of this lesson, you should be
able to:
*explain the concepts of transfer or
transfer payment concerning
economics, and
*analyze the level of activities of
different economic institutions
concerning transfer and the impacts on
the global economy.
Are you aware of the different kinds of
goods and services that private and
government sectors provide for the people

Does the present government provide

more goods and services than it did in the
past?

How does the government redistribute

more income?
Economic Institutions (Review)
The term 'economic institutions' refers to:
a network of commercial organizations that determine how goods
and services are produced, generated, distributed, and purchased
Examples: producers, manufacturers, retailers, wholesalers,
buyers

the particular agencies or foundations devoted to the gathering or

studying of economic data, or authorized with the job of supplying
goods and services that are necessary to the economy of a country
Examples: the Philippine Bureau of Internal Revenue, the U.S.
Federal Reserve, the National Bureau of Economic Research
the popular and thriving arrangements and structures that are
part of culture or society
Examples: competitive markets, the banking system, a system of
property rights.
Learn about it!

The Functions of Economic Institutions

The economy of a particular country like
the Philippines is composed of different
institutions that play a significant role in
providing the needs of the people. These
institutions perform economic activities
that start from production to distribution
of goods and services to the people.
Here are some of the functions of
economic institutions in society:

*Enhance development through financial

services
*Provide business opportunity to people
by financing and loans
*Fund research projects aimed at
improving the lives of the individuals in the
society
Transfers
In economics, transfer or transfer
payment is a redistribution of income or
resources in the market system. It refers to
payments or transactions where there is no
value added to the economy. There is no
additional production of goods and
services but just a transfer of money from
private hands to government.
Examples:

*Taxes
*Social security
*Private pension benefits
*Housing
*Health care
Transfer payments can originate from
either government or business sources.
Business transfer payments include
corporate gifts to non-profit institutions,
payments for personal injury, and taxes
paid by domestic corporations to foreign
governments. Far more important, both, in
terms and policy significance, are transfer
payments originating from government
sources.
Learn about it!

How Transfers Work in the Government

The government as an economic institution
also provides commercial goods to the
people in the form of public services and
transfer payments.
In the Philippines, the government is
allocating a huge amount of money to
finance different programs like education,
In the Philippines, the government is allocating a
huge amount of money to finance different programs
like education, infrastructures, health, and defense.

Among the government agencies that received the

highest allocations are:
*the Department of Education (DepEd) with PhP
411.905 billion,
*the Department of Public Works and Highways
(DPWH) with PhP 384.287 billion, and
*the Department of Interior and Local Government
(DILG) with Php 124.229 billion
In the United States, transfers are
payments made to individuals by the
federal government through different
social benefit programs.

In Canada, transfers are payments

made to all provinces and territories by
the federal government.
Learn about it!
Economic Institutions, Transfers, and the
Impact on the Global Economy
Transfer as an activity of every economic
institution, such as the industry, finance,
and services, distribute part of their
income or profit to provide essential
services and assistance to some segments
of society, especially the underprivileged,
to help uplift their living conditions without
expecting anything in return.
In the circular flow of the
economy, households and firms
pay taxes to the government. In
return, the government
distributes transfers in the form
of services to the household
and subsidies to the firms.
The activities of the household, markets,
businesses, government, or financial
institutions as economic systems have a great
impact on the global economy because they
provide goods and services needed by people
not only of a particular country but also by
the world community. The stability of a
country's economy has a direct impact on the
global community for it determines its ability
to provide the needs of its people. It also
contributes to the stability of the world.
Explore!

Imagine that the Philippine government is

doing its job in solving the rampant
problem of smuggling. More taxes are
collected, and local and foreign industries
are protected. In the end, more effective
and efficient services are provided to the
people. How do you connect this scenario
to the lesson?
Try it!

If you become a wealthy individual

who is willing to share part of your
fortune to others, which among the
basic needs (food, housing,
education, health) will be your
priority? Justify your answer.
What do you think?

Why are there many Filipino

families who still do not have
access to essential goods and
services to support their
everyday living?
Keypoints
Economic institutions are sectors of the economy
that provide goods and services to the people.
One of the activities of different economic institutions
of a particular country is to provide transfers.
A transfer or transfer payment is a redistribution of
income or resources in the market system.
The circular flow of economy helps explain the
interrelationship of different sectors of the economy.
Government and private enterprises play major roles
in the world economy.
The activities of the economic institutions of a
particular country have a great impact on the global
community.
Economic Institutions: Redistribution
Objectives

At the end of this lesson, you should be able to:

*explain the concepts of redistribution in

relation to sociology, economics, and politics;
*analyze the level of activities of different
economic institutions concerning redistribution
and the impacts on global community; and
*recognize the various forms of redistribution in
own community.
*What do you expect the
government will do with the taxes
they collect from the people?

•In your church, in what programs

or projects do you think they
spend the donations coming from
the members?
Review!
Economic Institutions

The term 'economic institutions' refers to:

a network of commercial organizations that determine how goods and
services are produced, generated, distributed, and purchased
Examples: producers, manufacturers, retailers, wholesalers, buyers
the particular agencies or foundations devoted to the gathering or
studying of economic data, or authorized with the job of supplying
goods and services that are necessary to the economy of a country
Examples: the Philippine Bureau of Internal Revenue, the U.S. Federal
Reserve, the National Bureau of Economic Research
the popular and thriving arrangements and structures that are part of
culture or society
Examples: competitive markets, the banking system, a system of
property rights
Learn about it!

Redistribution
What is redistribution? Why is it
an important activity of
societies? How do you compare
redistribution from reciprocity?
In relation to Sociology

Redistribution is an everyday
activity of societies. Members of
the society contribute by giving
their goods that would be collected
by the head of the community
followed by a distribution of the
goods among the members.
Example:
A) Church tithes
The church acts as the central organization that
pools the goods donated by its members in the
form of tithes or donations. The church
manages these tithes and donations for the
maintenance of the church itself and its projects
and programs in which most of the time, its
members are the recipients. By that process,
the tithes or donations given by the members
are being redistributed to them, especially the
less fortunate members.
B) Potlatch

It is a ceremonial distribution of property

and gifts celebrated by most Pacific
Northwest tribes. In every celebration,
each person invited to a potlatch receives a
gift. Ceremonial formalities were observed
in the distribution of gifts or goods by the
donor according to the social rank or status
of the recipients.
Potlatch in Relation to Economics
Traditionally, the potlatch is the economic system
of the natives of South America. Today,
the potlatch is still evident in our economic system.
How?
Example:
In our society today there are rival companies. Let
us consider these companies as the rival groups of
Native Americans. Company A releases one
product to the market; the Company B will try to
surpass that product by releasing their product
better than the product of the Company A.
In Relation to Economics
Redistribution refers to the collection of goods and
services of people and groups to be given by a
central authority for allocation.
Example:
When the government collects taxes from its
population, the government becomes the
centralized authority where all taxes are pooled
and managed. The taxes that were pooled will be
returned to the people in the form of social
services, welfare benefits, infrastructures, and
others which the government will spearhead.
In Relation to Politics
Redistribution is the process by which electoral districts
are added, removed, or changed. This process is a form of
boundary delimitation that changes electoral district
boundaries, usually in response to census results. In
democratic governments, redistribution is required by law
or constitution.
Example: In the United States, redistribution happens
after each ten-year census. The state legislature approves
most states' legislative district redistributions. The highest
court rulings require that congressional districts have
roughly equal populations.
The table shows a comparison between redistribution
and reciprocity.
The table shows a comparison
between redistribution and reciprocity.
Economic Institutions, Redistribution, and
their Impacts on the Global Community
As we have learned in Chapter 3, redistribution
refers to the collection of goods and services of
people and groups to be given by a central
authority for allocation.

Both producers and consumers are economic
institutions in which the government or central
authority collects taxes from them and allocates
these funds for projects which are also for the
use of economic institutions. If one failed to do
his function, there would be dysfunction and
economic imbalance in society.
Redistribution in the Family or Community
Redistribution is evident in our society.
Family, as the smallest unit of society,
performs simple redistribution. The mother
or father, as the head of the household,
collects a part of his or her children’s
income and allocates it to food and
pending bills. This serves as the basis for
sustained community efforts under a
political leader.
Explore!

Think of ways on how

redistribution is being
effectively practiced in your
family, school, barangay, and
municipality or city.
Try it!
Get a partner. Think of at least three
situations where small-scale
redistribution can occur in the
community.
What do you think?
How does redistribution contribute
to the development of society?
Keypoints

*Economic institutions refer to the network of

commercial organizations that determine how goods and
services are produced, generated, distributed, and
purchased.
*In sociology, redistribution is the system of exchange
that involves the centralized collection of products from
members of a group followed by the distribution of those
goods among the members.
*In economics, redistribution refers to the collection of
goods and services of people and groups to be given by a
central authority for allocation.
*In politics, redistribution is the process by which
electoral districts are added, removed, or changed.
*Potlatch is a ceremonial distribution of property and gifts
by the donor according to the social rank or status of the
recipients.
*Taxation is the process where the government collects
taxes from people to turn into social services.
*Church tithes are the donations that are given to religious
institutions to be used for their programs and projects.
*A redistribution is a form of reciprocity. It differs from
mere reciprocity, which is a back-and-forth two-party
exchange.
*The activities of the economic institutions play vital roles
in shaping and maintaining the stability of the global
community.
*Family, as the smallest unit of society, performs
redistribution.
Economic Institutions: Market
Transactions
*What is a market?
*What is a market
transaction?
*How do markets and
market transactions affect
the lives of people in a
society?
Learn about it!

Market
A market is a place or medium where buyers and
sellers interact to transact economic goods and
services. The meaning of market is not limited to a
certain place, location, or geographic area; rather, it
focuses on people who are willing and capable of
buying or selling goods and services.
In a capitalist economy, markets answer the three
basic economic problems of: what to produce, how to
produce, and for whom to produce.
Market Structures

Market structure is the classification of a market with regard

to key characteristics, such as number of sellers and buyers,
entry barriers to the market, the control and determinant of
pricing, and types of products in the market.
A pure competition market is a market structure
characterized by a large number of sellers and buyers,
homogenous products, and complete freedom of entry and
exit of market players.
A monopoly is a market structure characterized by a single
seller of a well-defined product for which there is no available
substitute and high barriers of entry of other market players.
The seller has complete control of the pricing of goods and
services.
A monopolistic competition is a market
structure characterized by a large number of
independent sellers, each producing a
differentiated product in the market with a low
barrier to entry of other players.
An oligopoly is a market in which only few
sellers comprise the entire industry with a
relatively larger number of buyers. Sellers,
therefore, have the power over the price of
products.
Amonopsony is a market in which there is only
one buyer.
Market Transactions

A market transaction is the exchange

of goods and services through a market
where buyers and sellers agree on the
price and quantity of goods and
services to be bought and sold in a
specific place and time.
Market transactions taking place in the
economy could be a tool in:
*measuring the total output of the
economy or the Gross Domestic
Product (GDP) of the country thereby
becoming one indicator of growth and
development of a society, and
*providing the basic data that are used
by economic planners and forecasters.
Types of Markets

There are different types of markets. Each one

has unique characteristics and functions.
Physical Markets
This is a set up where buyers can physically
meet the sellers and purchase the desired
merchandise from them in exchange for money.
Examples: shopping malls, department stores,
retail stores
Non-Physical Markets or Virtual
Markets
In such markets, buyers purchase
goods and services through the
internet. The buyers and sellers do not
meet or interact physically, but
transact online instead.
Examples: 
Rediff shopping, eBay, Amazon
Auction Market
In an auction market, the seller sells
his or her goods to the highest
bidder.
Market for Intermediate Goods
Such markets sell raw materials
(goods) required for the final
production of other goods.
Black Market

This is a setup where illegal goods like

drugs and weapons are sold.
Knowledge Market

This is a setup that deals with the

exchange of information and
knowledge-based products.
Financial Market
This market deals with the exchange of liquid assets (money).
Financial markets can be further categorized into the
following types:
stock market–a form of market where sellers and buyers
exchange shares
bond market–a marketplace where buyers and sellers are
engaged in the exchange of debt securities, usually in the
form of bonds.
foreign exchange market–a market where parties are
involved in the trading of currency; In this market, also called
currency market, one party exchanges one country’s currency
with an equivalent quantity of another.
predictive market–a setup where the exchange of good or
service takes place for future use
Explore!

Imagine yourself in a street where lots

of goods are being sold for lower
prices. Will you still buy these goods
even though you are aware that these
goods are most probably counterfeit?
Will you still be patronizing them?
Try it!
Make a simple business plan for a unique
product to be sold in a monopolistic
market.
What do you think?
How does the continuous decrease of the
price of petroleum in the world market
affect the producer and seller of the
product? Does it affect the world's
economy as whole? How?
Keypoints

A market exists whenever there is an interaction

between buyers and sellers.
Market structures are mechanisms of the economy to
answer the basic economic problems of production,
distribution, and consumption.
Market equilibrium became the balancing force
between demand and supply of goods in the market.
A market transaction occurs because of the
exchanges of goods and services between consumers
and producers.
Economic Institutions: Markets and State
Objectives
At the end of this lesson, you should be
able to:
*differentiate the role of markets and
states in running the economy,
*determine the dividing line between
markets and states, and
*discuss the four competing economic
models and analyze their impact in the
world community.
*Why do many countries remain poor
while others are rich?

*In our country, the rich become richer

and the poor become poorer. Is there
any explanation for this?

*Who will take the lead to solve these

problems?
Review!

Economic Institutions
The term 'economic institutions' refers to:
a network of commercial organizations that
determine how goods and services are
produced, generated, distributed, and
purchased
Examples: producers, manufacturers,
retailers, wholesalers, buyers
*the particular agencies or foundations devoted to
the gathering or studying of economic data, or
authorized with the job of supplying goods and
services that are necessary to the economy of a
country
Examples: the Philippine Bureau of Internal
Revenue, the U.S. Federal Reserve, the National
Bureau of Economic Research
*the popular and thriving arrangements and
structures that are part of culture or society
Examples: competitive markets, the banking system,
a system of property rights
Learn about it!

Markets and State

A market is a place where buyers
and sellers transact economic goods
and services. It is also a mechanism
used by society for allocating and
distributing the goods and services
produced.
A state is a group of people, more or less
numerous, with a definite geographical
area, with defined territorial boundaries,
independent of external control, and
ruled by a government through laws
where inhabitants have to conform by
force in the common interest. In
economics, a state is always referred to
as the government.
The market, as a mechanism used by
different economic institutions in the
distribution of goods and services that
the economy produced, always relies
on the very mechanism it uses−the
price of the products. Meanwhile,
the state uses its inherent power and
authority in allocating goods and
services.
Learn about it!

The Dividing Line Between Markets

and States
In the Philippines, some products are
purely market-driven. with some
products, the government can
intervene in production and pricing. An
example of this are utilities and
selected essential services.
In a global perspective, model market
economies such as the United
States and Singapore are characterized
by freedom of choice and enterprise,
private ownership of all economic
resources, a prevalence of competition,
and the presence of market mechanism.
While in a state-driven economy
like China, the government largely
controls the industry.
The two mechanisms significantly
differ in the way they allocate
goods. In a market economy, those
who can afford the price of the
product have more, while a state-
run economy has a principle of
having something according to the
need.
Learn about it!
Competing Models of Economic Organization
and Their Impacts on Global Community
Market Economy Model
The market economy model of Taiwan, Korea,
and Singapore prevails in the production of
goods, competitiveness, flexibility, and high
growth rates that are manifested in the
economy. A high level of inequality prevails,
resulting to a high incidence of poverty among
people, a problem in the environment, and
vulnerability to financial crisis.
State Capitalist Model

The state capitalist model of Russia and

China shows the power of government
in the production of goods but with
passivity in social and environmental
issues. High and steady growth rate
evident but a high level of inequality is
also manifested.
Central Planning Model
The central planning model of North
Korea dominates the entire economic
activity of production as well as the
social context. This model wants to
create a classless society. In the long
run, it is counter-productive, and lower
growth rate or even economic
stagnation occurs.
Social Market Economic Model
The social market economic model of most
European countries depends heavily on the
role of the market in the distribution and
allocation of products. The economy and
the government is very active in providing
social welfare to the people. This leads to
equality and harmony among people and
government, but a high level of taxation is
evident.
Let us analyze these four competing
economic models and their impacts on the
global community. It is notable that the
government, private corporations, and
multinational companies have to join
hands in uplifting the lives of the people,
protecting and preserving the
environment, and creating a caring society
so that this world would be a better place
to live in.
Explore!

Imagine yourself in North Korea as a

travelling journalist-economist. What kind
of story will you be writing about the
country?
Try it!

Based on this lesson, make a travelogue

showing what countries you will be visiting
based on economic status or model.
What do you think?
There are fundamental standards or criteria in analyzing
economic models as suggested by some economists. These
are:
*Is the living condition of people in society improved?
*Is the growth of economy aimed at raising the standard of
living?
*Is the societal income equally distributed among members?
*Is there a guarantee that a standard of living is being
maintained?
*Do established institutions respect human rights?
*Are there enough provisions for the education and health of
the underprivileged?
Are these standards fit for the four competing models of
economic organization? Why? Why not?
Keypoints
*Economic institutions evolve to distribute efficiently and allocate goods
and service to members of society.
*A market is a place where buyers and sellers transact commercial goods
and services. It is also a mechanism used by society for allocating and
distributing the goods and services produced.
*The state, always referred to as the government, is a group of persons,
more or less numerous, with a definite geographical area, defined
territorial boundaries, independent of external control, and ruled by a
government through laws where inhabitants have to conform by force.
*In the Philippines, some products are purely market-driven. In some, the
government can intervene in production and pricing.
*In the United States, the model market economy is characterized by
freedom of choice and enterprise, private ownership of all economic
resources and prevalence of competition, while in China, the government
largely controls the industry.
*The four competing economic models that greatly affect the global
community are market economy model, state capitalist model, central
planning model, and social market economic model.