Economics and Sustainability

This module is about learning to apply economics to understand the world around us and in particular the main barriers and enablers towards sustainability. The focus is on providing an introduction to the discipline of economics that is practical, intuition-based, and relevant to understand the sustainability challenges of our time. The course requires no previous knowledge of economics and it caters also to those who may never take another course in economics. We will discuss environmental and social dimensions of sustainability and how to measure how “wealthy” we are. We will ask why the actions of people, firms, and countries are not always aligned with societal and sustainability objectives. We will see how economists construct simplified “models” of decision-making based on the benefits and costs of available options (trade-offs) and we will apply these models to understand a variety of contexts: Why did firm in 1800 England (industrial revolution) adopt labour-saving but energy-intensive and fossil-fuel reliant technologies? Can we predict likely consequences of different policies to address the housing crisis before they are put in place? How does a country chooses which products and sectors to specialize on? Why is the environment subject to so much “free-riding” and “tragedy of the commons”? How can policies but also social norms help achieve sustainability? To do this, we will look at the economic principles behind market interactions (what we choose to buy and what firms choose to produce and sell) and assess in what circumstances unregulated markets are likely to fail to achieve social welfare and sustainability. Understanding how people, firms, and countries respond to the "incentives" they face will help us design policies and change the incentives to achieve more socially and environmentally sustainable outcomes. At the end of the course we will have a better understanding of the barriers to achieve more sustainable economic systems and what we can do about it!