## 1. Introduction Economics is the study of choice. [[Economics is about choosing between which wants we want to afford given our resource budget]] ### Activity [[Think it through]] Existing impressions or preconceptions about economics: money, inflation, poor-rich, capitalism, socialism, revealer of character, power to choose. Market means customer/buyer that we want to influence to buy our products. We want to sway their "wants" so that they want to buy our products. Cost is the modality in which we need to risk to produce the goods. Efficiency is the process to produce more goods and cut the cost, bringing price lower. These terms means purely business for me. That everything is quantified. Maybe it's true that what is not measured cannot be improved. [[Theory]] Economics is divided into microeconomics and macroeconomics.[[Microeconomics is the study of choice at the individual or firm level, while macroeconomics is the study of choice on a societal level]] Both are relevant to global health policy, but as we will see, some areas such as international trade, food and diet, and movement of people affect not just health sector, but many other sectors too and so require a macroeconomic assessment. Trade refers to the exchange of goods (manufactured or services) and underlines all markets. International trade happens between countries and is therefore a fundamental feature of global interaction and underlies much global policy, such as trade agreements. ## 2. Key economic concepts [[Efficiency]] is about making the most of what we have, meeting the most *wants*, given the resources at our disposal. Inputs that influence efficiency: labour and capital. What are the three types of efficiency: 1. Technical efficiency: producing maximum benefit (outputs) from given inputs (resources), or producing given level of benefits from least inputs How something is produced. ==Ensuring no resources goes to waste.== 2. Economic efficiency: producing maximum benefit from a given budget or producing a given level of benefit at least possible cost (value of resources) Concerned with least cost mix of resources in production. 3. [[Allocative efficiency]]: producing the mix of benefits (from a given set of resources) which is most highly valued Most relevant to us: ==Focused on saying what should be produced and who should get it.== > Technical efficiency may dictate how things produced, economically efficient at producing a wide range of goods and services, but we need to determine how much shall be produced and how that is distributed. These types of efficiencies are HUGE task for the government alone, hence why we need market: to achieve allocative effiencies, by which the decisions concerning what should be produced and how it is distributed and made. When the markets are operating 'perfectly', they will achieve equilibrium at the point of [[Allocative efficiency]] by producing the mix of benefits that matches the pattern of demand. ### 2.2 Opportunity costs When we choose something, we lost the value of other options we did not take. We forego the pleasure of other options. For example in health, paying one course of IVF is equivalent to 150 MMR vaccinations that cannot be given. Take it a step further, paying for defence or other security measures instead of health, that's an opportunity cost. ### 2.3 The role of money and price Money is important because it influences our power to enact the most efficient choice. Money is means of exchange. Exchange does not always involves money. Though having no price, volunteering in an organisation does not mean your time has no value. The opportunity cost of this time could be three hours with your family, or sleeping for three extra hours. ### 2.4 Marginal analysis, supply, demand and the market Demand curve represents the value of the marginal benefit of each unit of goods consumed. In the market, it means as the number of demand increases, the price will go lower, and vice versa. In health, for example we introduce tax for goods that are bad for health, then the demand will lower. Supply curve represents the amount of resources needed to produce goods and drive the price for each good increases. For example, if you want to produce one vaccine, the X amount will only require certain number of workers, small factory, etc to justify the investment. However, if you want to supply vaccine at low costs, the investment case needs to justify how big the market is, how many workers needed, equipments, leasing the factory/place, compliance with tax, etc. In other words, producers will only be willing to produce greater amounts if compensated by a higher price. Market equilibrium happens when demand meets upply. More supply, price falls. Demand is high, price is high. We need to ensure that all markets operate freely and adjust to this equilibrium. Sometimes, markets break down, fail to operate in the manner portrayed in this ideal, and sometimes, do not exist at all. ## 2.5 Concept diagram National economy may affect funding for health sector, also household economy. Risk factors also interferes, such as exposure to disease, pollution or sanitation. ## Activity 1, Session 1 [[Question]] "What is economics in a post-pandemic era?" As the written material stated, economics is the study of choice. When the world functions in "business as usual", or pre-pandemic, the economy runs as it was. Money, inflation, and power were controlled and monitored without any potential spike. Now, during and after the pandemic, economics must be reimagined. The "allocative efficiencies" just gained the spotlight as suddenly all the world's population is the vaccine market, hence demand rapidly surged, while supply was limited. As expected, prices increased, negotiations between countries, even regionals and multilaterals, provided as means to control the price by leveraging the buying in bulk. The pandemic also exposed the trade mainly happened between those who have money, the ultimate enabler. As we recover from the pandemic, and enter the post-pandemic phase, we must rethink about how to approach global health policy with "all people" as the center of interest and potential market as opposed to constrained, national/regional interests. Global health must be global. ## References [[What is economics?]] [[Managing the pursuit of health and wealth - the key challenges]] [[@thelancetInvestmentHealthKey2019]]