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Evaluation in Economics

Evaluation is a very important concept in IB Economics. But before we evaluate we always analyze.

Analysis is providing the DEED aspects --your Definitions, Explanations, Examples and Diagrams to show how the theory helps to answer the question. 

Okay, what's evaluation?

Basically, analysis is explaining the relevant theory. Evaluation is critiquing the theory.

Economic theories (i.e. our diagrams) always suggest certain things are true --for example that price ceilings will result in shortages. However, our field is full of interesting nuances. For example, price ceilings don't always result in shortages, because they might be set above the current equilibrium price.

There are always uncertainties and priorities to consider about the effects of a given policy. Remember that in your IA, for example, you're almost always looking at the possible effects of a certain policy decision. The simple presentation of the theory you did in the analysis section, needs to be challenged and critiqued. That's what we're doing when we evaluate. We're looking at all the ways the policy effects might be wrong or uncertain. And we're explaining the other relevant considerations we need to take into account when deciding whether or not the policy will be a good one. 

Here's a list of things you can write about, using an acronym I came up with called CLASPP. 


(d.) - A clasp is something that holds things together. But (spelled with 2 P’s) it’s also an acronym for the 6 types of evaluation we can use in IB Economics. 

Use at least 3 of these. Personally, I often recommend to my students that they try use Stakeholders, Assumptions each time and include a third one of their choice, but if you can do more that's better. We always care a lot about stakeholder effects and assumptions is impressive because it shows that you really understand the basis of the theory.


This is where you synthesize the insights of the diagram, where you're explaining the (potentially simplistic) insights of the theory and the diagram you presented above.

-What can we conclude from the theory that you’ve explained in your analysis?

-What is the basic relationship between the aspects that you compared in your diagram? (i.e. In general, what happens to price and consumption when the price ceiling is introduced?)

Long-term and short-term effects

Some effects of policies aren't evident for quite a while and sometimes the short-term effects are good, while the long-term effects can be bad. 

-Is the change good in the short-term, but over in a few years it could have undesirable consequences? Over time many suppliers may move out of the industry, as they have an insufficient either willingness or ability to sell for the amount dictated by the price ceiling. 

-Could the policy be really hard on people in the short-run, but it fixes the long-term problem?

-Could this policy fix one problem, but create another?


What does the diagram (the standard economic thinking) assume is true, but often might not be. 

-Are there some assumptions being made, that the theory depends on that may not hold true? This is the same as “ceteris paribus” --the assumption that all other things are being held equal, when in fact they might not stay constant. Explain what might change and how that would effect your analysis. 

-Are there weaknesses in the theory?

-What is unrealistic about the theory?

-Does the theory rely on people acting rational (i.e. trying to maximize their own best interests or utility) when in reality that may not be how people behave? 


-What effects would this policy have on the government, consumers, producers and the rest of society? Suppliers may suffer, while consumers benefit from a price ceiling, as long as suppliers continue to provide the goods. 

-Policies (i.e. price ceilings) are often made with particular stakeholders in mind, so are there undesirable effects on other parties (i.e. price increases for consumers)?

-Is the policy great for some groups, but bad for others?


Each policy benefits some more than others (as we explore in stakeholder effects). With priorities we notice which groups benefit more and we can infer who the policy is created to benefit. 

-Discussing the priorities of a society, or the government is also a good way to keep things in perspective. A policy like subsidizing schools is probably good for families, good for the long-term macro economy, but perhaps unfair for taxpayers who don’t have children. New policies should reflect the true priorities of the society. 

-Is there an important normative (i.e. values aspect) that the policy change is assuming? 

Pros and Cons

Finally, pros and cons is where we try to notice any additional good or bad things about the policy, which we haven't mentioned yet. 

-What are the advantages and disadvantages of this policy?

-What are the costs and the benefits of this policy?

-What are the arguments for and against this policy?

-This one is to double-check that you haven’t left anything worth mentioning.



Tim Woods is available for IB Economics tutoring and IA support every day online. You can also find him on Instagram if you need anything.