Price Elasticity of Demand Simple Definition and Direct Examples

September 18, 2023/in Uncategorized /by Simon Weru

Demand is affected by many aspects, top among them changes in price of the commodity. When price changes without particular expansion of the economy and subsequent increase in income, effects may be witnessed on the demand of some commodities.

I used “ may” and “some” since different products will have different elasticities, depending on some factors on the nature of the product like urgency and availability of substitutes.

What is Price Elasticity of Demand?

We all know that changes in price will have an impact on demand. However, the question economists sought answers for was “to what extent”.

Price elasticity of demand measures the extent of demand changes to changes in price over time. An increase in price by the rule of thumb is expected to take demand along the negative trajectory.

Price elasticity of demand illustrates how much the reduction will be. Similarly, the elasticity can be measured on increase in demand following a reduction of prices. The latter is, however, not dwelled upon much.

Formula

Price elasticity of demand is expressed in the formula below:

Price elasticity of demand = % change in demand of the commodity ÷ % change in price

Example

This happens in a computer hardware outlet. The computer outlet sells a variety of computer accessories, but our main concern is the laptops sold there, and the brand is Lenovo.

Due to the recent international differences between the US and China, importation of Lenovo laptops or their spares from China into the country has become exorbitantly expensive. For a single laptop worth $850, the US customs duty is now charging $250 from the $100 it used to charge before.

The tariffs have now been reflected on the price of laptops at the street outlets and online e-commerce platforms. The shop in question is situated in downtown Chicago, and also operates all over the country via its e-commerce platform.

Last month before the new tariffs came into play, the Lenovo ThinkPad went for $950. The sales during that month, just like in months before, were at 100 units per day, and subsequently 3000 units per month. However, after the tariffs were introduced and importation became more expensive, the laptops were now sold at $1100. The sales across the month have averaged at 65 units per day.

Lets calculate the price elasticity of demand for Lenovo:

%change in demand = (65-100) ÷ 100 = -35%

%change in price = (1100-950) ÷ 950 = 15%

Formula: Price elasticity of demand = % change in demand of the commodity ÷ % change in price

= -35% ÷ 15%

Price elasticity of demand = 2.3

There are categories to classify this and other elasticities exhibited by different commodities:

Types of Elasticity

Infinity elasticity is the reduction of demand to zero levels, such that the resultant elasticity value is infinite. This kind of elasticity implies that demand of the particular commodity is heavily impacted by the slightest change in price.
Elastic (greater than 1) is where the result of changes in demand are a significant change in price of a commodity. The resulting elasticity value is greater than one, such as in the example above where elasticity is at 2.3. Demand is expected to reduce significantly upon the increase in price of the commodity. However, demand in this case will never get to zero.
Unitary elasticity – change in price causes a similar and equal change in demand. In the calculations, the denominator and numerator are all of the same value. For instance, in our example, upon the change in price by 15% to $1100, demand would have also changed by the same value (15%) to 85 units per day, so as to arrive at a unitary elasticity of demand.
Inelastic elasticity is where any changes in price of the commodity result in insignificant changes in demand. In inelastic demand, division between changes in price and in demand result in values that are less than 1 but greater than zero. These are perfect inelastic products, a delight for any marketing initiative. We will later look at the characteristics of inelastic products with regards to marketing etcetera.
Perfectly inelastic are cases where any extent of changes in price do not yield any changes in demand of the commodity. The numerator is therefore zero, and the resultant value is also zero. This is also a delight for marketers.

Factors of Elasticity

The following are the qualities of perfectly elastic and perfectly inelastic commodities:

1. Availability of substitutes

Factors of elasticity are basically the factors that affect changes in demand, one of them being the availability of substitutes as alternatives to the commodity in question. Existing substitutes with high similarity in utility and preference are only separated by price differences.

Consumers are known to be very swift to move between commodities, and a change in price of the said commodity would accentuate that movement. Commodities that are alike include butter and margarine, sandals, and household items like brooms.

Technology has allowed for unique differentiation of particular products, but at the same time there are no limits to mimicking any technology.

Urgency

Some products are only in demand because they are affordable, not because they have so much priority in the order of wants. Secondary products have reduced urgency in the order of wants, and have high susceptibility to elasticity in demand upon slight change in the price of the commodities. These commodities are also known as discretionary products, and include electronics, luxuries, apparel, and investing assets.

Low discretionary products, on the other hand, are commodities that one can almost not live without, and their demand rarely moves even in powerful price turbulence. These are primary commodities that are essential to daily living, such as tissue paper, water, electricity, and staple food.

Importance of Elasticity in Demand of Prices: Marketing, Pricing Strategies

The decision to make a product less discretionary or without substitutes requires meticulous strategies, and may not be autonomously controlled by the producer (or marketer). Understanding the elasticity of demand is key in branding a product and selling it out to particular sections of the population.

As much as some products may be non-urgent and at the same time expensive, they maintain an inelastic nature of demand as the commodity is produced for a target buyer. Take Rolex for instance. Changes in price may not concern the select population which buys the commodity.

A seller or marketer making decisions to change the price of their commodities should begin by asking the question – how elastic is this product’s demand? If the commodity’s demand has high elasticity, then it would not be the best move to adjust prices to the upper end in noticeable margins .

Conversely, if the price has lower demand elasticity, marketing strategies may not be affected by accompanying changes in prices of the commodities.

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Bitcoin Mining Economics 101: How to Profit in the Digital Gold Rush

September 16, 2023/in Uncategorized /by Simon Weru

Bitcoin mining is profitable, but not to all, this as the environmental debate heats up.

The Intricacies of Crypto Mining and the Rising Environmental Concerns

Bitcoin mining has only been here for slightly more than a decade, but has ensued a heated debate in matters of energy consumption and the viability of bitcoin miners making profit over increasing energy demands as more miners enter the fray.

Before we even come to the intrigues of bitcoin mining, we can look at why it’s necessary.

Key Takeaway:
Mining is sometimes likened to horserace staking, where if you are able to stake for all horses in the race, chances are high you will bag a win. However, the win can only be profitable if it transcends the cost of wagers.

What is Bitcoin Mining and Why It’s Important

Cryptocurrency and cryptography dates back to the 90s, but it took innovation by the anonymous Satoshi Nakamoto to unveil one that has passed the test of time.

One juggernaut by initial cryptos was the decentralization of the currency while the cryptocurrency remained financially valuable.

This would later be achieved through the cryptography blockchain, and the huge role by computer nodes connected to the blockchain in validating, recording and appending each crypto transaction to the crypto blockchain. And this point is where crypto miners come in.

Satoshi laid the framework for not only a self-sustaining financial system, but the foundation for remaking similar networks.

Crypto mining began with small-scale miners solving manageable quizzes. However, after a while the industry transformed to explicitly industrial-scale mining with mining companies even getting listed on stock markets. Companies like RIOT in Texas, USA and Core Scientific have made strides in the NYSE, gaining national importance as significant stock market players.

In the month of July 2023, Core Scientific announced a mining success of over 1,022 bitcoins produced within the month, across over 220,000 miners, with 69% of these owned by the company. For context, there were only 28,000 bitcoins mined in that month across the world.

Satoshi created a self-sustainable financial network which would entail peer to peer verification and recording. In return, the public verifiers and recorders (miners) would get rewards at the initial rate of 50 bitcoins for each block verified.

A block is a stash of transactions bundled together and verified as a whole, then ultimately appended to the greater block chain. However, the system was set to self-regulate itself in controlling the number of bitcoins in circulation, to balance demand and supply dynamics.

This was done through halving, whereby the number of bitcoins awarded to miners is halved after the distribution of every 210,000 bitcoins. The 50 coins distributed in the first 210,000 blocks recorded has since been reduced to 6.25 coins in 2020, and will halve further to 3.125 coins in the year 2024 – halving happens approximately every four years. It is estimated that this number will ultimately get to zero, and that bitcoin will cease from production and distribution in the year 2140, a whole century from now.

Miners, however, do not have to worry about halving, as long as we are not yet to 2140. This is because over the years bitcoin has been gaining significant value, and as the coins reduce in supply over time, their demand will conversely soar, attaching huge values to the few coins awarded to miners. Industrial miners have hugely capitalized in large-scale mining, while small-scale miners have struggled to remain aloft.

Microeconomics of Bitcoin and Cryptocurrency Mining

From costs of machinery, to competitiveness of bitcoin mining, to the performances of bitcoin in the markets – microeconomics have imposed a juggernaut for cryptocurrency mining at this advanced stage.

Bitcoin’s algorithm is built such that the hash products have difficulty levels based on the competitiveness of bitcoin mining, so as to achieve the desired circulation of 210,000 bitcoins in quite an expansive period of about 4 years.

In the wake of massive miners jumping into the fray, this self-regulatory mechanism possessed by Bitcoin has made hashes hard nuts to crack. Initially, simple CPUs or slightly advanced GPUs could manage to solve cryptography quizzes at the current rate, due to the relevantly low difficulty levels, accredited to reduced competition in the mining industry during the heydays.

However, many have come to know of bitcoin mining and its profitability, driving craze demands and as a result high difficulty levels.

Inside a mining rig, ASIC machines on the closeup

Mining is expensive, an aspect that has erased small scale miners from the picture. At the current hash rate, ultra high capacity computers in the form of ASIC (Application-Specific Integrated Circuit) are required to solve a single hash quiz and get a bitcoin grant in return. Consequently, gargantuan mining farms have been set up, for one reason of making profit in large scale, but more importantly to tap into large economies of scale.

Mining is sometimes likened to horserace staking, where if you are able to stake for all horses in the race, chances are high you will bag a win. However, the win can only be profitable if it transcends the cost of wagers. Similarly, the more mining rigs possessed by a farm, given they have the requisite capacity for the existing hash rate, chances of cracking a hash are high, and so are the bitcoin rewards as a result.

However, the survival of these farms rests on the value of Bitcoin in the markets, and this value will only be profitable when deductions are made for the cost of machinery, cost of electricity, and other resources used in the mining process.

Macroeconomics of Bitcoin Mining

Bitcoin mining has initiated above anything else, a heated debate on its impact on the environment. It is not that bitcoin mining rigs exhume any poisonous gas, but it is about how much energy is consumed in the production of one bitcoin or the verification of a single bitcoin transaction. Research has it that in a year, bitcoin production consumes roughly 110 TeraWatts of electricity. To put it into context, Switzerland consumes half of this energy in the same period.

The electricity needs for mining rigs and cooling plants have imposed pressure on existing energy plants, the resulting energy demands further abetting the activation of fossil fuels in the production of electricity. It is for this reason that Tesla CEO Elon Musk banned purchase of Tesla cars with bitcoins as had been happening, and required that anyone willing to exchange Bitcoins for Tesla has to show proof of clean energy consumption in Bitcoin production and transactional processes.

While some miners have legitimate energy supplies, the energy costs have compelled most of them to go for austerity but mostly unclean alternatives like coal. In the US alone, carbon footprint was capped at 30 million tons of CO2 per year, equal to emissions of three of the largest coal plants in the USA.

KICKER: It is all interconnected. The desire to beat competition in the crypto mining industry has mushroomed ridiculously large farms, which have transformed into monumental carbon guzzlers. Bitcoin mining is no longer a commoners game, the rules do not allow it. The expectation of bitcoin mining rigs finally going silent is in a century’s time, and the world cannot hold itself before then. Cleaner alternatives can be devised, and the bitcoin mining industry can be regulated to allow for cohesive operations within the precincts of the environment.

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5 Immunization Challenges Encountered Among Children

September 1, 2023/in Uncategorized /by Alex Musyoka

Immunization is the delivery of an antigen package to influence a particular immune response to a pathogen of similar nature. Before the age of 18, a person is supposed to receive a range of bacterial and viral immunization packages. Popular vaccinations include Influenza vaccine which is delivered annually in children and adults; Diphtheria, Tetanus, and Pertussis (DTaP); Poliovirus (IPV); Measles, Mumps and Rubella (MMR), Varicella (Chickenpox), Pneumococcal Vaccine(PCV), Haemophilus Influenzae type B (HIB), Rotavirus, Hepatitis A&B, Human Papillomavirus (HPV), and Meningococcal A&B.

Table of Contents

Significance of Immunization

Disclaimer: Immunization Risks

Immunization Enabling Factors

Barriers to Immunization

Significance of Immunization

The United Nations Children’s Fund (UNICEF) lists five reasons immunization is important, not just for the individual’s life but for the universal good:

Immunization saves lives, as some of the diseases vaccinated against are very fatal once they attack. Smallpox was once a killer pandemic but has since been phased out thanks to the now available smallpox vaccine.
Immunization protects generations to come. By preventing infection in the current vaccinated lot, contagious diseases are mitigated from spreading and infecting new generations. Moreover, research has it that a mother who contracts rubella during the first trimester may give birth to a child with the Congenital Rubella Syndrome (CRS) which causes delayed development, heart defects, and deafness. The Rubella vaccine is very available and may help mitigate such generational effects.
Immunization saves the costs of disease treatment and management. Most vaccine packages are free of charge, thanks to priority community healthcare by various stakeholders and governments. On the other hand, diseases that attack later in life may result in costly prolonged hospital stays, expensive medical procedures, and high-price medications.
Immunization helps prevent major disabilities. Many children and adults are unfortunately suffering from permanent disabilities caused by diseases such as poliomyelitis, diseases that would have been prevented if the vaccine was administered at the right time.
Immunization protects loved ones and the community. Some contagious infections such as measles have been seen to expose community immune weaknesses by spreading rapidly. Infants at very young ages may have not received vital vaccinations, and suffer greater risk when those infections strike. Therefore it is important for all eligible children to receive immunization in due time to help protect themselves, their families, and the young human beings who have not had the privilege of getting vaccinated.

Disclaimer: Immunization Risks

Immunization is universally hailed not for its ultimate magic in disease prevention, but because the benefits outweigh the risks. Recent research has revealed that immunized children may suffer higher risks of contracting life-threatening illnesses. The Haemophilus Influenzae Type B (HItB) has been found to increase incidents of insulin-dependent diabetes in those who receive the vaccine than those that are not immunized. Vaccines also have side effects that may expose unattended underlying conditions in children. That said, research on various vaccines is very much alive, and it is the due diligence of the parent to relay any underlying conditions with the child, and the provider to take every step to address those issues.

Immunization Enabling Factors

Immunization’s success story is made possible through collaboration of various important stakeholders including government, legislators, parents, human resource, and funding.

Governance and leadership offers the framework of the production, distribution, and administration of vaccines across the public. Government health and finance institutions involved in the vaccination campaigns ought to exhibit high accountability to reach optimum effectiveness of immunization strategies.
Immunization strategies are hosted by national and sub-national partners who arrive at specific target areas and generate visions and goals for the success of immunization campaigns.
Legislation counters all compliance barriers to immunization. In some places the parent is punished for denying children immunization, while some legislations define the safety and quality standards to be embraced by health providers for a safe immunization campaign.
Infrastructure is an important enabling factor, as it facilitates the accessibility of immunization by the public, after the vaccines have been prepared and made available free of charge. The perfect infrastructure includes up-to-date data storage facilities, defined transport networks to all zones, and unaltered communication between the public and providers.
Health and essential human resources are key to implementing immunization campaigns. Major barriers of immunization have been attributed to a short or under-skilled human resource in immunization centers. Health and essential human resources ought not only be adequate, but skilled enough to detect, communicate, and deal with any challenges faced during immunization.
Lastly, the immunization vaccines, professional, and infrastructure are all resources that require funding. Developing countries have galloped in under-immunization since there is only but limited funding for immunization resources. In developed countries, the public-private partnership facilitates a smooth campaign for 360 degrees immunization coverage.

Barriers to Immunization

Accessibility of immunization as a health service. Difficulties exist in the accessibility of health services and therefore immunization, as the services may be out of reach, too expensive private facilities, and too crowded public health centers. Some places have embraced mobile vaccination, such that vaccination delivery is separated from overall health services. That way, more area can be covered in a single day, and the mobility facilitates immersion of service delivery in remote places.

Immunization tracking and health recording.

Health records have been difficult to maintain not just in immunization campaigns. Some patients may randomly shift facilities, making it hard to track their immunization routine in a single medical file. Electronic Health Records and vaccine schedule cards come in handy. Further, there needs to be a parallel health record system that is accessible by multiple health facilities which may be visited by similar patients at a go.

Parental hesitancy and misconceptions.

There exists a myriad of misinformation on the implication and risk-factors associated with immunization. It is true, immunization comes with its own risks and there has to be a platform for exchange of information about the possible risks. Parental hesitancy is difficult to deal with, since some of the reasons are rooted deep in the parent’s lifestyle and culture. Parents themselves may have evaded immunization and lived equally healthy lives. This may lead them to want the same for the children, not knowing the health hazards lurking in the near future.

Providers have a role to play in giving the correct and adequate information to help the parent make an informed decision. In some jurisdictions, particular vaccinations are mandatory and the patient has no authority over their administration. This may help in cases where the parents have to be forced, with well-defined implementation procedures.

Healthcare personnel relationships with patients.

Patient-based care is also critical in immunization and may influence the parent to fulfil the immunization needs of the child, even when it contradicts their beliefs.

Other systemic barriers exist in immunization, such as inadequate infrastructure, insufficient supply, and inadequate personnel. These are challenges experienced in the entire healthcare realm, and ought to be addressed together with other healthcare services within the clinical facilities.

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How to Prevent Malnutrition among Children

August 31, 2023/in Uncategorized /by Alex Musyoka

Malnutrition has overly been classified as an ecologically-induced condition, whereby the patients suffer as a result of famine and related food availability challenges. However, much interest is overlooked in malnutrition among children due to medical reasons, whereby prevailing physiological conditions within the child, or poor feeding practices deprive the child of important nutrients for proper growth.

Table of Contents

Epidemiology

Malnutrition has for quite some time been the major killer of infants below the age of five, with data showing a prevalence of malnutrition in 16% of children in this age bracket, and the condition attributed to the death of 1 ⁄ 3 of children in that age.

Simply put, malnutrition is the low or none at all intake of food supplements that are essential to the optimal functioning of the body. However, some authors/scientists have elected to include all forms of nutritional disorders in malnutrition, covering both undernutrition and overnutrition. This article shall, however, stick to malnutrition within the context of undernutrition. Various forms of malnutrition (undernutrition) include stunting (low height for age), wasting (low weight for height), underweight (low weight for age), and deficiencies in vitamins and minerals.

Complications of Malnutrition

Malnutrition has very fatal implications among children, mostly when it is as a result of low intake of vital nutrients such as protein. The implications are physiological, medical, and cognitive.

Medical conditions of marasmus and kwashiorkor

These are immediate danger zones in malnourished children. Marasmus is characterized by muscle wasting, wrinkled skin, and metabolic underperformance such as bradycardia, hypotension and hypothermia. Kwashiorkor, on the other hand, is caused by inadequate protein intake but other nutrients may be at normal levels. It is mostly prevalent among children who have sufficient intake of carbohydrates such as corn and rice, but due to some reasons do not have adequate intake of flesh and plant protein. Kwashiorkor is uniquely characterized by edema (body fluids in the belly, feet, and hands), among other symptoms such as loss of hair and dermatitis.

Prolonged deficiency of energy

This is due to insufficient nutritional intake leads to emaciation of muscles and body fats, causing general weakness in the whole body. In children, wasting may impair the immune functioning of the body, leading to prolonged suffering from infectious illnesses, a complication that has high mortality chances.

Emaciation of muscle mass in malnutritional wasting

Wasting spreads to vital organs such as the heart, causing cardiovascular complications. With the ejection fraction down to below the average (60%) rate, some other vital organs dependent on blood circulation remain at risk. Hypotension impairs renal functioning due to a low glomerular filtration rate, with perennial deficiencies risking a renal failure of the affected.

Stunted growth

Stunted growth is characterized by not only low physical development but also cognitive impairment due to nutritional deficiencies. Affected women, due to obstetric complications, may give birth to underweight children, passing on the malnutrition syndrome through generations. Stunting as a result of malnutrition has an irreversible implication on the height of the child, such that they may maintain the short stature even in adulthood.

Malnutrition impairs the gastro-intestinal function, causing more nutrient deficiency even during the refeeding stage, leading to the metabolic refeeding syndrome. Malnutrition has been found to cause exocrine pancreatic deficiency causing impaired intake of nutrients. Intestinal permeability is also set to reduce, leading to diarrhoea and further nutritional deficiencies.

Measuring Malnutrition

Nutritional screening and assessment is the first step to arresting malnutrition among children. Nutritional screening tools are used to check the physical changes of the body and detect any nutritional imbalances among children so as to monitor their well-being. Common parameters for nutritional screening include clinical assessment, anthropometry, body composition methods, functional assessment and laboratory experiments.

In clinical assessment, the patient’s medical records are monitored closely to check for any malnutrition risk-factors. Malnutrition may be caused by illnesses in the digestive tract which hamper the ingestion, digestion, and absorption of nutrients into the body. Further, clinical assessment includes physical examination of the patient’s muscles, bones, and body fats to detect wasting, stunting, and underweight malnutrition.
Anthropometry encompasses the many forms of measurement of the body size, weight, composition, and other proportions. Body Mass Index is a formula for measuring the body weight/height ratio, to detect stunting among children. Mid-arm circumference and skinfold thickness are renown parameters of monitoring body size changes in patients.
In body composition methods, assessment models are used to determine the proportions of the different body constituents; fat mass, fat-free mass, extracellular cell mass, body cell mass, bone mineral mass and muscle mass. Through imaging (X-ray, MRI, CT), densitometry, and bioimpedance analysis, information is acquired on the proportions of different body constituents which determine the nutritional composition of the overall body.
Functional examination entails monitoring the strength of body muscles and the performances of respiratory and immune functions. Laboratory assessment includes the testing of protein content and other nutrients in the bloodstream. Through these parameters, the caregiver determines the nutritional health of the patient and if malnutrition is detected early then the condition is reversible.

Preventing Malnutrition

Nutritional sufficiency in the child begins at the onset of the pregnancy all the way till the child is self-sustainable, and comprehends the concept of nutritional balance.

Healthy feeding during pregnancy

During pregnancy, the mother is advised to eat healthily, with enough fluids, and take frequent rests for optimum metabolism. Further, providers should check for nutritional illnesses like anemia and nutritional deficiency, making sure the pregnant mother has a balanced nutrition. The mother is highly advised to avoid all forms of drugs and substance abuse; quit smoking and cut alcohol intake.

Proper breastfeeding

Immediately after birth, the mother is advised to breastfeed the baby for six months non-stop. Medical advisory dictates that during the six months, the baby should feed on breast milk alone without complementing with other solid or liquid foods. During the six months, the baby shouldn’t have water, or infant formula as it has commonly been the case.

Breastfeeding has many advantages over other artificial methods besides just nutritional value. Through body contact with the mother, the baby develops a stronger immune system, supplementing the nutritional impact of breastmilk on the baby’s immunity. A point to note is that colostrum is meant to be fed to the baby, hence the mother should start breastfeeding within hours of the delivery to capture the highly nutritious colostrum.

Breastfeeding even during weaning

Weaning begins after six months, and even during this period the mother should not reduce breastfeeding the baby until maybe 24 months. Normally, the baby’s complementary food is specially modified from the main “adult” meals, and the mother should not think too much or observe any specialties when feeding the baby with this food.

Solving prevailing infections

There exists a plethora of infections and illnesses that can hamper the child’s nutrition just as it happens in adults. Diarrhea simply means that food ingested has not been digested as required, and is an indicator of an underlying illness. Prolonged diarrhea is one of the major causes of malnutrition among children, and the guard should be reinforced by cooperation and information sharing between the mother and healthcare providers.

Ecological factors like famine could be beyond the mother or the healthcare provider. Food security falls into another realm of governance and resource allocation. However, involved individuals can practice drought-resistant farming, or have long-term solutions for water storage so as to have a consistent supply of food. Remember the health of the mother, especially during pregnancy and breastfeeding, will utterly shape the nutritional status of the child.

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Ways of Ending Childhood Obesity

August 31, 2023/in Uncategorized /by Alex Musyoka

Childhood obesity is prevalent in over 20% of the US childhood population

Childhood obesity is over time growing into a global concern. The overweight pandemic is arguably more prevalent in developed countries than others, with countries like the USA bearing the brunt of an obese childhood population. Put in context, the Center for Disease Control (CDC) records that over 14 million children between the ages of 2-19 have exceeded standard Body Mass Indices (BMIs), which is close to 20% of the entire childhood population in the US.

Childhood obesity has been traditionally attributed to excessive consumption of high-calorie foods. However, new research has found danger zones in sugar and soft drinks intakes, high meal portions, mental misfits, and scanty body exercises.

Obesity in childhood has more repercussions in later life stages, as the children are likely to maintain the excess Body Mass Index in adulthood or even become bigger. This poses huge risks of contracting lifestyle conditions like diabetes, liver, and cardiovascular diseases in their lifetimes.

Table of Contents

Childhood Obesity Risk-Factors

Childhood Obesity Health and Social Hazards

Diagnosing and Treating Childhood Obesity

Childhood Obesity Risk-Factors

Calorie foods have long been known to dramatically increase BMI indices, mostly among children who have such foods in high abundance. It’s one causative agent, but there’s more:

Fast foods, cakes and bakes, snacks etc. High-calorie foods have been the order for young children who have lively taste-buds. Traditional food is considered mundane, and while fast foods may not be utterly catastrophic as we make it sound, it is the consistency that piles up fat in the child’s blood stream and vital organs.
Lifestyle habits – just like in adults, unhealthy lifestyles breed conditions such as obesity among children. There has been so much discussion into the unhealthily stiff lives our children are subjected to, thanks to video games etcetera. Any substantial diet has to be put to work lest it will be transformed into fat and stored in the body, and we do know the danger of this.
Psychological stress – Arguably, appetite for fast foods is highly catalyzed by boredom, something that ourselves we can attest. Moreover, scientists have successfully attached high meal portions to the many forms of mental misfits like depression, whereby children feed heavily to console emotional breakdowns.
Genetic Heritage – It is not uncommon for children to be born with “heavy weight” genes. When inherited, the Prader Willi genetic syndrome elicits obesity. Children inheriting conditions like low-thyroid have been seen to have high appetite levels, risking obesity. Further, family environments fond of obesity-inducing lifestyles such as junk-feeding and high sugar intakes increase the chances of the young to exhibit obesity.
Medical and Socio-economic factors also induce childhood obesity. As revealed earlier, children in developed countries have higher risks of becoming overweight. The affordability of fast-foods and high-calorie diets may explain this phenomenon.

Childhood Obesity Health and Social Hazards

Obesity has been known to cause consequential health complications, but highly overlooked are the social implications subjected on obese children.

Excess body fats are the poison in obesity, with its impact trailing from the head all the way down:

Stroke

Obesity has been directly linked to stroke due to inflammation of the brain caused by excess fat deposits. All over the body, high fat content in the blood poses plaque risks in blood vessels, causing high blood pressure. Hypertension is the number one causative agent for stroke.

Sleep apnea

Also an obesity health hazard, where excessive fat deposits on respiratory tracts narrow air passages. Muscle activity is highly censored during sleep, and this proliferates the risk for suffocation, consequently risking heart attacks and a whole load of cardiovascular nightmares.

Liver Disease

Some call it Non-Alcoholic Steatohepatitis (NASH), which is the inflammation of liver cells and critical parts by fat deposits in the liver. These deposits are also associated with other complications such as Liver Cirrhosis and Liver Cancer.

Diabetes

Obesity is a chief cause of Type-2 Diabetes, which is commonly associated with insulin resistance or a total lack of insulin. High fat deposits in the pancreas and around the liver cause respiratory cells to reject insulin-action, risking a big chance of liver failure. Type-2 Diabetes is known to cause serious cardiovascular and kidney complications.

Psychological and Social Struggles

Victims of obesity will arguably grapple more with esteem challenges than worries about medical complications. Obese people are at a higher risk of depression, stigmatization, and anxiety disorders. This leads them to be secluded from the outer society, confining them to even greater risks of further obesity.

Diagnosing and Treating Childhood Obesity

Obesity is monitored through physical examination and medical records. A Body Mass Index is often calculated to apportion the child’s weight against the height. A BMI of below 25 is considered healthy while above 30 is rendered chronic obesity with urgent need for therapy. Other measurements include weight balancing, waist , and skinfold measurements.

Arguably, obesity is one of the conditions with widely diversified treatment remedies. Treatment for obesity includes emotional and psychological therapy, dietary changes, lifestyle adjustments, medicine therapy, medical procedures, and corrective surgeries.

Dietary Changes

Most of the decisions are made by the guardian, and may include resolutions to replace sugary, calorie, and carbohydrate meals with healthy fruits and vegetables. Some food would also be dropped entirely, such as soft drinks and candies.

Lifestyle Adjustments

Parents are once again the administrators of these. The child will have to be trained on a different lifestyle to increase their mobility, proliferate exercises, and reduce time spent in idle positions.

Psychological Therapy

Addressing the root cause of overfeeding could help entirely arrest obesity. Children should be accorded a safe space to express their fears, family concerns, and social challenges. Further steps can be taken by the psychologists to prescribe medications or other remedies.

Medical Procedures to Counter Childhood obesity

Advancements in medicine have invented new ways of bypassing tedious exercises with rapid effects. The list is big, but perhaps we can mention a few:

Endoscopic sleeve gastroplasty – stitching the stomach to reduce its size.
Intragastric Weight Loss Balloon – a water-filled balloon to reduce the stomach vacuum and achieve fast fill-up with drastically reduced meal portions.
Adjustable Gastric Banding – reduction of stomach size through sub-division. A band divides the stomach into two, allowing just a narrow passage that retains food for prolonged periods.
Gastric Bypass Surgery – a significantly smaller pouch is connected to the intestines from the esophagus, acting as the stomach, food now flows directly from the higher part of the stomach to the intestines.
Gastric sleeve – a big portion of the stomach is ridded and the reduced stomach size now holds less food.

Medicinal packages are issued by qualified physicians depending on the child’s nature and diagnosis.

Other guerilla remedies include vagal nerve blockage which reconverts nerve emissions to reduce appetite, and gastric aspirate where a tube is used to drain the stomach after meals.

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Ethical Issues in Euthanasia – See 10 Types of Euthanasia

August 29, 2023/in Uncategorized /by Alex Musyoka

Fictitious Euthanasia Scenario: July 7th was Joan’s duty day in the Maryland Hospital oncological unit. A fateful evening it was, as there were so many appointments for radiotherapy during the day and some had to be extended to the night. The logging, preparation of documents, not to mention the handling of patients in different cancer phases was just too energy draining for her. And when a call came through from one of the oncology wards, she was so hesitant to pick it up.

A flash glance at the phone and the number was one she has often seen in the better part of the week – it was Christine, a 25 year-old family woman who had suffered the excruciating ordeal of stomach cancer. The cancer spread from the stomach and was now in the intestines.

The Dilemma

The woman had no appetite, but the cancer also made it very difficult for her to relieve her bowels. Imaging in the previous week showed that the cancer had metastasized to the pelvis, and the pain on her hips was so excruciating to even allow her to walk.

Joan knew what Christine wanted, she wanted it all week – a relief, a rest from all the pain and suffering she had endured in the last seven months. But Joan had been very categorical, she was not going to abscond from her professionalism principles of vowing to protect and prolong life at all costs. Even if she knew Christine was a lost cause- four failed surgeries and no reception of painkillers, it was not in her position to grant Christine her wishes. But the patient had requested it so desperately, and made it look like it was the ultimate aphrodisiac.

This time she would give it to her. Four doses of Pentobarbital (Nembutal) in her coat pocket, Joan walked into Christine’s room, placed the medication in Christine’s hands, and stepped back to watch life leave someone’s body slowly. Five minutes and it was done. The pain was gone and life was gone too.

Inside this article:

The Concept of Euthanasia

Types of Euthanasia

Ethical Issues in Euthanasia

The Concept of Euthanasia

Just like in the introductory scenario, euthanasia has always been an ethical dilemma with the bulk of the contemplating left for the healthcare provider. Most religions and socio-political societies have prohibited euthanasia in all its forms. However, most countries have not yet spelt out detailed legislation over the matter, with only a few countries like Canada, Belgium, and Netherlands making strides in legalizing some extent of euthanasia and spell out the limits too.

The initial concept of Euthanasia has always been pro-life versus pro-choice, whereby the demands of the patient are weighed against the professional ethics of protecting life by all means. Euthanasia has, however, been abused and relatives are now given a say in determining the fate of a loved one due to other reasons other than alleviating pain. Some have requested euthanasia based on predictions that the medical costs will go over the roof alongside some certainties that the patient may not make it in the end. All these are ethical issues that require adequate support from legal regulations with all possible scenarios addressed in detail.

Types of Euthanasia

Voluntary Euthanasia

This is euthanasia administered to a patient in accordance with their wishes. In this case, the patient is conscious, and believed to be of sound mind and body to make the important decision. It remains a debate on whether a patient’s judgement may be clouded by the prevailing suffering such that they choose to commit suicide rather than hang on for some time.

Involuntary Euthanasia

It’s done against the wishes of a patient. This covers all forms including mercy killing, request from family members, and the withholding of medical aid. In involuntary euthanasia, the patient spells out their wishes in a sound state but they are rather circumvented by the attendant.

Non-voluntary Euthanasia

This is done without the consent of the patient. Here the patient is not in a position to make the decision; could be unconscious, incapacitated, or underage such that the decision has to be made by someone else responsible.

Active Euthanasia

Refers to euthanasia administered fully by the attendant. In common cases the attendant injects a drug like morphine into the patient’s bloodstream, causing their death.

Passive Euthanasia

The one administered indirectly by the healthcare provider. The attendant may withhold medical aid (e.g life-support), withdraw the support, or watch as the patient administers euthanasia on themselves.

Mercy killing

This is where a physician or responsible official ends a patient’s life to alleviate them from suffering. Mercy killing is done without the patient’s consent, and may consist of all forms of euthanasia save for voluntary.

Self-administered

This is where the patient voluntarily takes their own life without the intervention of others. This may happen with or without the knowledge of the physician responsible but they do not play part in it. A patient may take fatal overdoses, cut off life-support themselves, or do anything else that takes the form of suicide.

Other-administered Euthanasia

Other people rather than the patient administer euthanasia. This could be the family, friends, or other people with their own intentions making the decision on behalf of the patient or fulfilling the patient’s decisions.

Physician-assisted Suicide

Entails the partial participation of the physician in charge in administration of the euthanasia or availing of necessary requirements for the patient to administer it themselves. In the introductory case scenario, the patient administers the euthanasia themselves but the drugs are presented by the physician in charge. This is assisted suicide.

Ethical Issues in Euthanasia

There exists a thin morality line between euthanasia (directly induced death), and allowing the patient to die through delaying or withholding medical aid. Artificial life-support treatment methods are considered extraordinary treatment, and some may accept the withholding of this form of treatment. On the other hand, withholding ordinary treatment in the form of drugs is widely condemned as unacceptable.

Ethicists have time and again debated over the level of participation of a physician in the death of a patient through euthanasia. Just like we may not condemn a chemist for selling lethal drugs in a suicide case, the physician who passively participates in euthanasia may not be condemned as much as the one who administers the euthanasia themselves, wishes of the patient notwithstanding.

Bottom line: Euthanasia is a moral dilemma, but the physician ought to practice in the full awareness of the laws governing the administration of euthanasia in different scenarios: the level of the physician’s participation, consent from the patient or the family, and the type of drugs used. Different countries have different regulations, but in all states involuntary euthanasia remains prohibited.

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Impacts of Privatization on Economic Growth

August 29, 2023/in Uncategorized /by Alex Musyoka

Privatization takes us deep into the public finance realm, where several aspects are put into consideration, aside from the primary aim of making profit.

Definition of Privatization

Privatization has everything to do with the transfer of government and otherwise publicly held assets into ownership by private entities, whether a single individual, a group of shareholders, or by another company. In the realm of finance, privatization as a concept is mainly focused on corporations that have economic productivity, rather than just assets.

Privatization may involve corporations in any industry. Governments have before privatized stand-alone companies such as food processing plants, infrastructure companies such as road construction and maintenance authorities, energy corporations such as electricity suppliers, transport companies such as airlines and mass transit systems, telcos, and utility services such as water suppliers.

Privatization is utterly a fiscal policy, developed by a government as a strategy to serve particular economic objectives.

Reasons for Privatization

Governments decide to lay off companies for the following causes:

For better efficiency – one of the reasons for privatization in most cases is to streamline the efficiency of the company, report substantial profits, and make strides in business partnerships and job creation through a sustainable financial health.
To separate individual businesses from politics. Government parastatals are often mixed up in political activities, deviating from the primary goal of efficiency, service/product delivery, and creating value. By establishing corporations privately, deeds such as corruption are curtailed, while company officials work diligently with accountability as they report to the shareholders who have the power to dismiss anyone in the company.
To boost trade – overally, corporations may be privatized to boost trade and business in the economy. Private corporations, when streamlined properly, may function to complete the cycle of trade, by either introducing raw materials, facilitating services, and the end product.

Different Methods of Privatization

Governments and transacting partners will develop particular terms of exchanging ownership of the asset in question. These methods of privatization differ in the returns from privatization, the recipients of privatized corporations, and the role the government plays in privatizing corporations.

The conventional way of privatization is the sale of a public corporation to a private entity, and the government transfers full ownership to the private buyer. Most commercial corporations are subjected to this kind of privatization, and investors begin the possession of shares to the privatized asset/corporation.
The government may issue vouchers in a socialist environment, such that all citizens are shareholders in the public corporation. Vouchers may be issued free of charge, and at the same time they may be sold at affordable prices to citizens. Afterwards, the citizens get a chance to exchange the shares with real money.
Restitution is privatization where the government returns back assets to their original owners. Historical predicaments are the main reasons for the restitution approach, with the government attempting to reparate victims of injustice by returning their resources. Getting the original owner has always been an uphill task, as well as conducting accurate valuation for the assets, making restitution quite difficult.
In internal privatization, ownership is transferred to a senior employee in the corporation, who has shown positive indications of excellent management of the public corporation.

The first option, i.e. privatization by sale to private investors has become the most common method due to its convenience. The government makes money, and accords the company its real value through transferring it into the stock market.

Impact of Privatization on Economy

Almost every impact of privatization touches on income distribution, showing that the concept of privatization is not only financial, but rather socio-economic, in a way that the privatization initiative corrects social inequalities.

1. Employment

This has been one of the cons associated with privatization, such that corporations in their public nature will employ as much as it can, while as a private entity, overemployment is one of the impediments of profit-making that the private corporation will want to deal with. By limiting and overhauling employment, privatization boosts its efficiency and gains the trust of shareholders as a result of promising profit margins.

2. Competition

Privatization introduces new players to the industry. However, the competition may not be very perfect, as some corporations may have been monopolies in their preceding states, bringing on the monopolism in a community of private businesses.

Competition best takes place without political interference, whereby corporations cannot be bailed out, or given preferential treatment by oversight authorities. Without political interference, privatized corporations bring in additional competition to the market, sparking product enhancement, and ultimately better living standards.

3. Price Changes

By the simple explanation of introduction of competition, privatization generally lowers the price for different products in the industry. Consumers have increased options and the supply may go higher than demand in the said market. Consumers cherish low prices, but in the long run they will do a lot of saving to prepare for uncertainties in the market. We all can tell of how savings build the economy; investments are made, business booms, and the cycle goes on and on.

4. Balance of Trade

While privatization’s efficiency boosts productivity on a national scale, there are high risks that public corporations once listed as up for sale will attract foreign investments more than the targeted local investors. In developing nations, the local investors may not have the financial muscles like foreign investors. Foreign investments accumulation in a country may have some positives in terms of job creation and others, but in the long run the country suffers from political and economic subjugation by the foreign powers.

5. Fiscal-monetary impacts

Massive privatization may be government efforts to repossess money in circulation, the same way it happens with the sale of government securities. This strategy, though less elastic, may help in efforts against hyper-inflation, setting an economy up for moderate financial health.

Privatization also promotes the culture of saving and investment in a country, allowing people the avenues to invest their savings through the private corporations. A highlight to mention, moreover, is the impact of privatization on the quality of life. Privatization increases the efficiency of services than they would have been in the hands of government operatives. Though empirically undetermined, privatization of utilities such as water, electricity, transport etc., may improve living standards for the people, as the services have now been separated from unnecessary political upheavals.

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3 Branches of Finance: Personal, Corporate, and Public Finance

August 29, 2023/in Uncategorized /by Alex Musyoka

These three are the types of finance. Considering the different financial sizes of the three, they can also be referred to as the levels of finance; from a personal level to a corporate, and then public level. But what about finance?

Finance as a term has varied definitions, but most center around the management of money. Others though, include aspects like creation and circulation of money. In real sense this is the case with many versions of finance. As a course, finance encompasses cash flows, capital returns (dividends etc.), financial statements (balance sheet, profit/loss, income statements etc.), behavioral finance, interest rates and yields. Professionals in the finance industry mostly venture into commercial banking, investment (banking), insurance, corporate finance, treasury (public finance), audit services, and wealth management.

The entire finance realm and course revolves around personal, corporate, and public finance:

Personal Finance

Refers to ‘management’ of money at a personal level. Encompasses income, expenses, savings, investment, and protection.

Income – All forms of rewards derived from labor, businesses, investments, and assets. The various forms of reward are wages, salary, commission, profits, interest, rent, pensions, dividends, and bonuses. Income plays the primary role of settling financial obligations, even though the income itself may not be in the form of immediate cash.
Spending – In spending, the money now leaves an individual’s ownership. Spending ensures a healthy financial living while at the same time wants are satisfied. Controlled spending is achieved by an order of priority, based on principles like the pyramid of wants. Budgeting is also done to achieve controlled spending.
Saving – In the event that the income available is not exhausted by the spending, there results a surplus. This surplus is preserved for other reasons among them emergency funds, house savings, school fee, and anticipated medical fees.
Investing – Individuals possessing surplus funds can elect to invest the money in diversified means. Some may buy securities, others put the money in productive bank accounts, while others may venture into businesses directly.
Protection – After getting income, human beings now seek to protect their wealth and life at the same time. This is where the individual enrolls in an insurance program. Common insurance policies are life assurance, motor vehicle cover, theft and burglary, and health insurance..

Corporate Finance

Corporate finance is a higher level of finance management. This level of finance is defined as the management of a corporation’s investments, returns, and resources in a way that achieves profitability for the shareholder(s). Some of the aspects of personal finance are carried on to corporate finance, only on a larger scale. The realm of corporate finance entails capital investments, capital financing, and managing returns.

1. Capital Investments

This is the management of a corporation’s resources by investing them in a controlled manner so as not to risk losses. After shareholders pour in their equity capital, they will expect those resources to yield the most achievable profit margins. At the same time, the shareholders will want assurances that their monies will not drain down the pipe. Capital, therefore, must be managed with a very reduced risk margin. Also, capital from other sources such as lenders has to be accounted for fully. This is achieved by corporate financing.

2. Capital Financing

Corporate finance also entails development of strategies to source capital for the financial needs of the company, and to achieve other objectives like expanding the corporation, or dealing with competition and market shocks. Available capital financing channels include:

Loans – a popular strategy for capital financing, loans are debt obligations used for capital financing, and come with a maturity date upon which the obligation should be settled. The lender, however, does not have a claim to the returns of the capital invested, and can only have access to the borrower’s assets incase of a default.
Equity issuance – Capital is raised by issuing shares in a public or private forum. The investors/shareholders have a claim to the corporation’s assets and any returns that come out of their investments, all in accordance with the amount of shares held by the investor.
Bonds issuance – instead of selling out significant rights of the company, the company may opt to issue bonds directly to investors. Issuing bonds is a brilliant strategy for financing, as the interest rates are lower than direct loans from banks. The strategy is also perfect for short-term needs without the need to sell out a part of the company. For investors, bonds have certain returns unlike equity shares. Its agreed upon with the issuer.

3. Returns Management

Corporate finance also entails the management of returns gained from the business of the corporation. A corporation has two choices when it comes to managing returns; plough back to investments, or share dividends with investors. Even as a management choice has to be made between these two, most times the approach usually merges the two, and the only decision to be made is the amount to be shared as dividends and the percentage to be plowed back to investments.

Public Finance

This is the major arm of finance that is in the purview of government and constituent authorities like legislature and central bank. Public finance is the management of a jurisdiction’s resources to achieve the following objectives:

Economic development
Emancipation from income inequality
Price stability
Favorable balance of payment

Public finance achieves the above objectives through several functions such as:

Public revenue collection – favorable strategies around taxation, penalties, and fees.
Allocation of public revenue – Accountable sharing of revenues across the government and its stakeholders to achieve economic equality. Public budgeting falls under this scope.
Public debt management – consideration of different economic and political factors to acquire alternative finances through debt issuance to cope with budget deficits and emergency needs.
Managing public assets – accountable management of a jurisdiction’s public assets to achieve the satisfaction of public needs. Public assets include infrastructure and facilities such as ports, airports, roads, railways, buildings, waterways, schools, commercial companies and other assets under the ownership of the government.

Public finance has become a critical scope of overall finance because the performance and condition of personal and corporate finance is regulated, directly and indirectly, by the government and public finance organs such as the central bank.

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Effects of Income Changes on Consumer Choices

August 28, 2023/in Uncategorized /by Alex Musyoka

Income changes are known to impact generally the amount and net value for goods purchased. However, when it comes to consumer patterns, there is more to it, considering the different types of goods in the eyes of consumers.

This article will heavily rely on microeconomics concepts namely the income effect, marginal and total utility, price elasticity of demand, among other concepts.

Also in this article, we will see how income changes affect consumer choices in two ways; the amount of goods and services purchased, and the type of goods purchased.

Effect of Income Changes on Number of Goods Consumed

Increase in income causes the increase in the amount of money at the consumers’ disposal. The consumers’ purchasing power is thus increased, and the demand for goods and services at both a personal and general level tends to rise. In a normal economic environment, an increase in the price of a commodity may reduce the number of goods bought at a go. This would be best explained in an example.

Example scenario

Nicholas has a budget constraint set at $500 for shoes in a given year. One pair of shoes goes for averagely $50 so the number of shoes to be purchased are budgeted at 10 per year. Shoes are non-primary commodities, and this level of price indicates that Nicholas spends on sub-luxurious shoes. Enters the theory of price elasticity in demand for goods and services.

Economists have desired to measure the changes in demand upon different extents of changes in price of a commodity. Goods with high elasticity (more than 1) change their demand drastically when the prices are altered with, even the slightest change.

Goods with low or infinite elasticity (inelastic goods) hardly change their demand when their price changes. Examples of inelastic goods are luxury goods and non-discretionary products like shoes. Elasticity in demand is affected by two things; availability of substitutes and urgency of products. High elasticity is associated with high availability of substitutes and low urgency. The contrary is associated with low elasticity.

Back to our example, shoes purchased at $50 fall under (i) high availability of substitutes and (ii) Low urgency. Such goods are referred to as discretionary goods which one easily do without.

Effects of income changes

In this year, contrary to norm, Nick’s salary has been cut by 40%. That means the amount of disposable income is reduced to 60%, and as a result the budget constraint for shoes in the year has been cut to $300. Therefore, Nick has two options; (i) To reduce the number of shoes purchasable to 6 ($300 ÷ $50), or (ii) Reduce the quality of shoes purchased to $30 so the number of shoes remains at 10 for the year.

Nick can also find a balance between the two, such that the quality of goods will be reduced, and the number of goods also lowers. Either way, the number of goods purchased is lower at the same price tag. This explains the effect of income changes on the number of goods purchased, and how this eventually reduces the demand for the goods in mention.

Effect of Income Changes on the Types of Goods Consumed

Income changes also impact the type of goods purchased, such that the consumer may change the combination of goods they buy. Look at the case scenario below:

Case Example

Linda receives a monthly salary of $7000, based on which her weekly budget for dinner is constrained at $500. A booked table at a high-end restaurant costs $100 while making dinner at home costs her $50. At her current income level, Linda’s dinner combination is 3 restaurant dinners and 4 dinners made at home.

Linda’s salary is, however, set to be revised to $8,500 per month. Automatically, every aspect of Linda’s expenses is set to change for the better, due to an increase in the disposable income. By direct proportionality, Linda’s budget constraint for food is now set at 600. Linda is thus allowed to make up to 5 stops at the restaurant for the $100 dinner, and only has to make home dinner two times a week.

Three months down the line, Linda’s employer has gone through significant breakdowns which force a massive pay cut for employees, and Linda will now receive $5600. By direct proportionality, Linda’s disposable income earmarked for food budget comes down to $400. As expected, she abruptly changes her food consumption pattern to 1 dinner at the restaurant, and now makes 6 dinners at home.

Effects of income changes on Type of Goods

The above phenomenon is known as the income effect, where there are two types of goods/services which change in two opposite trajectories upon an increase or decrease in the consumer’s income. The two types of goods are inferior and normal goods.

Inferior goods are in Linda’s case scenario the dinner at home, which increases demand as the consumer’s income decreases, and reduces demand as the consumer income increases. The dinner at the high-end restaurant is in the income effect known as “normal” goods, which are goods and services whose demand increases as income increases, and decreases demand as income decreases. The income effect is made possible by the availability of substitutes, such as in Linda’s case whereby the “normal” high-end restaurant dinner can be substituted with the “inferior” and cheaper dinner at home.

Again, the extent of switching between types of products as a result of income changes varies with the elasticity of the goods or services in question. As from the above case scenario, dinner (at home and restaurant) appears to be very elastic, as a slight change in the income levels significantly impacts the demand for those products. Other concepts such as marginal and total utility also come into play in demand changes. Assuming that the restaurant’s menu is capped at $100, Linda may not spend more than the $100 no matter how much her income increases.

Consumer Choices, Income Changes, and Economic Conditions

When macroeconomics is considered in this case, consumer choices may be informed by prevailing economic conditions. During financial crises and similar predicaments, consumers tend to spend more on discretionary products (inferior), than on normal goods. So yes, income has an irrefutable effect on consumer choices as far as microeconomics is concerned.

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Income Inequality: Causes, Impacts, and How to Measure

August 28, 2023/in Uncategorized /by Alex Musyoka

Income inequality amplifies the greater social inequality present in our social framework. It refers to the disparity in the incomes of different people, cultures, and societies based on different demographics. Income inequality only considers earnings in the form of salary, wages, rent, profit, interest, yields, and so many other returns from the sale of one’s products, offering labor, or investing in capital. Income inequality performs and indicates almost as similar as wealth inequality. However, while income inequality measures periodical earnings, wealth inequality considers the value of one’s fixed and current assets.

Causes of Income Inequality

Why would two people have different incomes?

The conventional explanation is the development of in-born talents, abilities, and determination that has greater monetary value than someone without them. However, economists have arrived at a myriad of socio-economic, political, and cultural factors that determine income inequality. Remember, income inequality is always an indicator of a fragmented society, culturally and socially, economics set aside.

1. Educational level

The major indicator of income inequality in a perfectly natural environment, education has gradually crept into the society as a significant determinant of the quality of life. High-end jobs are accorded to C-suite officers who rake in millions, while unskilled laborers who are un-dependent on education live on peanuts.

2. Globalization

Income inequality across the world has been associated with historical events like colonization, facilitated by global intervention by other countries. Even currently, the existing transport infrastructure has seamlessly facilitated the moving of raw materials for processing in developed countries, while goods come back to be sold in the same countries. Globalization is a sensational factor, since different people harbor dissimilar perspectives to its impact of income inequality.

3. Technology

Technological advancements have only benefited the developed and rich while the poor manual laborers reel from joblessness.

4. Social bias

There has been unlimited concerns of historical injustices meted out to particular segments of the society to particular races, genders, and ethnicity. Socio-cultural bias has bore the blame for income inequality in highly-polarized places like the USA and some parts of Europe, and the issue has as a result been highly politicized.

Political power – In smaller samples, political power has generated significant affluence for particular groups of individuals across generations. Individuals equipped with political influence can access quality education, sufficient resources, and the requisite networks to advance their careers and businesses. Moreover, political power has been analyZed in the sense of ethnicities, races, and geographies which have greater political power than others.

How to Measure Income Inequality

The Census organization of the US lists over five methods of determining inequality, namely: the Atkinson Index, Equivalence Adjustment of Income, Gini Index, Mean Log Deviation, and Theil Index. We may look at all of these and several others in a snippet, but first things first let’s look at the top two measurement methods: Gini Index and Percentile Ratios

1. Gini Index

The Gini Index is the most commonly used method of determining inequality. The Gini Coefficient is derived from the Lorenz Curve, where the cumulative share of a particular community is mapped against the share of people in the population. Perfect equality rests at zero (the 45 degree line), as the income distribution matches with the population as it advances. The gini coefficient is calculated by dividing the area between the curve and 45 degree line with the total area under the perfect line. A gini index of 1 represents a very unequal population.

2. Percentile Ratios

Also known as the 90/10 ratio. The income of people in the upper 10% is calculated against the income of the bottom 90%, and the resulting percentile determines income inequality in the said place. The Palma’s formula divides the owners of the top 10% of the gross national income, and divided by 40% of the lowest in the income levels. The Palma index skips the middle class, a class that has been found to compose 50% of the income, with the other 50% shared between the upper and lower classes.

3. Subsidiary measurement methods

Atkinson’s model determines the role played and contributions made to income inequality by both ends. Equivalent adjustment of income measures the distribution of income in households, but with special consideration made to the households members to determine the economies of scale adopted by the said household. The Mean Log Deviation measures income inequality too, and just like with the gini coefficient, in MLD zero is a situation of perfect equality while 1 indicates high inequality levels. All these inequality measurements have specific distinctive objectives and ways of arriving at inequality measurements. They are unique both in the process and the outcome as well.

Remedies to Income Inequality

Solving income inequality involves addressing the key causes of socio-economical differences within the society. The following are some of the possible solutions:

Increasing minimum wage – only the poor bear the brunt of minimum wage, while the rich gain from a lower minimum wage as they are the employers. Hence, by raising the minimum wage, economic privilege will be shifted to the employee who will have better working standards and a higher income for themselves.
Progressive taxation – this involves a rising trend of tax rate as income levels progress. Progressive taxes is when the poor pay less taxes per income while the rich pay higher taxes per amount of income. That way, the poor are incentivized to grow from their state.
Provision of equal and available education to all. Education has arguably been a major determinant of economic prosperity among the past generations until recently, when technology took over. Equal education access may not provide similar skills and knowledge, but gives everyone an opportunity to learn if they wish so.
Open access to capital – individuals with entrepreneurial energies have to be allowed access to requisite forms of capital- financial, raw material, assets, and human resources. This way, these resources will not be only available for those with financial and political influence.
Fostering gender and racial equality – it is an uphill task to regulate a socio-cultural aspect of the society more than the economical part of it. However, societies should do all they can to achieve a society free of bias in education, employment, and business along lines of gender, race, or ethnicity.

The main role in controlling income inequality sits with the government of the day as it possesses requisite powers to accentuate efforts on job and business opportunities, and the level of income derived from these activities.

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