Part A: You are giving a talk on a new concept, economic insecurity. A skeptical audience member says that economists have been studying poverty for years and thus, economic insecurity is not a new concept. Provide a rebuttal as to why this is an incorrect statement (that poverty and insecurity are not necessarily the same). Secondly, identify two ways we can measure economic insecurity. Part B: Examining the relationship between income and well-being in any given year tends to suggest there is a positive relationship between the two variables. However, when examining well-being and income over a long-run period, there appears to be no relationship between these outcomes. Comment on this phenomenon and provide a possible reason for this finding given prospect theory.

Part A: You are giving a talk on a new concept, economic insecurity. A skeptical audience member says that economists have been studying poverty for years and thus, economic insecurity is not a new concept. Provide a rebuttal as to why this is an incorrect statement (that poverty and insecurity are not necessarily the same). Secondly, identify two ways we can measure economic insecurity. Part B: Examining the relationship between income and well-being in any given year tends to suggest there is a positive relationship between the two variables. However, when examining well-being and income over a long-run period, there appears to be no relationship between these outcomes. Comment on this phenomenon and provide a possible reason for this finding given prospect theory.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter18: Income Distribution And Poverty

Section: Chapter Questions

Problem 3QFR

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