Information Provision and Regulation (Online Lesson)

In this online lesson, we look at how improved provision of information and regulation can help to tackle market failure.

WHAT YOU'LL STUDY IN THIS ONLINE LESSON

• a review of the impact of information failure on markets
• examples of information-based solutions to market failure, including some diagrammatic analysis
• different approaches to evaluating the effectiveness of information provision
• an overview of some ideas from behavioural economics in relation to reducing information failure problems
• the meaning and nature of regulation
• types of regulation and regulators
• evaluating the effectiveness of regulation

Additional teacher guidance is available at the end of this lesson. Thank you to Cathy Williams and Jon Clark for their contributions to this lesson.

HOW TO USE THIS ONLINE LESSON

Follow along in order of the activities shown below. Some are interactive game-based activities, designed to test your understanding and application of information provision and regulation. Others are based on short videos, including activities for you to think about and try at home, as well as some extra worksheet-based activities.

If you would like to download a simple PDF worksheet to accompany the video activities, you can download it here: Information Provision And Regulation. You can print it off and annotate it for your own notes, or make your own notes on a separate piece of paper to add to your school/college file.

ACTIVITY 1: VIDEO - INFORMATION FAILURE

In this video, we review the topic of information failure, looking at some of the causes and impacts. We also briefly consider the difference between symmetric and asymmetric information, as well as moral hazard and adverse selection.

ACTIVITY 2: GAME - INFORMATION SOLUTIONS

See what you already know about the different ways in which the provision of information can be used to tackle information failures.

ACTIVITY 3: VIDEO - INFORMATION PROVISION EXAMPLES

In this video activity, we start by reviewing some key content in relation to market failures, before considering some real-world examples of information provision and taking a look at how to illustrate information policies using diagrams.

ACTIVITY 4: READING AND RESEARCH - WHEN IT GOES WRONG

Information provision is not always effective! Take a look at some of these examples, and make your own notes. What factors do you think influence the effectiveness of information provision as a solution to market failure?

• An old one but a classic! Find out more about the introduction of Freeview TV in the UK
• Should the government have encouraged us to count calories as part of their obesity strategy? See what The Guardian had to say about it here.
• Singapore's government introduced an information campaign for COVID-19 using cartoon characters; it was abandoned within 24 hours. Read about it here.
• If you want a more challenging read, you could take a look at this academic paper, which analyses the effectiveness of different types of information provision and the reasons for their effectiveness

As a contrast, here is a selection of public information campaigns that are generally regarded as quite effective. How do they compare to the failures above? What makes them effective?

• The UK government's THINK campaign for road safety
• PR Week's top 8 selection

ACTIVITY 5: VIDEO - EVALUATING INFORMATION PROVISION

This video provides an overview of some of the key issues when using information provision as a means for reducing information failure.

ACTIVITY 6: VIDEO - BEHAVIOURAL INSIGHTS

In this video, we make some synoptic links to the topic of behavioural economics, and consider how behavioural insights can sometimes be used to tackle information failures.

ACTIVITY 7: FIELD TRIP!

If you are able to go to a supermarket to help your family with grocery shopping, then why not do a bit of economics at the same time? Download this tutor2u Supermarket Sweep activity. Simply read the instructions in the resource, and follow along when you next visit a supermarket to find out businesses use insights from behavioural science to influence your shopping behaviour.

ACTIVITY 8: READING AND RESEARCH - NUDGES

Find out more about some important behavioural economics principles by following these links.

• You can find examples of nudges on Medium here and on the tutor2u website here
• This piece from behavioural scientist David Halpern in The Guardian provides a good introduction to the concept of Nudges. As a follow up, you could try to pick up a copy of his book "Inside the Nudge Unit" or the book he refers to by Thaler and Sunstein called "Nudge".
• Read Geoff Riley's tutor2u piece on Evaluating Nudges
• This commentary from the LSE on factors to consider before nudging is a good starting point

ACTIVITY 9: VIDEO - REGULATIONS

In this video, we explore the basics of how regulation should work in theory to help tackle market failure.

ACTIVITY 10: VIDEO - REGULATION EXAMPLES

We explore the topic of regulation in a bit more detail in this video, looking at some real-world examples of regulation in markets that you meet very regularly, and consider the various categories of regulation. We also take a quick look at the regulators themselves.

ACTIVITY 11: RESEARCH - FINANCIAL SECTOR REGULATION

Get ahead with your Year 13 Economics by making some synoptic links here to regulation of the financial sector.

Explore the website of the Financial Conduct Authority (FCA) here. What do they do? How do they do it? What does the FCA think will happen to financial sector regulation in the future, especially in light of Brexit?Find out here.

What is the role of the Bank of England in regulating the financial sector? Find out about the Prudential Regulation Authority here and the Financial Policy Committee here.

Finally, take a look at Geoff Riley's tutor2u videos on UK financial regulation measures. Start with this one as an overview and then follow up by taking a look at this onevwhich provides an update on the latest measures.

ACTIVITY 12: VIDEO - EVALUATING REGULATION

This video considers some of the pros and cons of economic regulation.

ACTIVITY 13: READING AND RESEARCH - REGULATORY CAPTURE

One way in which regulators can be ineffective is through regulatory capture. As a starting point, take a look at this tutor2u revision video on the topic from Geoff Riley.

Now carry out your own research to find answers to the following questions:

1. Why might regulatory capture occur?
2. Find 3 examples of regulatory capture, and explain what happened in each case.
3. Why does regulatory capture not happen in every case?
4. What factors / measures could reduce the chance of regulatory capture occuring?

ACTIVITY 14: GAME - MULTIPLE CHOICE REVIEW

Have a go at the MCQS, testing your knowledge of the topics covered in this online lesson.

EXTENSION READING

If you are looking for a bit of a challenge, then you could take a look at these documents on regulation:

• The UK Government's Principles for Economic Regulation
• This journal article from 1989 from academics at MIT on The Effects of Economic Regulation

ADDITIONAL TEACHER GUIDANCE

This lesson comprises:

• around 40 minutes of guided video, spread across 7 videos
• around 30 minutes of student thinking and activity time across those videos
• several reading and research tasks, on information provision "failures", behavioural economics and financial regulation
• 2 interactive games, one of which is an MCQ review of the topics covered in the online lesson
• a "field trip" activity

We expect that the "core" of the lesson would take around 90 minutes, with additional time required for the reading and research tasks.