No 58: About Snow and Economics

ONE REASON why I think economics is so interesting is that almost anything can be analsyed using economic ideas.

For instance, as we discussed in AS class this morning, the snow.

Some possible economic discussion points about this could be:

1) Externalities: what are the positive and negative externalities created by snow? Students this morning argued that it could depend on which country you were talking about. There are considerable negative externalities (especially lost working hours) in countries like the UK where we are not very well prepared for snow so it disrupts the economy. There may be positive externalities in, for example, countries that have a large winter sports sector.

2) Opportunity cost: every morning we are faced with the decision of whether to get up and go to work/school OR stay in our warm comfortable beds. The snow can change opportunity costs very much in favour of staying at home (unless your job is selling shovels). As students noted, we may expect there to be few students in class, lowering the chance that you will miss any new topics by not coming to class. Therefore, students may not come to class, making sure that this in fact comes true!

Workers may be faced by a choice of going to work and getting paid, of having an excuse of staying at home and still getting paid. I think we all know which choice seems more attractive!

Because of this, some large employers have taken action, such as Sainsburys as described in this article. They have decided to stop pay for workers who cannot come to work due to snow. This was announced 3 days after the news that this Christmas had been their most profitable ever (see here).