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ISOLATION PRINCIPLE

Discuss the application of the isolation principle in economics by reflecting on your choice of how to allocate your time during a normal week of term between study and ‘free’ time.1 In your discussion, make sure you critically examine how well our approach in the lectures of modelling this choice 2 reflects how you actually choose 3  and which factors determine your actual choice compared to the factors that we capture in our model.

Free time defined here as all the time lumped together which is not devoted to your studies. For the model, see in particular Sections 3.1 to 3.5, how you yourself allocate time to your studies here at Branson Uni during a typical week. It is the trade-off between your study and non-study time that we are interested, not any of the trade-offs among your non-study activities. It is sufficient to focus on the percentage of your overall time that you spend studying, no need to measure actual hours. Deadline: as defined in the syllabus that you find on the VLE page of the module.

Many alternative explanations:
• Relatively high cost of labour & cheap local sources of energy
• Europe’s scientific revolution, Enlightenment movement
• Geography (abundance of coal)
• Characteristics of nations as a whole
– cultural attributes (hard work, savings)
– geopolitical (access to colonies)

Building an economic model
• Isolate key factors affecting the issue under study
– hypothetical vs. substantive isolation
– data: factors that are assumed to be constant (c.p.)
– variables: factors that are allowed to change
• The model seeks to capture how the variables influence each
other, ceteris paribus
Models necessarily omit many details (map metaphor!)

What is a good model?
• It is clear: it helps us better understand something important
• It predicts accurately: its predictions are consistent with
evidence
• It improves communication: it helps us to understand what we
agree (and disagree) about
• It is useful: We can use it to find ways to improve how the
economy works

What drove mechanisation, why in England?
It became profitable to switch to energy intensive production technologies because the cost of labour increased relative to the cost of energy.