Oct 24 2010
What does a good IB Economics Commentary look like?
Published by Jason Welker at 5:34 am under Elasticity,IB Economics,Supply/Demand,Taxes
It’s that time of the IB Economics course when I get to start teaching my year one students to write the dreaded Internal Assessment Commentaries. For their first IA, my students are writing a commentary on an article relating to Section 2.1 and 2.2 of the IB course, on supply, demand, market equilibrium and elasticities.
After reading a dozen or so out of my 38 students’ first drafts, I began to realize that what many of them needed was a clearer idea of what a good IB Economics commentary should look like. So I went back through past years’ commentaries and decided in the end just to write a sample commentary myself.
As you know, I do a lot of economics writing, so I thought this would be a breeze; I’d bust out a 700 word commentary modelling to my students what a top IA should look like. Well, I did it, but it proved to be much harder than I thought it would be. Why? Because after my first draft I was at 1100 words! The word limit, as IB students know, is 750, so I proceeded to spend as much time as it took me to write figuring out how to get it down to within the word limit.
Well, I did it. Below is my sample commentary for year one IB students. I do owe some credit to a past student of mine, Maren, whose article I stole and whose own commentary I adapted to write this one.
First, here’s the link to the article:
Where is Switzerland’s Cheapest Place to Live? – SwissInfo
And my commentary:
Introduction of theory:
Demand, supply and elasticity are basic economic concepts that when applied to different markets can help governments and individuals make informed decisions about things as basic as where to live and how to collect taxes.
Connection to article:
Recently, Credit Suisse conducted a survey and determined that Switzerland’s most expensive canton is Geneva, while the cheapest place to live is Appenzell Inner Rhodes, (AIR)
Analysis:
Demand is a curve showing the various amounts of a product consumers want and can purchase at different prices during a specific period of time. Supply is a curve showing the different amounts of a product suppliers are willing to provide at different prices. Equilibrium price and quantity are determined by the intersection of demand and supply. Price elasticity of demand (PED) indicates the responsiveness of consumers to a change in price, and is reflected in the relative slope of demand.
In the graph below, the markets for housing in Geneva and AIR are shown.
Demand for housing in Geneva (Dg), is high because of the many employment opportunities there. In addition, Geneva’s scarce land means supply of housing is low, resulting in a high equilibrium rent (Rg). Demand for housing in Geneva is inelastic, since renters in Geneva are less responsive to changes in rent compared to AIR, perhaps due to the perceived necessity of living close to their work.
Demand for housing in AIR (Da) is low, but supply is high due to the abundance of land. AIR is a rural canton with few jobs, therefore fewer people are willing and able to live there than in Geneva. Since living in the countryside is not a necessity, demand is relatively elastic, or responsive to changes in rent. The lower demand and greater supply make the AIR’s equilibrium rent relatively low.
The effect of a tax on property is a shift of the supply curve to the left and in increase in rents as landowners, forced to pay the canton a share of their rental incomes, raise the rent they charge residents.
In Geneva, property taxes are high, but this has little effect on the quantity demanded.
Geneva’s property tax shifts the supply of housing leftwards, as fewer landlords will be willing and able to supply properties to renters when the canton taxes rental incomes. However, the decrease in quantity demanded is proportionally smaller than the increase in the price caused by the tax, since demand for housing in Geneva is highly inelastic, or unresponsive to the higher price caused by the tax.
Renters in AIR are far more responsive to higher rents caused by property taxes, perhaps because living in AIR is not considered a necessity and there are more substitutes for rural cantons to live in. Renters in Geneva do not have the freedom to live in one of Switzerland’s many rural cantons, and are therefore less responsive to higher rents resulting from cantonal taxes.
Evaluation:
A tax decrease in AIR could lead to a significant increase in the number of people willing to live there, since renters are highly responsive to lower taxes. To some extent, housing in AIR and Geneva are substitutes for one another. Lower taxes in AIR would make living there more attractive, and subsequently the demand for housing in Geneva would fall putting downward pressure on rents there. People would move to AIR, attracted by lower rents, and commute to work in the cities. According to the article, this is already happening:
The disparity in the amount of disposable income… has increased the trend of people moving cantons for financial reasons… Economic necessities had led to an increase… of people moving address and opting to commute into work”.
There are many determinants of demand for housing in Switzerland, the primary one being location. High rents in Geneva are explained by the high demand for and the limited supply of housing. On the other hand, residents in AIR enjoy much lower rents, due to the weak demand and abundant land. Cantons should take into consideration the PED for housing when determining their property tax levels. Raising the tax Geneva will have little effect on rentals but could create substantial tax revenue. On the other hand, reducing taxes in AIR may attract many households away from the city to the countryside, drawn by the lower rents and property taxes.
Applying the basic principles of demand, supply and elasticity to Switzerland’s housing market allows households and government alike to make better decisions about where to live and how much to tax citizens.
Note: To see the full commentary including a cover page and highlighted article, click here
About the author: Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course.
Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author46 Responses to “What does a good IB Economics Commentary look like?”
Hi Jason,
this is a very useful guide for students and inexperienced IB econ teachers like me. thank you so much for taking the time and effort you do to provide such excellent resources.
best wishes
martin hartnett
Hello!
Thank you for posting this here. I am now writing my first IE and this is so helpful!
Your site is amazing.
Best wishes
Agne
Thanks for the work. This should prove helpful for my students. But didn't you go over the word limit?
Hi William,
The commentary above is exactly 750 words in length! Trust me, that was the hardest part… my first draft was 1200 words… took me longer to get it down to 750 words than it took to write the 1200 words!
Jason
As far as I know, labels in the diagrams count, and that could easily go about 20 words for diagram… I'm not so sure if the IBO is very strict with this though.
The words on the diagrams do count and must be considered when writing the commentary.
In reference to the commentary, how exactly would you make a clear difference between the Criterion D and E – both dealing with applying/evaluating economic concepts?
P.S. Amazing site – never seen something like this before,
Martin
Nice commentary – I also struggle with my students on this task. Just a tip, word count seems to be over 750 (if you include diagram labels – which they do) and IB, unfortunately is anal about this. I understand the reason for it or else we'd be reading War and Peace novels every time a commentary was submitted by an Ib econ. student, Nice site!
Hi Pat,
Word count is 750 without diagram labels. You are only partially correct about words in diagrams, however. Labels that are not full words do not count.
In the new IA model (for next year's Y1 students), labels AND words included on diagrams do not count, which gives students considerable more room for analysis and evaluation.
Best,
Jason
Hello,
I'm in the process of finishing my Economics portfolio, I still have to write the last one but I just wanted to verify: labels like S1 or D1 (represents the supply and demand curves) do not count as words right?
Thanks.
Hi Sai,
That is correct. Labels that are not words are not counted in your wordcount.
Jason
Was struggling to write my first commentary, knew what i wanted to write about but had no idea how to write it, this site really helped me.
Many thanks!
Salvador
Hello,
A good commentary, but on the diagrams, the arrow marks used to show the shifts of the supply curve should be straight in any direction (upwards/downwards/rightwards/leftwards). In the cases above, the leftward shift of the supply curve 'must' be shown with a straight leftward/upward arrow, because that would represent that there are changes to the price at each quantity on the supply curve or that there are changes to the quantity at the every price on the supply curve (thus a shift in the supply curve), and also shows that the arrow mark is not merely showing that the supply curve is shifting! What do you feel, Jason?
The blog is just amazing!
Hi Ganesh, I don't think it matters all that much whether the arrows are horizontal, vertical, or at an angle. The arrows are just there to show the direction of the shift that's occuring… S and D can shift inwards or outwards, up or down, depending on your interpretation. Thanks!
Jason
hi. every time i write a commentary i have difficulty with the word count because it isn't clear whether the diagram labels count. so far i was told not to count my labels… then i was told to count everything :/ even the ones that aren't words. so i just want to make sure – does it specify anywhere in the syllabus or something what counts or what doesn't? or are we just guessing? cos it would be so helpful if i could prove to my teacher that labels which aren't words don't count.
thanks 😀
Can I simply say what a relief to search out someone who actually is aware of what theyre talking about on the internet. You definitely know find out how to deliver a problem to mild and make it important. Extra people must read this and understand this aspect of the story. I cant imagine youre no more fashionable because you undoubtedly have the gift.
Hey guys, I found a great article to do a commentary on.
http://www.economist.com/node/21528623
if anyone has anything to say about it, I would really appreciate it
wtf.
How do u choose your topic as to what to write your commentaries on
How do u choose ur topic as to what u r gonna write ur commentaries on
thank you so much for this you're a lifesaver! staring my IA now this is reallly helpful!
I’m working on my final commentary for iB, but am still struggling with the analysis. God only knows how I got through the first three.
Do you know if economic sanctions can be part of protectionism? Because sanctions are mostly stuff that’s imposed on a country by another country, not self imposed, like tarrifs and quotas..
Hi Mr.Welker,
I'm an economics student at an International school in Japan, and we have just been introduced to the IA in Economics. I have been looking at some newspaper articles that I may be interested in doing, however I'm not sure what makes a good newspaper/blog and wether i'm allowed to use outside statistics to back up an argument when I write it. I was wondering if I could get a second opinion on a news paper article that was written about Britain's austerity measures (I've been following the story and I find the argument that Paul Krugman makes very interesting). If you wouldn't mind taking a look and perhaps giving me your opinion, it would help me a lot.
Article: http://www.guardian.co.uk/politics/2012/may/30/pa…
Regards
Hello Sir,
I am writing my first commentary for economics and my teacher hasn't really gone to much indepth about the expectations. What in your opinion makes a good article? Are there some keys points i should look for when choosing one?
while choosing articles for the commentary, Ib specifies different sources. Does the sources refer to different media (newspaper,magazine,journal,internet) or different news sources (times,dc,economist,etc.) ?
Hi Jason,
My teacher is insisting that I start all my commentaries with the opening paragraph summarising the articles I have used. It is necessary to summarize the articles when the starting the commentary? It eats up my word count and I don't see much use of it as the moderators are going to have an access to the whole article that i have used.
Need urgent reply as the submission date is tomorrow.
Hello!
Thank you for the help. I was impressed by the graphs and was wondering what program you used to draw them?
thanks!
Masha Lopatova
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