How to Plan and Write an Economics Internal Assessment (IA)

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JennyOwl Tutor

Economics

January 15th, 2020Last updated: May 22nd, 2023

So... you have chosen an article to base your economics internal assessment ("IA") on and are moving to the next step of planning your IA. This article, written by an experienced IB teacher, sets out a seven-step process that you can use to make writing your IA that little bit easier.

Step 1- Find the right source

Find a newspaper article (*on a weekly basis) and record the website address and date of the article.

The article that we will analyse in this example can be found here.

Step 2 – Identify the key material

Highlight the relevant text for your application. It’s important that you are happy with the material you are going to use.

Step 3 – Key terms matter

Outline key terms to be defined.
*Define the necessary terms if not clear

  • Market Failure – inefficient allocation of resources
  • Externalities:
    Demerit good – plastic bags creating a negative externality of consumption
    Merit good – biodegradable bags or cloth bags creating a positive externality of consumption
  • Welfare loss
  • Government Intervention:
    command and controlled method – Banning
    Free-market-oriented – indirect taxation on plastic bags
    Subsidy to promote the positive externality

Step 4 – What is the economic theory you are applying?

Outline key Economic theory to be used

  • Market Failure – existence of externalities
  • Demerit good – the consumption of plastic bags leads to a negative externality of consumption, the external cost is unhealthy oceans and fishing grounds, destroying the natural habitat, environmental damage to trees and environment (Reference to the quotes from the article):
    • A fishing hub near the mouth of the Copper River, is dependent on healthy oceans. She said a plastic bag ban would help reinforce that message in the community. It would also help clean things up.
    • She said it’s not unusual to see plastic grocery sacks stuck in trees or bushes along the highway leading out to the landfill, 17 miles from the city center.
    • He often goes hunting for rabbits along the road. Bags and plastic foam clamshell boxes dot the landscape. “They’re everywhere.”
  • Explanation of the diagrams and short overview of short-run and long-run effects of this externality to the society
  • Government Intervention – use of the command and controlled method – banning ( direct regulation) to diminish the negative externality
  • Discussion on the short-run and long-run pros and cons of the banning – government intervention in the market: Use of quotes from the article to support discussion:
    • He said the biggest challenge has been trying to get Cordova’s sizable transient population to understand the upcoming ban
    • Cordova’s one-year lag was to give businesses time to adapt to the change,
    • Enforcement will be through the police department, with violators facing a fine of up to $1,000. But interim city manager and Police Chief Mike Hicks said it’s unlikely the maximum fine would be imposed. He said most retailers have been receptive to the change.
    • “I don’t think we’re going to have any problems with people switching over,” he said. “I think it’s going to go just fine.”
  • Comparison to alternative policies as outlined in the article: a Fairbanks tax on plastic bags was considered
  • Discussion on direct regulation impact vs use of indirect taxation ( free-market method) so compare and contrast pros and cons of the banning with the indirect taxation
    • Be clear on the meaning of Fairbanks ( see here for further information: https://en.wikipedia.org/wiki/Fairbanks,_Alaska)
    • Use of quotes from the article to support discussion:
      A Fairbanks tax on plastic bags was considered by the City Council in 2009, but community pushback forced the city to rescind the measure before it ever went into effect.
  • Other alternative solutions – promotion of merit good – biodegradable bags and/ or reusable cloth bags e.g. through subsidy: Use quotes from the article:
    • He’s been saving boxes and looking into buying reusable cloth bags for customers. But those are expensive, and customers would have to pay for them.
    • This summer the store handed out 400 reusable bags hoping to target those customers. They were a hit.
    • “We have a lot of people come through with the cloth bags,” Branch said. “It’s really is cool to see people embracing it.”

Step 5 – Enhance your analysis by using diagrams

Draw at least two relevant diagrams (*these must be your own drawing and labelling)

  • Negative externality of consumption ( plastic bags – external cost – environmental hazards) + effect of banning
  • Imposition of a fairbanks tax ( indirect tax) on plastic bags in the negative externality of consumption diagram
  • Positive externality of consumption (cloth bags) + use of subsidy to promote these further and support businesses and customers in the transition period

For example:

Economics IA graph example

Economics IA graph example

Step 6 – Evaluate the material effectively

Brainstorm some ideas for evaluation –

  • impact of policies stated in the article
  • impact on stakeholders in the short and long-run,
  • suggest alternative policies,
  • refer to Schools of Economic Thought

Step 7 – Get it down!

Once you have gathered all your relevant research, have nailed your analysis and evaluation and have a good idea of what you intend to argue, the next step is to get writing! Ensure you follow the guidance set by the IB and communicated by your class teacher.

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Comments

    zeinab said on 9th Jan 2019
    Im currently writing my IA on microeconomics is it fine if I use more than two diagrams and for the introduction should I describe the article? And approximately how long should it be?
    Thanks
      Owl Tutors replied on 10th Jan 2019
      Dear Zeinab

      Thanks for reading. Please note that comments to blog posts aren't checked by the authors, and that the author of this blog post may not see this.

      Best wishes

      Mike
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