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Evaluation in Economics

Evaluation is a very important concept in economics. It is what you to when you have finished analysing. By analyzing we mean giving your Definitions, Explanations, Examples and Diagrams (DEED). Show how the theories relate to the question and explain the theories. Basically analyzing is drawing out the theory and then evaluation is drawing your conclusions and also challenging the analysis.

The hard part about all of this is making sure that you say enough in your analysis and in your evaluation. So you don't forget, remember to "Do the DEED" when you analyze and then "CLASPP it all together" when you're evaluating. On your essay questions and data response questions (on your exams) you'll need to evaluate. But you don't need to evaluate in your short-answer questions.


(d.) - A clasp is something that holds things together. But (spelled with 2 P’s) it’s also an acronym for the 6 types of evaluation in IB Economics.

Use at least 3 of these in your Part B questions. Personally, I recommend to my students that they try use Stakeholders, Assumptions each time and include a third one of their choice. We always care a lot about stakeholder effects and assumptions is impressive because it shows that you really understand the theory.

What is evaluation?

Economic theories (i.e. our diagrams) always suggest certain things are true --for example that price ceilings will result result in shortages. However, our field is full of interesting nuances--for example that price ceilings might not result in shortages. The economy is not a simple machine. And that's why we evaluate.

There are always uncertainties and priorities to consider about the effects of a given policy. Remember that in your IA, you're almost always looking at the possible effects of a certain policy decision. The simple presentation of the theory you did in the analysis section, needs to be challenged now and explored in more depth. That's what we're doing when we evaluate. We're looking at all the ways the theory might be wrong. And we're explaining the other relevant considerations we need to take into account when deciding whether or not the policy will be a good one. 

Here's a list of things you can write about.  


This is the basic one, where you're explaining the simple insights of the theory and the diagram you presented above.

-What can we conclude from the theory that you’ve explained in your analysis?

-What is the basic relationship between the aspects that you compared in your diagram? (i.e. What happens to price and consumption when the price ceiling is introduced?)

Long-term and short-term effects

-Is the change good in the short-term, but over in a few years it could have undesirable consequences? Over time many suppliers may move out of the industry, as they have an insufficient either willingness or ability to sell for the amount dictated by the price ceiling. 

-Will the policy be really hard on people in the short-run, but it fixes the long-term problem?

-Will this policy fix one problem, but create another?


-Are there some assumptions being made, that the theory depends on that may not hold true? This is the same as “ceteris paribus” --the assumption that all other things are being held equal, when in fact they might not stay constant. Explain what might change and how that would effect your analysis. 

-Tell us the weaknesses in the theory?

-What is unrealistic about the theory?


-What effects would this policy have on the government, consumers, producers and the rest of society? Suppliers suffer, while consumers benefit from a price ceiling, as long as suppliers continue to provide the goods. 

-Policies (i.e. price ceilings) are often made with particular stakeholders in mind, so are there undesirable effects on other parties (i.e. price increases for consumers)?

-Is the policy great for some groups, but bad for others?


-Discussing the priorities of a society, or the government is also a good way to keep things in perspective. A policy like subsidizing schools is good for families, good for the long-term macro economy, but is perhaps unfair for taxpayers who don’t have children. New policies should reflect the true priorities of the society. 

-Is there an important normative (i.e. values aspect) that the policy change is assuming? 

Pros and Cons

-What are the advantages and disadvantages of this policy?

-What are the costs and the benefits of this policy?

-What are the arguments for and the arguments against this policy?

-This one is to double-check that you haven’t left anything out in the preceding ones.