The Costs and Benefits of Licensing in the Economy

Objective: 
Students will analyze the role of licensing and credentials in the economy, evaluating their benefits and costs for individuals, businesses, and society as a whole. 

Materials Needed: 

  • Handouts summarizing the pros and cons of licensing, with real-world examples (e.g., medical licenses, taxi medallions). 
  • Data or case studies on industries heavily regulated by licensing. 

Lesson Steps: 

1. Introduction (10 minutes): 

  • Introduce the concept of licensing and credentials: 
  • Define what licensing is and provide examples from various professions (e.g., healthcare, law, cosmetology). 
  • Explain the economic rationale for licensing, including quality assurance and consumer safety. 
  • Briefly mention controversies, such as barriers to entry and economic inefficiencies. 

2. Viewing Clip (5 minutes): 

  • Set up the context: Relate their discussion to real-world debates about licensing, focusing on its role in creating exclusivity and potential monopolies. 

3. Group Discussion (10 minutes): 

  • Divide students into small groups to discuss: 
  • What are the potential benefits of requiring licenses for certain professions? 
  • What are the drawbacks or unintended consequences of licensing? 
  • How does the Game of Thrones example reflect real-world licensing issues? 
  • What is the impact on Bronn’s value of his new credential (knight)? Why does that credential justify his asking Tyrion for more pay? 

4. Concept Application (20 minutes): 

  • Case Study Analysis: 
  • Provide real-world examples of licensing and credentials, such as: 
  • Taxi medallions in New York City. 
  • Medical licenses for healthcare professionals. 
  • Tech certifications (e.g., AWS, Microsoft). 
  • Ask students to analyze the following for each example: 
  • Benefits: Improved quality, consumer safety, trust in the profession. 
  • Costs: Barriers to entry, reduced competition, higher costs for consumers. 
  • Discuss how licensing affects wages, job opportunities, and market efficiency. 

5. Wrap-Up and Reflection (10 minutes): 

  • Summarize the key takeaways: 
  • Licensing provides consumer protection and professional accountability but can also limit competition and innovation. 
  • Pose a reflective question: In your future career, how might licensing or credentials impact your opportunities? 

6. Activity/Homework (15 minutes): 

  • Debate Exercise: 
  • Split the class into two groups: 
  • Pro-Licensing: Argue that licensing is essential for quality and safety. 
  • Anti-Licensing: Argue that licensing creates unnecessary barriers and inefficiencies. 
  • Each group prepares their arguments and presents a 2-minute case to the class. 
  • Facilitate a short discussion on which side they find more persuasive and why. 
  • Compare and contrast the desirability of licensing in two professions: electricians and African-style hair braiders.