Tesco, UK

 Over the last five years, Tesco has demonstrated a strong and resilient business performance, navigating a period of significant economic challenges—from the post-pandemic landscape to severe cost-of-living inflation—to deliver consistent sales growth, recover profitability, and return substantial cash to shareholders . The company's strategy has focused on reinvesting in its core customer offer through value initiatives like Aldi Price Match and Clubcard, which has resulted in growing market share and improved customer satisfaction .

Here is a summary of Tesco's financial performance over the last five fiscal years.

📈 Strong Sales Growth and Market Share Gains

Tesco has consistently grown its top-line sales over the five-year period, from £57.89 billion in 2021 to £69.92 billion in 2025 . This growth has been driven by a successful strategy focused on value and loyalty:

• Winning Customer Offer: The combination of "Aldi Price Match," "Low Everyday Prices," and exclusive "Clubcard Prices" has made Tesco highly competitive, helping customers manage the cost-of-living crisis .

• Record Market Share: This strategy has paid off significantly. By early 2025, Tesco's UK market share reached 28.3%, its highest level since 2016, with 21 consecutive periods of growth . This momentum continued into the first half of the 2025/26 financial year, with share up a further 77bps to 28.4% .

• Volume and Premium Growth: The focus on value has driven volume growth, while innovation in premium ranges like 'Finest' has also been a key contributor, with Finest sales growing by 15% in FY24/25 .

💰 Profitability and Shareholder Returns

After a dip in the 2022/23 fiscal year due to high inflation and impairment charges, profitability has rebounded strongly:

• Profit Recovery: Adjusted operating profit fell to £2.63bn in 2022/23 as the company absorbed significant cost inflation to protect customers . However, it rebounded by 11% in 2023/24 to £2.83bn and grew by a further 10.6% in 2024/25 to reach £3.13bn .

• Cash Returns to Shareholders: Reflecting confidence in its strong cash flow and balance sheet, Tesco has undertaken an aggressive share buyback programme. Since October 2021, it has bought back £3.7 billion worth of shares as of October 2025 . The dividend per share has also been on the rise, increasing by 13.2% for FY24/25 to 13.70p .

🚀 Strategic Investments and Future Outlook

Tesco is not resting on its laurels and is investing in long-term growth platforms:

• Digital and Convenience: The company is expanding its online capabilities, with its 'Whoosh' rapid delivery service now covering over 70% of UK households . It also launched "Tesco Marketplace" to offer third-party general merchandise online .

• Personalisation and Media: With Clubcard penetration now over 80% in its markets and 18 million app users, Tesco is building a powerful digital media and insight platform to offer personalised deals and a new revenue stream .

• Cautious Optimism: For the 2025/26 financial year, Tesco initially guided for lower profits to allow for further investment in a highly competitive market . However, due to a strong customer response to its investments, it upgraded its profit guidance in October 2025 to between £2.9bn and £3.1bn .

In summary, Tesco has successfully fortified its position as the UK's market leader by doubling down on value and loyalty during a period of economic strain. This has translated into consistent sales growth, a powerful recovery in profits, and significant cash returns for its shareholders.

Health Economics

 

Here is a summary of the video from the 0:00 to 15:00 minute mark:

0:00 - 0:50 Introduction
Professor Gruber introduces the final lecture as a different kind of class. He will apply the economic tools learned throughout the semester to the real-world topic of health care policy, drawing on his 25 years of experience in the field.

0:51 - 3:46 Background: The US Health Care Problem

• High Spending: The US spends far more on health care than any other developed nation—about 17.5% of its GDP (nearly $10,000 per person). This is roughly double what many European countries spend.

• Mixed Outcomes: Despite this spending, health outcomes are unequal. The "haves" (well-insured) get the best care in the world, evidenced by a million people coming to the US for treatment. The "have-nots" get some of the worst care. For example, a Black baby is twice as likely to die in its first year as a white baby, a rate worse than Barbados.

• The Two Fundamental Problems: The US faces two core issues: spending is too high, and access to care is too unequal. The lecture will focus on these two aspects.

3:47 - 12:27 The Access Problem

• The Uninsured: Before 2014, about 50 million Americans were uninsured.

• Market Failure, Not Just Choice: The fact people are uninsured is a policy concern due to market failure (adverse selection) and redistribution (the uninsured are poorer).

• How Insurance Worked (Pre-ACA):

  • Employer-Sponsored Insurance (60%): Most Americans get insurance through their employer. Insurers prefer large groups because risk is predictable.

  • Individual Market (6%): This market functioned poorly due to adverse selection. Insurers feared only sick people would buy insurance, so they protected themselves through "pre-existing conditions exclusions" (refusing to cover costs related to past illnesses) or "medical underwriting" (denying coverage or charging exorbitant prices to sick individuals). This meant if you were sick, you often couldn't get insurance.

  • Government Insurance (20%): Two main programs: Medicare (for the elderly) and Medicaid (for the poor). These programs offered full coverage without discrimination.

  • The Uninsured (15%): These were typically the "working poor"—people with jobs that don't offer insurance but who earn too much to qualify for Medicaid.

12:28 - 15:00 Historical Reform Attempts and Two Extreme Solutions
For 100 years, efforts to reform health care failed because they were caught between two extreme solutions:

• Solution 1: Subsidization: Giving money to help people buy insurance. The problem is that it doesn't fix insurers' incentive to avoid sick people and is politically difficult.

• Solution 2: Single-Payer: A government-run system for everyone (like in Canada). The lecture outlines three major political barriers to this:

  1. Paying for it: It requires a massive, visible tax increase, even though it would replace the "hidden tax" of employer-sponsored insurance (where employers pay lower wages in exchange for providing insurance). People don't believe employers would pass the savings back to them in wages.

  2. Status Quo Bias: People with employer-sponsored insurance are reluctant to give up what they know for an unknown new system, due to loss aversion.

  3. Powerful Lobbying: Health insurance is a massive industry that would fight aggressively to protect its business.

Here is a summary of the video from the 15:00 to 30:00 minute mark:

15:00 - 21:00 The "Three-Legged Stool" Solution
Stuck between the extremes of subsidization and single-payer, economists (including Professor Gruber) developed a new approach, first pioneered in Massachusetts and later becoming the basis for the Affordable Care Act (Obamacare). This "three-legged stool" consists of:

1. Ban Insurer Discrimination: Insurers are no longer allowed to deny coverage or charge higher prices based on pre-existing conditions. They must offer insurance to everyone at a standard community rate.

2. The Individual Mandate: If insurers are forced to accept everyone, they will only get sick buyers and go bankrupt. To fix this, everyone is required to purchase insurance. This ensures a balanced pool of both healthy and sick people, allowing insurers to function like a bookie setting odds to guarantee a profit.

3. Subsidies: A mandate is unfair if people cannot afford insurance. Therefore, the government provides income-related subsidies to make coverage affordable for low-income individuals.

21:00 - 30:30 The Impact and Ongoing Debate on Access

• Did it work? Yes, it was the largest insurance expansion in American history, covering about 45% of the uninsured nationally (and 2/3 in Massachusetts).

• Why are people still uninsured? Three main reasons:

  1. The law doesn't apply to undocumented immigrants (about a quarter of the uninsured).

  2. The mandate has exemptions (e.g., for those below the poverty line or for whom insurance is still unaffordable).

  3. The penalty is a tax, and some people prefer to pay it rather than buy insurance.

• Political Challenge: This three-part solution is more complicated to explain than simple alternatives like "single-payer." While it was a major step forward, it hasn't solved the access problem entirely, leaving an ongoing debate, particularly within the Democratic party, about whether to push for single-payer.

30:30 - 45:00 The Cost Problem

• Two Contradictory Facts:

  1. It's been worth it: Health care spending has quadrupled since 1950, but the improvements in health outcomes (e.g., lower infant mortality, better heart attack and knee surgery treatments) have been economically worth the cost.

  2. It's incredibly wasteful: An estimated one-third of all health care spending does nothing to improve health.

• The Core Challenge: The productive 2/3 of spending is so valuable that it makes the overall rise in costs seem worthwhile, but the unproductive 1/3 represents massive waste. The problem is that while we can identify waste in hindsight, it is extremely difficult to prospectively know which treatments will be effective and which will be wasteful.

• Two Potential Solutions to Control Costs:

  1. The Regulatory Path (European Model): Direct government control over the health care system through:

     • Technological Regulation: Rationing certain procedures (e.g., denying kidney transplants to people over 75).

     • Supply Regulation: Limiting the number of doctors, hospitals, and machines (e.g., Canada has far fewer MRI machines).

     • Price Regulation: The government sets the prices for medical services. This is the most important method. The US is unique in letting the free market set most prices, which fails due to market imperfections like lack of information (you can't shop for a heart attack) and imperfect competition (monopoly hospitals or prestigious hospitals charging far more).

  2. The Incentives Route (ACOs): This approach, a key part of Obamacare, creates "Accountable Care Organizations" (ACOs)—groups of doctors and hospitals that work together. Instead of paying for each service, the government pays them a flat fee per patient to manage all of that person's care. The idea is to give them an incentive to be efficient. However, this approach has not worked well in practice, as providers struggle to figure out how to effectively manage care and costs within this system.

Here is a summary of the video from the 30:00 minute mark to the end (46:00):

30:30 - 41:00 The Cost Problem (Continued)

• Two Potential Solutions (Continued):

  • The Regulatory Path (European Model): This involves direct government control through:

    • Technological Regulation: Rationing certain procedures (e.g., denying kidney transplants based on age).

    • Supply Regulation: Limiting the number of doctors, hospitals, and machines (e.g., Canada has far fewer MRI machines, leading to long waits).

    • Price Regulation: The government sets the prices for medical services. This is the most important method. The US is unique in letting the free market set most private insurance prices, which fails due to market imperfections like lack of information (you can't shop for a heart attack) and imperfect competition (monopoly hospitals or prestigious hospitals like MGH charging far more due to a "reputational monopoly"). While Medicare successfully uses price regulation, applying it universally is politically difficult and has failed in the past (e.g., state-level attempts in the 1970s).

  • The Incentives Route (ACOs): This approach, a key part of Obamacare, creates "Accountable Care Organizations" (ACOs)—groups of doctors and hospitals that work together to provide all of a patient's care. Instead of paying for each service, the government pays them a flat fee per patient to manage all of that person's care. The goal is to give them an incentive to be efficient and control costs. However, this approach has not worked well in practice, as providers struggle to figure out how to effectively manage care and costs within this system.

• Why This Matters: Health care costs are the single most important government fiscal problem. The US faces a long-term deficit of roughly $75 trillion, and $70 trillion of that is driven by health care costs. Controlling costs is as critical an issue for the future as climate change.

41:00 - 46:00 Course Conclusion

• The Goal of the Course: Professor Gruber explains that the purpose of 14.01 is not to memorize formulas, but to:

  1. Spark an interest in economics.

  2. Make students more educated consumers of news and policy, especially in an era where facts and the scientific method are under attack.

• The Economist's Job: He concludes with a joke about a doctor, a priest, and an economist who are rude to a slow, blind golfer. While the doctor and priest pledge charitable acts to atone, the economist asks, "If he's blind, why doesn't he just play at night?" The point is that the economist's job is to be "annoying"—to question basic assumptions, find logical flaws in arguments, and think critically about problems to find responsible solutions.

Financial Markets: Yale Open Course - Introduction and What this Course Will Do for You and Your Purposes

 

Here is a summary of the provided transcript of Professor Robert Shiller's first lecture for "Economics 252: Financial Markets."

Course Overview and Philosophy

Professor Robert Shiller introduces his undergraduate course on financial markets. He emphasizes that the course is "down to earth" and focused on the real world. He views finance not as a tool for mere profit, but as a fundamental "pillar of civilized society" that allocates resources, incentivizes productivity, and manages risk. The course aims to be philosophical yet detailed, covering institutions like banking, insurance, and securities markets, all within a global context. This iteration of the course is particularly timely due to the recent financial crisis.

Course Structure and Approach

• Updated Content: The course has been significantly updated to reflect the turmoil and changes following the worst financial crisis since the Great Depression, incorporating a global perspective (e.g., the G-20).

• Comparison to Econ 251: Shiller distinguishes his course from the more theoretical and mathematical "Financial Theory" (Econ 251) taught by Professor John Geanakoplos. This course focuses on intuition, institutions, and history, with mathematical concepts covered in review sessions.

• Practical Utility: Shiller believes this is one of the most useful courses at Yale, preparing students for the real world by demystifying the language and mechanisms of finance, which he considers essential for anyone wanting to do "something big and important."

• Materials: The main textbook is by Fabozzi, Modigliani, and Jones. Students will also have access to draft chapters of Shiller's new book, "Finance and the Good Society."

Finance as a Noble Profession

A central theme of the lecture is countering the negative perception of finance as a field for "money-grubbing" people. Shiller argues it is a noble profession and a form of engineering that works with people to make things happen.

• Career Prospects: He presents data showing a high number of jobs in finance (analysts, managers, advisors) compared to fields like economics or astronomy, highlighting its relevance for students' careers.

• Wealth and Purpose: He discusses the Forbes 400, noting that the richest people are not typically athletes or movie stars, but businesspeople who build organizations. He then poses a crucial question: what is the purpose of amassing great wealth?

• The Gospel of Wealth: Shiller introduces Andrew Carnegie's essay, "The Gospel of Wealth," which argues that the wealthy have a moral obligation to give away their fortunes to benefit humankind. This idea of using financial success for a greater good is a recurring theme.

Practical Course Elements

• Guest Speakers: Shiller plans to invite practitioners who exemplify a positive and moral approach to finance:

  • David Swensen: Yale's Chief Investment Officer, who grew the endowment significantly while forgoing much larger Wall Street salaries.

  • Maurice "Hank" Greenberg: Founder of AIG, a major philanthropist and business figure.

  • Laura Cha: A key financial regulator from Hong Kong, providing a government perspective.

• Teaching Assistants: The TAs come from diverse backgrounds and have research interests in areas like behavioral finance and mutual fund practices, which will be integrated into the course.

Outline of Future Lectures

Shiller provides a brief roadmap for the course, covering 20 lectures. Key topics include:

1. Risk and Financial Crises: The core concept of diversifying independent risks and how the failure of this assumption led to the 2008 crisis, drawing parallels to the Great Depression.

2. Financial Technology and Invention: Viewing finance as an evolving technology with complex instruments.

3. Insurance: Its life-saving role, illustrated by comparing the impact of earthquakes in Haiti vs. San Francisco.

4. Efficient Markets vs. Behavioral Finance: The debate over whether markets are perfectly efficient or influenced by psychology.

5. Debt, Stock, and Real Estate Markets: The fundamental functions of these markets in enabling homeownership, business creation, and their role in the financial crisis (especially the housing bubble).

6. Banking and Regulation: Topics like the money multiplier and new international regulations (Basel III) to prevent future crises.

7. Derivatives (Forwards, Futures, Options): Explaining these complex contracts.

8. Institutional Finance: Covering investment banking, professional money management, exchanges, and public/nonprofit finance.

Final Message

Shiller concludes by reiterating that the ultimate purpose of the course is not about making money, but about finding one's purpose through finance. He encourages students to learn the details so they have the power to make things happen and, like Andrew Carnegie suggested, to use that power for the benefit of society.

Professional Money Managers and their Influence

 

Professor Shiller argues that institutional investors are fundamentally important to our economy and our society. Following his thoughts about societal changes in a modern and capitalist world, he turns his attention to the fiduciary duties of investment managers. He emphasizes the "prudent person rule," and critically reflects on the limitations that these rules impose on investment managers. Elaborating on different forms of institutional money management, he covers mutual funds, contrasting the legislative environments in the U.S. and Europe, and trusts. In the treatment of the next form, pension funds, he starts out with the history of pension funds in the late 19th and the first half of the 20th century, and subsequently presents the legislative framework for pension funds before he outlines the differences of defined benefit and defined contribution plans. Professor Shiller finishes the list of forms of institutional money management with endowments, focusing on investment mistakes in endowment management, as well as family offices and family foundations. 00:00 - Chapter 1. Assets and Liabilities of U.S. Households and Nonprofit Organizations 11:30 - Chapter 2. Human Capital and Modern Societal Changes 17:04 - Chapter 3. The Fiduciary Duty of Investment Managers 28:23 - Chapter 4. Financial Advisors, Financial Planners, and Mortgage Brokers 33:53 - Chapter 5. Comparison of Mutual Funds between the U.S. and Europe 37:58 - Chapter 6. Trusts - Providing the Opportunity to Care for Your Children 43:14 - Chapter 7. Pension Funds and Defined Contribution Plans 58:23 - Chapter 8. History of Endowment Investing 01:02:34 - Chapter 9. Family Offices and Family Foundations Complete course materials are available at the Yale Online website: online.yale.edu This course was recorded in Spring 2011.

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This transcript is from a Yale University lecture by Professor Robert Shiller on the role of institutional investors, financial advisors, and the evolution of financial structures in modern society. Here is a summary of the key points discussed:

1. The Scale of Household vs. Institutional Wealth

• Total U.S. Household & Nonprofit Assets: ~$70 trillion (as of late 2010), including real estate, pensions, deposits, and equities.

• Liabilities: ~$14 trillion (primarily mortgages), resulting in a net worth of ~$56.8 trillion.

• Institutional Shift: A significant portion of assets (pension funds, mutual funds, life insurance reserves) is now managed by institutional investors. This marks a shift from 100 years ago when families managed virtually all wealth directly.

2. Human Capital and Societal Change

• Human Capital: The present value of national income (~$13 trillion/year) is estimated at $260 trillion, dwarfing tangible assets and highlighting the continued importance of family and individual earning power.

• Modernization: Society is moving away from family-based support (e.g., caring for elderly parents) toward institutional solutions (pension funds, assisted living, health plans) to provide more choice and professional risk management.

3. Fiduciary Duty and Regulation

• Prudent Person Rule: Institutional investors are legally required to manage money with the care of a "prudent person." This rule historically encouraged conservative investing (e.g., government bonds) but was interpreted more aggressively over time (e.g., Yale’s David Swensen investing in startups), contributing to financial bubbles.

• Dodd-Frank Act (2010): In response to the financial crisis, the act shifted focus from the vague "prudent person" standard to explicit "prudential standards" enforced by government regulators (FSOC), particularly regarding leverage.

4. Financial Advisors and Planners

• Regulation: Financial advisors are regulated by the SEC and must be approved by FINRA. However, "financial planners" face looser regulations, leading to concerns about bad advice (e.g., excessive leverage before the 2008 crisis).

• Mortgage Brokers: Until recently, they required no licensing, allowing bad actors to operate.

5. Key Investment Vehicles

• Mutual Funds: Democratized investing by offering transparent, equitable returns. U.S. funds differ from European UCITS primarily in tax treatment.

• Trusts: Legal arrangements allowing money to be managed for specific individuals (e.g., handicapped children or spendthrift heirs). They ensure funds are protected from mismanagement or creditors.

6. Pension Funds Evolution

• History: The first U.S. pension plan was established by American Express in 1875. Early plans were often underfunded, leading to collapses (e.g., Studebaker in 1963).

• ERISA (1974): Created the Pension Benefits Guarantee Corporation (PBGC) to insure and regulate pension funds.

• Shift to Defined Contribution: Due to the difficulty of guaranteeing returns (defined benefit), plans shifted to defined contribution (e.g., 401(k)s), transferring investment risk and responsibility to employees.

7. Endowments

• Professional Management: Endowments (like Yale’s) support institutional missions (e.g., funding graduate students). Poor historical management (e.g., Yale investing everything in a single bank in 1825) highlights the need for diversification, a principle championed by modern managers like David Swensen.

8. Family Offices and Foundations

• Family Offices: Private wealth management firms for ultra-wealthy families (typically $100M+), handling investments and estate planning.

• Family Foundations: Charitable organizations (36,000 in the U.S. as of 2006) set up by wealthy families for tax benefits and philanthropy. They allow families to manage wealth for social good, outliving the original donors.

• Philanthropy vs. Consumption: The lecture contrasts extravagant spending (e.g., Paul Allen’s yacht) with significant charitable giving (e.g., Paul Allen donating over $1 billion), suggesting that institutional structures enable both wealth accumulation and social contribution.

Conclusion

Professor Shiller emphasizes that while the family remains central, the world is increasingly managed by professional institutional investors. Despite growing pains and regulatory challenges, this trend toward professionalization and institutionalization is shaping the governance of global wealth and addressing fundamental human needs like retirement security and philanthropy.