Scarcity: Why Having Too Little Means So Much
“The biggest mistake we make about scarcity is we view it as a physical phenomenon. It’s not.” We’re busier than ever. The typical inbox is perpetually swelling with messages awaiting attention. …
Economics
The Economic Inefficiency of Gift Giving: Why You Shouldn’t Buy Presents for the Holidays
From Michael Sandel’s What Money Can’t Buy: The Moral Limits of Markets. Joel Waldfogel, an economist at the University of Pennsylvania (now at Minnesota’s Carlson School of …
The Scroll of the Scribes
King Solomon, thought by some to be the wisest man who ever lived, anticipated the economists concept of separating equilibria by about 3,000 years. In his most famous case, he proposed cutting a baby …
Five Key Lessons in the Fight Against Poverty
I finally got around to reading Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. The book brings to light some of the complexities of poor people’s lives by exploring the …
Why Catastrophes Happen
From Ubiquity: Why Catastrophes Happen There are many subtleties and twists in the story … but the basic message, roughly speaking, is simple: The peculiar and exceptionally unstable …
Charlie Munger: Bad Morals Drive Out The Good
Charlie Munger on applying Gresham’s Law. The idiotic ideas are all from the social science department and I would put economics in the social sciences department although it has some tinges of …
What Competition in Nature Should Teach Us about Markets
“Though the free-market faithful have long preached that competition creates efficiency, as if it were a law of nature, nature itself teaches a different lesson.” No tree can afford to not …
The Great Ideas of the Social Sciences
What are the most important ideas ever put forward in social science? I’m not asking what are the best ideas, so the truth of them is only obliquely relevant: a very important idea may be largely …
10 Reasons Countries Fall Apart
“States don’t fail overnight. The seeds of of their destruction are sown deep within their political institutions.” Is it culture, weather, or Geography? What about war or some …
The Pursuit of Fairness
As James Surowiecki illustrates in an excellent piece in the New Yorker, the pursuit of perfect fairness causes a lot of terrible problems in system function. Surowiecki calls this The Fairness Trap: …
How Raising Prices Can Increase Sales
I have posed at two different business schools the following problem. I say, “You have studied supply and demand curves. You have learned that when you raise the price, ordinarily the volume you can …
Greg Mankiw Recommends Reading These 18 Economics Books
If you’d like to read more about economics issues try these 18 books recommended by Greg Mankiw, author of Principles of Economics. The Cartoon Introduction to Economics Basic economic …
Giffen Goods: Raising prices and increasing consumption
Other things being equal when the price of a good rises, the quantity demanded should fall. Economics refer to this as the law of demand. Because there are many counter-examples to this law it’s …
Gresham’s Law: Why Bad Drives Out Good As Time Passes
Whenever coins containing precious metals have been used along with base metal coins of the same denomination, both legally accepted as tender, the bad coins have driven the good coins out of …
The Principles of Comparative Advantage: Why Tiger Woods Shouldn’t Mow Your Lawn
In economics, comparative advantage refers to the ability of a person or nation to produce a good or service at a lower opportunity cost than another person (or nation). This is why trade can create …
Mental Model: Supply and Demand
Supply and demand is a foundational economic mental model. Understanding it is instrumental in building a better picture of how the world works. *** The law of demand states that there is an inverse …