Our goal is to make the beauty and power of economic thinking available to everyone. We will discuss what it means to think like an economist, how you can use economic thinking to make the world a better place (or to take advantage of your friends and enemies, if you prefer), and also how sometimes thinking like an economist can get you into trouble. In addition to our core Economics for Everyone material, you’ll also find supplemental videos for each unit. These videos dive into the mechanics of the big economic concepts. Unlike the core videos, these supplemental videos include some math. However, they are not necessary to understand the core E4E videos.
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Economics is the study of choices and how those choices affect others. There are lots of social sciences that study human behavior, for example, psychology and sociology. So, how are economists different from other social scientists? Economists focus on three core principles:
These principles build the foundation for thinking like an economist. The tools of economics can be used to answer questions such as: Should I invest time in this course? How can we split the work for a group project? How should policymakers assess climate change policies? What drives the gender pay gap? And the list goes on. If you go online and look at the news headlines, whether they are related to large firms or fashion, you’ll see events driven by economic factors. These videos and other Economics for Everyone materials will help you understand and analyze these economic factors. In the first season of Economics for Everyone, this unit delves into Optimization and Equilibrium. Stay up to date with Economics for Everyone to learn about the release of Empiricism content.
Which of these is the most important invention?
The answer is up for debate and the list is not exhaustive, but money is an essential invention. In medieval England, income per capita was just $1000. Now it’s over 26 times as large. When you enter the grocery store, there are more cereal options than you could ask for. How did we get these results? Perhaps markets played a role.
Let’s say you work in a big city. It’s 5:00 PM, and it’s time to go home. You use a rideshare app to call a ride. The price of your ride is $30. In the afternoon, you look at the price of your ride home, and it is $15. What’s going on?
You participate in markets every day. When you exchange your hard-earned money for goods and services, you are participating in a market. How do you respond when the price of your ride doubles? How does the rideshare driver respond when they see the price of their service has doubled? The decisions of buyers and sellers in a market underly the supply and demand curves you hear discussed in textbooks.
Economists use supply and demand to study how buyers and sellers respond to changes in the market. What happens to the price of toilet paper when the whole world shuts down? How do rideshare companies respond when significantly more people are demanding rides after work? How do farmers respond to increasing costs of water?
Every time you make the decision to buy something, you are making considerations. Economists have studied and have a special name for the considerations that you, a buyer, make. It is called the buyer’s problem! Thinking about the buyer’s problem can help you make important decisions such as where to go to college as well as reflect on other decisions like the choice to buy a pair of jeans or two sweaters. In this lesson Dr. Angela Doku introduces the buyer’s problem, walking you through decisions we all make every day.
Trade appears just about everywhere in our lives. You may be thinking of international trade, which is, of course, important. But, did you give yourself a haircut? Make your own shoes? Trade is everywhere! What about when you are assigned a partner on a project, how do you decide to allocate your and your partner’s time on the project? Trade is not just relevant for governments and businesses. Trade shows up in your life in ways you may not expect. In this lesson Professor Min Sok Lee explains the basics of trade, and how trade can help you.
When you decide to drive to school in the morning, do you consider how that choice affects others? Adding another car to the road increases congestion, which means others’ commute times are impacted. When a firm releases pollutant during its production process, the pollutants in turn affects the health of others. Economics is not just the study of choices, but also, how those choices affect others. Some choices impose a cost on others like increased commute time or health problems. When our choices affect bystanders, economists call those effects externalities.
What do these things have in common:
Game theory deals with situations where your outcome depends critically on the actions of other participants. In this lesson, we introduce the some of the basics of game theory.
What does economics have to say about discrimination? Can economics teach you about the gender pay gap? Economics has something to say about the gender pay gap, but also about types of discrimination you may not have thought of before. Why might you and I get different prices from an online retailer for the same product? Both theoretically and empirically, economists have studied discrimination in many forms. In this lesson, you will be introduced to the study of discrimination from an economic perspective.