Showing Up For Work

I ended up not posting on these pages this past Wednesday.

I’m not proud of it, and I wished I had posted on that day, but let’s talk about showing up for work. The phrase isn’t mine, in the sense that I associate it with Seth Godin. And this practice, of trying to write here every weekday, and post links to interesting Twitter threads and videos over the weekend, is partly because of Seth’s practice of writing daily without fail. And also, of course, due to that other blog that has daily updates, come rain or shine.

And trust me, it is hard to do! I don’t feel quite so bad about not posting for long stretches over the past two years, because there were days where I simply didn’t feel like writing. And I was completely fine with that. But this past Wednesday, it was part laziness, part lots of other things to do, and part logistical issues.

But I should stop wussing around and ‘fess up. These are all excuses, and if I aim to post daily, then failure to post is I not prioritizing this task above all else. Generally speaking, I try to schedule posts a week ahead, and a good Friday is when I have posts lined up all through next Sunday.

But alas, this doesn’t always happen. And so you might see me hunched up over my laptop, a gently sympathetic cup of coffee next to me in a café, typing away furiously to meet my self-imposed deadline of posting by ten am. A bad day is one on which I miss the deadline, and a horrible day is one on which I don’t post at all.


The reason I’m writing this post today, and the reason I’ve spoken at length about my failure this past Wednesday, is because I want to leave you with two messages:

  1. If you write (and preferably post publicly) regularly for long enough, you will reach a stage where it becomes an almost compulsive habit, and that is A Very Good Thing. As Seth himself says, there is no such thing as writer’s block. Just sit and write. Some days will be diamonds and some will be stones, but the point is to first write. Worry about quality later.
  2. If you feel as bad as I do about missing a day, that is An Even Better Thing! But keep at it, and show up for work the next day, and then the day after, and then the day after that. Each day is, as it were, a marginal revolution.

And while you are at it, wish me luck. For today is Friday, and I don’t yet have any posts scheduled for next week.

Ah well, onwards!

Technology, Inflation and Day to Day Lives

You can hardly read a news source these days without reading one article or the other about inflation. There’s plain vanilla inflation, there’s shrinkflation, and there’s skimpflation. There is, one might argue, an inflationary spiral in coining terms related to inflation!

But as students of economics, I found a recent blogpost written by Virginia Postrel quite fascinating. She speaks about inflation being a formative experience as a young person growing up in the 70’s, and for this blog post, she asked some folks who were around then to speak of their memories regarding the inflation episodes of the 1970’s.

And what made this such an enjoyable read is the fact that day to day activities and behaviors changed due to inflation. It’s one thing to speak about how prices went up, and households cut back on their expenditures. But it is quite another to speak about how the lives of ordinary people changed as a consequence of inflation:

In the late 1970s, Tom Noonan, then around 20 years old, worked in a Winn-Dixie supermarket in Louisville, Kentucky. His job was to change price tags a couple of times a week. He’d go through the store with a box cutter and a pricing gun, slicing off the old price stickers and applying the new, higher ones. It’s one of the 1970s memories that came pouring out of my Facebook friends when I asked about their experiences.
Not every store was so meticulous. Many just slapped the new prices on top of the old ones. “I half remember peeling off price labels to get a lower price (maybe on a book?), not even realizing that what I was doing was wrong or illegitimate,” confesses Mike Schiffer, a law school IT manager born in 1968, in the Facebook thread. “I don’t think I really understood how prices were set or changed at that point.”

https://vpostrel.substack.com/p/from-the-archives-remembering-inflation

Which activities, tasks and chores have changed in our lives today because of the recent bout of inflation? How does inflation manifest itself in terms of how we lead our day-to-day lives? With barcode scanners, Tom Noonan’s job no longer need exist in most (but not all!) cases, and that is a good example of how you might want to think about the intersection of inflation, technology and day to day lives.

And if you’ll allow me a brief but entertaining digression: this would also be a good time to talk about, well, barcodes:

How vast mega-stores emerged with the help of a design originally drawn in the sand in 1948 by Joseph Woodland as he sat on a Florida beach, observing the furrows left behind, an idea came to him which would – eventually – become the barcode. This now ubiquitous stamp, found on virtually every product, was designed to make it easier for retailers to automate the process of recording sales. But, as Tim Harford explains, its impact would prove to be far greater than that. The barcode changed the balance of power between large and small retailers.

https://www.bbc.co.uk/programmes/p04k0066

Not just this episode – please listen to the entire series, and purchase the book if you can. This series remains a great way to understand how our day to day lives in the modern economy are impacted in surprising ways by inventions we take for granted. Such as the barcode, for one – but on an entirely related note, also check out the episode on shipping containers:

How a simple steel box changed the face of global trade. Shipping goods around the world was – for many centuries – expensive, risky and time-consuming. But 60 years ago the trucking entrepreneur Malcolm McLean changed all that by selling the idea of container shipping to the US military. Against huge odds he managed to turn “containerisation” from a seemingly impractical idea into a massive industry – one that slashed the cost of transporting goods internationally and provoked a boom in global trade. Tim Harford tells the remarkable story of the shipping container.

https://www.bbc.co.uk/programmes/b08jbd20

Both, of course, have a lot to do with inflation today – and both are not objects that would come up in an introductory course on economics, more’s the pity.


But a useful question to think about as a student of economics today is this: which of our day to day activities today are impacted by inflation in surprising and unexpected ways? Or put another way, what would be a good Tom Noonan example from today?

Thinking about this question is a good way to think about economics, but even better, economics in conjunction with technology and better-est of all, it helps you become a keener observer of life around you. An economic naturalist, if you will.

Learn Economics By Watching Movies

Classes on Principles of Economics at the Gokhale Institute have been going on for a while now, and have included one class on how to learn economics by looking at a painting. Another class, the topic of today’s post, was about learning economics by watching movies.

Here is the chart for India’s GDP:

Source: https://fred.stlouisfed.org/series/MKTGDPINA646NWDB#0

And it is safe to say that something happened around the 1990’s, and India has never looked back since. But is it possible to tell the same story… not by looking at charts, tables and chapters from a book – but by watching movies?

Let’s watch clips from three of them, and see if we can’t tell ourselves a story about India’s growth episodes.


The first clip we’re going to watch is from a movie called Naukri. This is a movie from the 1950’s, and is about a young Kishore Kumar and the troubles he faces while searching for employment. We’re going to watch a song at the start of the movie, called Chota Sa Ghar Hoga:

In this song, Kishore Kumar tells his young sister and his widowed mother what life will be like when he finds a job. There will be, he tells them, a small house, material comforts, and better times than the ones they’re going through right now. The only thing that prevents us from enjoying all this right away, he seems to be saying, is that he hasn’t found a job just yet – but just you wait! Once he does, all will be hunky dory.

If you accept the premise that Bollywood is all about showing you what you want to see, then I would argue that it isn’t a far stretch to assume that in the 1950’s, people wanted to watch movies about finding a job. Now, of course, I should be taking a sample size of larger than one, and I freely admit to there being some cherry-picking involved. But that being said, I would argue that a movie titled Naukri would likely not be made today – and the protagonist would not be singing songs about finding a job. More on that note in a bit, but the point I am trying to make here is that back in the day, folks visited movie theaters to watch songs about finding a job. Their daydreams were about finding employment, and about how life would change for the better once they did find it.


By the 1970’s though, the Great Indian Dream had soured. Youngsters no longer wanted to watch movies about finding a job. Now, in fact, they wanted to watch movies about what would happen once they were unable to find a job – and this was no longer a question about “if”. Unemployment was all but guaranteed, and the daydreams in this decade were about what life would be like when no gainful employment was possible.

And what would life be like? Yash Chopra had an answer, in Deewar:

Nobody left the movie theatre wanting to be like Shashi Kapoor. Amitabh was the anti-hero, but he was the focus of the audience’s daydreams. It is society that has deprived us from being able to get gainful employment, Deewar is saying, and here’s a three hour escape from reality. Watch a movie and daydream about what happens when through no fault of your own, you find yourself unable to get a job.

This scene, the one that I have embedded here, is in fact saying that the opportunity cost of material wealth is a loss of values and familial ties. Not in such abstruse, academic tones – but that’s one way of thinking about this scene. Or put another way, Deewar could well have been titled Naukri Nahi Milegi – Ab Kya?

In economist-y terms, the optimism about finding a Naukri has been replaced with a surly pessimism about never finding one. And it’s one thing to say that India’s GDP growth rate never really took off in the 1960’s and 1970’s, and quite another to think about how Bollywood movies help us see the same thing – if we choose to look.


And about twenty-five years later or so, yours truly was in college. And when I was in college, our dreams weren’t about finding, or not finding a job. In fact, to borrow a phrase from the movie that I’m going to talk about, who the call cared where we landed up?

Our dreams, were, instead, about driving to Goa in a Mercedes:

There is another song in this movie, called Koi Kahe Kehta Rahe. And right before that song begins, Aamir Khan jokes that he is going to sing a song called “Naukri Paane Ke Sau Tareeke“. One hundred ways to find a job. He then chuckles and tells his befuddled audience that he’s only joking – who the hell cares where we land up.


Each of these movies could only have been made in their respective decades. Youngsters in my day wouldn’t have empathized with a movie about finding a job, much less a movie about what would happen if we didn’t get a job. Those concerns weren’t ours – at least, not of those of us who grew up in middle class surroundings in an urban environment. Dil Chahta Hai was a movie made for People Like Us. We didn’t have Aakash’s palatial house, and we stood zero chance of being sent to Australia to manage a business. And the idea that we could have taken a year off to go paint wouldn’t have gone down well at our homes.

But it wasn’t unbelievable. Out of our reach, sure, but not forever. Dil Chahta Hai was a movie for our times, much like Deewar and Naukri were movies for their times. And if you want to learn about how life changed on the ground for Indians post 1991, well, you could read the books, study the tables, and all the rest of it – or you could ask if Dil Chahta Hai could have been made before 1991.

Roger Ebert, the movie critic, was fond of saying that one shouldn’t ask what movies were about. One should ask instead, he’d say, how movies were about whatever they were about. What he meant by that was this: ask what the director is choosing to show you in terms of the set, the accessories, the plotlines, and the characters and their choices.

As economists, this lesson is equally important. When you’re watching a movie, or reading a book, or listening to a song, ask questions about whatever it is that you’re consuming. Reflect on what is being perceived by you, and what is being shown to you. It enriches your experience, but it also helps you become a better social scientist.

And you’ll begin to appreciate movies, and why they’re made when they’re made.


For example, our generation absolutely lapped up Dil Chahta Hai.

But a movie about traveling to Spain for a holiday? Why, that’s outrageous! Maybe for the generation that came after ours, eh?

Postscript #1: Naukri is a movie about finding a job, but it is about much more than that, and the rest of the movie is actually quite bleak.

Postscript #2: An earlier version of this post is also on this blog.

Is There Such a Thing as Development Economics?

Alex Tabbarok says no:

I used to think there was such a thing as development economics. There are still richer and poorer countries, of course, but is there a “development economics,” a special type of economics for poor countries? I don’t think so. Maybe there once was. In the twentieth century, divergence in per-capita GDP increased big time and it was a burning question why poor countries weren’t on the same development path as the developed nations. Starting around 1990-2000, however, we have seen convergence. Most countries are now on the same path. Poorer countries and richer countries are becoming more alike, sometimes for good and sometimes for bad.

https://marginalrevolution.com/marginalrevolution/2022/08/there-is-no-such-thing-as-development-economics.html

Here’s the Wikipedia article on what constitutes development economics:

Development economics is a branch of economics which deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural change but also on improving the potential for the mass of the population, for example, through health, education and workplace conditions, whether through public or private channels.

https://en.wikipedia.org/wiki/Development_economics

Both Alex’s definition and the Wikipedia definition focus on how low- and middle- income countries need a different kind of economic theory when it comes to growth in these parts of the world. But why do these countries need a special kind of economics?

I suspect an answer most economists would agree on (talk about courting controversy!) is that these countries are likely to have a poorer quality of institutions and property rights. The legal system may not work as well as intended and the quality of political institutions might be worse along at least some dimensions, and that’s just for starters. So it’s not so much the case that a special kind of growth theory is needed, but that some of the assumptions underpinning the model are fundamentally different.

But as Alex mentions in his post, these assumptions may not be applicable, because convergence has taken place. The post is difficult to extract from, and I would recommend that you go ahead and read it in its entirety. But perhaps the most surprising thing in Alex’s latest post is the fact that this convergence has happened because poorer countries have caught up, more or less – but also because richer countries have become worse along some dimensions:

More generally, poorer and richer countries face many of the same problems today: infrastructure, low-skill workers and technological change, climate adaption and so forth. Is the latest paper on cash transfers, pollution, or corruption about a poor country or a rich country? It’s hard to tell. Poor countries still have their own unique problems, of course, but those problems are best analyzed by country rather than by income category. India is not the same as Thailand or Peru. I see little that unites poor countries under the rubric development economics.

https://marginalrevolution.com/marginalrevolution/2022/08/there-is-no-such-thing-as-development-economics.html

And anecdotally, I’m sure we’ve all experienced ways in which poorer countries are not just better off than before, but also have materially better institutions and processes.

The question is, does that then mean that there is no longer such a thing as development economics?


I would disagree with Alex’s stance, and say that development economics very much remains a relevant subject, and that for two reasons.

First, because with convergence, we’re not answering the same question that we were earlier – it is not so much about the fact that we need to focus on how to have poor countries grow faster, but just about how to make the world grow faster. There still remain, to be clear, countries that remain poor, and even within countries that have developed faster, there are regions that remain poor – but the focus of development economics should be different today than it was, say, in the 1960’s.

But that brings me to my second point. I define development economics slightly differently. When I take classes on development economics, I say that this is a subject that tries to find out the answer to three questions:

  1. What does the world look like?
  2. Why does the world look the way it does?
  3. What can we do to make the world a better place?

And viewed from this framework, it is the answer to the first question that has changed from about sixty years ago. Figuring out why it has changed is now a fascinating part of development studies. And the lessons one can learn by thinking about this helps us try and figure out what we can do to make the world a better place. To give you just one of many possible examples, you might want to think about which factors helped South Korea grow so rapidly in the last six to seven decades, and then ask which of these factors are replicable in an Indian context today. Not all factors will be applicable, and India today is not what India was back then, nor is it today what South Korea was back then.

Also, Pakistan cannot learn the same lessons that India might, because the ground reality in both countries is different in terms of resources, climate, geography, population, income levels, political institutions and so much more. And Sri Lanka will have a different set of lessons that are applicable, and all the African nations is a whole other story… and well, so on. Alex mentions this in his blogpost, of course.

But while it is true that there is little that unites poor countries today under the rubric of development economics, I don’t take that to mean that there is no such thing as development economics. Rather, I would argue that this simply means that the low hanging fruit in development economics have been picked, and development economics has now become an even more challenging and interesting field than before.

But “what can we do to make the world a better place?” will forever remain a valid and urgent question, so development economics, for me, will remain a fascinating subject to think about.

More Than 10,000 Hours

How “Economically Connected” Are You?

Work, Why Don’t You?

How should I beef up my CV is a question that will start to make the rounds on campuses all over the country, for it will soon be placement season.

LinkedIn will be awash with people happy to report, or excited to share (or in some cases, elated to announce) that they have completed course XYZ on platform ABC. Recommendation requests will come flowing in through the pipelines, and endorsements will abound. But simple Econ 101 should tell us that each of these have become so easy to acquire, and so commonplace an occurrence, that their value on your CV is commensurately lower.

Pamela Paul, writing in the NYT, has an idea that is fairly popular in the United States (although as the column explains, it could always be more popular), but doesn’t have quite as many takers in India: get a part time job.


Many instead favor an array of extracurricular activities that burnish their college applications, like student government and peer tutoring. This may be a mistake even for those parents and kids more concerned about college admissions than about what happens after that. Consider that having an afternoon job cultivates skills like time management and instills a sense of independence and personal responsibility — attributes that many college administrators say some students today lack.
But after-school jobs teach more concrete lessons as well. Personally, I learned more working outside school — starting with three afternoons a week when I was 14 and ending with three jobs juggled, seven days a week, my senior year of high school — than I did in the classroom.

https://www.nytimes.com/2022/07/30/opinion/jobs-teenagers.html

The ability to get, hold on to, and do well in a job – any job – is a rare old skill, and one that you’d do well to cultivate. In fact, what better way to signal that you are ready for the hurly-burly of the labor market than by proving that you’re already a participant? Pamela lists out ten ways in which a job helped her, and while you should go ahead and read the whole column, I’ll list out the ten factors here. Note that this is my summary of her ten points:

  1. Being good at a job is a very different skillset when compared to being good at studies – which is a polite way of saying college doesn’t teach you all you need to know. Every single person who has left academia and joined the corporate world will nod appreciatively on reading this statement, guaranteed.
  2. Being fired, or quitting your job, is not the end of the world.
  3. You tend to appreciate money a lot more when you realize how little you are paid for an hour of honest work
  4. Promotions can be based on duration of employment, not on level of skill, and this is an important lesson for life
  5. You are paid for your time, and the work you put in during that time. Slacking ain’t appreciated!
  6. Bosses can be mean. Not all, and not all the time. but bosses can be mean.
  7. You will work with folks who are different from you, in many ways and with many consequences, and you have to figure out how to deal with it
  8. Some of these folks, simply because of who they are and how they made it to the same job as you, will pull you down to earth, by helping you realize how lucky you are to be where you are
  9. Boredom is part and parcel of all jobs.
  10. School skills can be acquired out of school – but the reverse isn’t true.

Any job is fine – it needn’t be a desk based job. In fact, the more physical labor is involved, the more you are likely to learn. I managed an art gallery while I was in college to earn money on the side, and also taught econ to students of commerce, and I learnt more by trying to handle the art gallery.

But a job interview is likely to go that much better if you are able to say yes in response to a question about prior work experience. The more interesting the job, and the more well thought out your responses to a question about what you learnt on the job, the better your chances!

Further reading: Tyler Cowen tells us about his first job (follow up post here), as does Alex Tabbarok (this post has more than a dash of surrealism!)

When Cars Were The Intruders

The MIT Press Reader has a fascinating extract from a book called “Fighting Traffic: The Dawn of the Motor Age in the American City.”, by Peter Norton. The piece is about the early 1920’s in America, and focuses on how Americans struggled to get used to the idea that cars were going to be around in ever increasing numbers:

City people saw the car not just as a menace to life and limb, but also as an aggressor upon their time-honored rights to city streets. “The pedestrian,” explained a Brooklyn man, “as an American citizen, naturally resents any intrusion upon his prior constitutional rights.”  Custom and the Anglo-American legal tradition confirmed pedestrians’ inalienable right to the street. In Chicago in 1926, as in most cities, “nothing” in the law “prohibits a pedestrian from using any part of the roadway of any street or highway, at any time or at any place as he may desire.” So noted the author of a traffic survey commissioned by the Chicago Association of Commerce.  According to Connecticut’s first Motor Vehicle Commissioner, Robbins Stoeckel, the most restrictive interpretation of pedestrians’ rights was that “All travelers have equal rights on the highway.” 

https://thereader.mitpress.mit.edu/when-cities-treated-cars-as-dangerous-intruders/

Even more amazingly, at least to my twenty-first century ears:

In New York City’s traffic court in 1923, a judge explained that “Nobody has any inherent right to run an automobile at all.” Rather, “the courts have held that the right to operate a motor vehicle is a privilege given by the state, not a right, and that privilege may be hedged about with whatever limitations the state feels to be necessary, or it may be withdrawn entirely.”  The law would not deprive pedestrians of their customary rights so that motorists could roam at will in cities.

https://thereader.mitpress.mit.edu/when-cities-treated-cars-as-dangerous-intruders/

We’ve come a very long way since! I and a good friend of mine, Binoy Mascarenhas, have had quite a few arguments about the redevelopment of many streets in Pune city in terms of the widening of footpaths, and whether it makes sense or not. My contention has been that this (the redevelopment) definitely makes sense eventually, but the current high priority problem for Pune city is better public transport. Widening footpaths (and thereby narrowing streets) ought to be done only if we can increase the percentage of people traveling by public transport. Once that is done, we should absolutely make our cities more pedestrian friendly. Binoy is going to be in Pune this weekend, and I look forward to continuing the debate.

But I found it amazing to note that there was a time when the cultural adoption of a car as an inevitability on our streets was a new phenomenon. With the benefit of hindsight, it is obvious – the car, and the mental model of it as being top dog on the streets – required a change in how folks would have viewed the streets back then. But even so, the idea that, for example, some passages in the excerpt made me sit up:

Some even defended children’s right to the roadway. Instead of urging parents to keep their children out of the streets, a Philadelphia judge attacked motorists for usurping children’s rights to them. He lectured drivers in his courtroom. “It won’t be long before children won’t have any rights at all in the streets,” he complained. As the usurper, the motorist, not the child, should be restricted: “Something drastic must be done to end this menace to pedestrians and to children in particular.” 

https://thereader.mitpress.mit.edu/when-cities-treated-cars-as-dangerous-intruders/

Maybe I’m far too much of a modern day individual, but I genuinely struggle to see how we could adopt our cities today to a pedestrian first framework. The volume of traffic seems far too high, and we seem far too dependent on our vehicles for us to even try and imagine what something like this might look like at a city scale.

But there was, it would seem, a time when this was not just possible, but was actually reality. At what costs, and with what benefits – and should we aspire to return back to those presumably idyllic times, is a question I look forward to debating about this weekend.

And, of course, one more book has been added to the pile. So it goes.

Sowell and Roberts on Opportunity Costs

The essay that I linked to the other day, by Russ Roberts, contains a lovely little quote by Thomas Sowell: only trade offs, no solutions.

Four small words, but they contain one of the most important lessons in all of economics: opportunity costs are everywhere. Opportunity costs are literally the cost of the opportunity foregone. If you choose to spend the next fifteen minutes reading and thinking about this blogpost, then you’re not going to be able to do something else in those fifteen minutes. You could have taken a nap, you could have listened to songs, you could have watched videos on YouTube – but now, each of these is not going to happen, because you’re going to devote your attention to this blogpost.

That is the opportunity cost, to you, of reading this blogpost.

But the deeper point is the one that Russ Roberts makes in his blogpost – that nothing is ever for free, because even if you pay nothing else, you’re still paying in terms of opportunity cost. That is, this blog is free, and will always be free, but in another important and meaningful sense, it has never been free: you’re always paying with your time, and that time could have been potentially better spent elsewhere.

And that’s the point that Sowell is getting at, when he says only trade offs, no solutions. Because opportunity costs are omnipresent, and because there is no escaping them, economics can never give you a “solution”. At best, it can simply tell you that in order to do this, you have to give up that.

And this is true no matter what you’re talking about: it could be how you’re going to spend the next fifteen minutes, it could be your decision to get married (or not), or it could be your decision to abandon a particular course you’ve enrolled in midway through. If you find yourself asking others (or yourself) whether this is the best thing to do, you’re asking the wrong question – at least as far as an economist is concerned.

What is the cost, the economist will advise you to ask yourself, of continuing with this course, or deciding to marry this person, or of spending the next fifteen minutes reading this blogpost? Whatever it is that you would have done otherwise is the price that you’re paying to do this instead – and if the cost seems too high, well, you’re saying that the trade off is too expensive, and you should go ahead and do that other thing instead.

Opportunity costs, in other words, are everywhere. Or all costs then, in a sense, are opportunity costs.

But I do think Sowell put it best, and certainly the most pithily: only trade offs, no solutions.

Parsing my Favorite Definition of Economics

My favorite definition of economics can be found at the start of Cowen and Tabbarok’s textbook:

Economics is the study of how to get the most out of life

There is another excerpt that is worth reading in this regard:

Alfred Marshall called economics “the study of mankind in the ordinary business of life.” This was the enterprise of Marshall and Adam Smith and Friedrich Hayek and Milton Friedman: they tried to understand what people do and the implications of their behavior for the society at large.
But my favorite definition of economics is a variant of Marshall’s. It comes from a student who heard it from another teacher of hers: economics is the study of how to get the most out of life. I like this because it strikes at the true heart of economics—the choices we make, given that we can’t have everything we want. Economics is the study of infinite wants and finite means, the study of constrained choices. This is true for individuals and governments, families and nations. Thomas Sowell said it best: no solutions, only tradeoffs. To get the most out of life, to think like an economist, you have to be know what you’re giving up in order to get something else.

https://www.econlib.org/library/Columns/y2007/Robertsopportunitycost.html (Very minor edit in the first sentence to make it more readable)

So: economics is the study of how to get the most out of life. But what does this mean, exactly?


Three questions present themselves almost immediately to me when I think about this sentence:

  1. What exactly does “how to?” mean?
  2. Who defines what “most” means in each context?
  3. Whose life?

I’ll begin with the second question, move on to the third, and finish with the first.

  1. Who defines what “most” means in each context?

    My daughter – all of nine years old – has a very clear answer to this question on, say, a Saturday morning. As many hours as possible on her tablet.
    Given her world, and her time horizons, this makes perfect sense to her.
    As does my definition of “most” when I decide to take a “five minute” break from whatever I’m doing to “quickly” check Twitter, or watch “just one video” on YouTube.

    That’s the trouble with this definition – “most” is a very, very tricky word. It is my job to teach my daughter that “most” has long term implications, and it is my job to remind myself that “most” has long term implications. What seems best at the moment isn’t necessarily the best if you take the long view. Economics will tell you how to get the most out of life, assuming you know what most means for you right now.
    But what is the best definition of “most”, and why, is a question economics doesn’t directly answer. It’ll tell you about the benefits and costs of whatever definition of “most” you happen to choose, but evaluating between these options is left to you. Tricky little thing that way, economics.

  2. Whose life?

    When I make a choice about the word “most”, should I keep in mind just me or other folks too? Watching the tenth YouTube video instead of getting back to work gets the most out of my life is what my brain tells me, but does my income suffer? Does my family’s well-being suffer? How should I balance these conflicting interests? Does that mean that I shouldn’t watch a single YouTube video?

    It gets even more complicated when I realize that I really need to think about four different sets of lives. My own right now, and my own in the future (both near and distant). But also the lives of others, and those right now and in the future.

    Freebies just before an election might win a government an election now, but what about greater indebtedness in future generations? Congo deciding to give oil exploration licenses might mean more dollars in their coffers now, but at what cost to the future lives of everybody on this planet twenty years down the line?

  3. What exactly does “how to” mean?

    My very first manager in the corporate world drummed a lesson into me that I have found very useful, and worth remembering. Everything that I do in any organization, he said, must fulfill one of three aims. It must either help the firm increase revenue, or it must help the firm reduce costs. Or, he said, it should help the firm improve speed-to-market. You might quibble that the third is a restatement of the first, but the point is well-taken, and relevant in this context.
    Economics helps you get the most out of life by either giving you more of whatever it is that you’re aiming for, or by reducing the effort involved in getting it, or both. And the apparatus involved in this is where math and econ begin to intersect. But the idea is summarized very well in the rule my manager set for me.
    For example, if what I want to do is get the most out of writing an examination, there are two things that I can do. Try and maximize my marks (my grades) or try and minimize my efforts. Ideally of course, I should try and get the biggest bang for the buck – maximize my marks while minimizing my efforts. And that, of course, is why most (if not all) students are so curious to learn about the “important questions”, the “pattern of the paper”, the “syllabus” and the “recommended” textbook.

But should one be maximizing marks and minimizing effort in the first place? Isn’t the point to learn as much as possible?

Allow me refer you back to the first question in this series