Introduction to Economics | Marginal Revolution University (MRU)

00:03:31
https://www.youtube.com/watch?v=g9uUIUqhrSQ

Summary

TLDRTyler and Alex explore the transformative power of economics, emphasizing how the study of incentives can fundamentally alter our understanding of various real-world scenarios. They illustrate this with examples such as differing service levels between restaurants and cable companies, unexpected consequences of laws meant to protect endangered species, and historical cases like the British government's change in incentives that improved convict survival rates during transportation to Australia. Economics is portrayed as a discipline that extends beyond financial management to guide decisions in various aspects of life, offering a broad framework for understanding human actions and societal challenges. Learning economics can reshape how we view the world and solve problems effectively.

Takeaways

  • 📚 Studying economics changes your worldview.
  • 💡 Incentives are fundamental to understanding behavior.
  • ❓ Economics raises important questions about everyday scenarios.
  • 🇬🇧 Historical incentives improved convict transport survival.
  • 🔄 Economics is broader than just financial advice.
  • 🔍 Learning economics provides new perspectives.
  • 📈 It helps in making choices about career and education.
  • 🌍 Offers deeper understanding of societal issues.
  • 🔄 Retraining the brain for new insights can be challenging.
  • 👀 Ultimately offers a 'new set of eyes' to view the world.

Timeline

  • 00:00:00 - 00:03:31

    Tyler expresses his passion for economics, emphasizing how it has shaped his worldview since he began studying it at age 13. Alex introduces the concept of incentives in economics, highlighting it with questions about service quality, laws affecting endangered species, and toy companies advocating costly regulations. A historical example from 1787 demonstrates how paying sea captains only for prisoners arriving alive improved conditions for convicts sent to Australia, showcasing how incentives change behavior. Economics, according to Tyler and Alex, is not just about money management but understanding human action and decision-making. It's a tool for making informed choices in various aspects of life, offering a deeper insight into societal issues. They conclude by acknowledging the challenges of learning economics but promise a transformative perspective.

Mind Map

Video Q&A

  • Why is the service at a local restaurant better than from the cable company?

    It's related to economic incentives that influence service quality.

  • Why do laws aimed at protecting endangered species sometimes result in more being killed?

    Incentives and unintended consequences can lead to negative outcomes.

  • How can economics help with choices in life?

    Economics provides insights into decision-making under scarcity, influencing career, education, and parenting decisions.

  • What is a key economic insight mentioned in the video?

    The concept of incentives and how they influence behavior and outcomes.

  • How did the British government solve the problem of high death rates on convict ships?

    By changing incentives, they paid captains only for prisoners who arrived alive, greatly improving survival rates.

  • What broader understanding does economics offer beyond managing money?

    Economics offers insights into human action, choices, and societal issues.

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  • 00:00:00
    ♪ [music] ♪
  • 00:00:13
    - [Tyler] I love economics.
  • 00:00:15
    I began studying economics when I was 13
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    and I haven't stopped yet.
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    Economics really has changed my life and the whole way
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    I see the world.
  • 00:00:25
    What's so powerful about the discipline
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    is just how much it shapes how you understand
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    everything around you.
  • 00:00:31
    - [Alex] But perhaps you're asking, what's my incentive
  • 00:00:34
    to learn economics?
  • 00:00:35
    Well, that's a great question.
  • 00:00:37
    You've already hit on a key economic insight, incentives.
  • 00:00:41
    For example, why is the service at a local restaurant
  • 00:00:44
    typically so much better than from the cable company?
  • 00:00:48
    - Or why do laws which supposedly protect
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    endangered species, sometimes end up
  • 00:00:53
    with more of those animals being killed?
  • 00:00:56
    - Or why do big toy companies sometimes advocate for regulations
  • 00:01:00
    which raise their costs?
  • 00:01:04
    Incentives are the key.
  • 00:01:06
    - Another example might help us explain.
  • 00:01:09
    Way back in 1787, the British government
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    hired sea captains to ship convicted felons to Australia.
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    Conditions on those ships were just awful.
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    On one voyage, more than one-third of the men died
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    and the rest arrived beaten, starved and sick.
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    The public was outraged, newspapers called
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    for better conditions, the clergy appealed
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    to the captains' sense of humanity, and British Parliament
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    passed regulations requiring better treatment
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    of these prisoners.
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    Unfortunately, those attempted solutions simply didn't work.
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    The death rate remained shockingly high.
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    - So Tyler, as a good economist, how would you solve this problem?
  • 00:01:49
    - Well, there was one economist at the time who came up
  • 00:01:52
    with a novel solution.
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    It was implemented and it basically worked.
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    Instead of paying the captains for each prisoner
  • 00:01:59
    who embarked to Australia, the government
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    would pay the captains only for the prisoners
  • 00:02:05
    who arrived alive.
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    Overnight, the incentives of the sea captains changed.
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    The survival rate of the prisoners shot up to 99%.
  • 00:02:16
    As one observer put it, economy beat sentiment
  • 00:02:20
    and benevolence.
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    - So what's your incentive to learn economics?
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    People hear that I'm an economist and they ask me
  • 00:02:27
    about managing their money.
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    And economics does have some lessons for investing
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    in the stock market, but economics is much broader than that.
  • 00:02:36
    It's the study of human action, how people make choices,
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    and how they should make choices under scarcity.
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    Economics will help you with your choices,
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    whether picking a career, parenting a child,
  • 00:02:49
    or deciding how much education is a truly worthwhile investment.
  • 00:02:54
    Overall, economics will give you a deeper understanding
  • 00:02:58
    of the key issues of our time.
  • 00:03:02
    - Economics can be hard.
  • 00:03:04
    Retraining your brain to look at the world
  • 00:03:06
    in a different way, isn't always easy.
  • 00:03:09
    - But the reward is a new set of eyes
  • 00:03:12
    to see the world.
  • 00:03:13
    So are you ready to begin?
  • 00:03:17
    ♪ [music] ♪
Tags
  • Economics
  • Incentives
  • Human Behavior
  • Decision Making
  • Scarcity
  • Economics Education