Introduction to Economics | Marginal Revolution University (MRU) — Transcript

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1. 0:00♪ [music] ♪
2. 0:13- [Tyler] I love economics.
3. 0:15I began studying economics when I was 13
4. 0:18and I haven't stopped yet.
5. 0:20Economics really has changed my life and the whole way
6. 0:23I see the world.
7. 0:25What's so powerful about the discipline
8. 0:27is just how much it shapes how you understand
9. 0:29everything around you.
10. 0:31- [Alex] But perhaps you're asking, what's my incentive
11. 0:34to learn economics?
12. 0:35Well, that's a great question.
13. 0:37You've already hit on a key economic insight, incentives.
14. 0:41For example, why is the service at a local restaurant
15. 0:44typically so much better than from the cable company?
16. 0:48- Or why do laws which supposedly protect
17. 0:51endangered species, sometimes end up
18. 0:53with more of those animals being killed?
19. 0:56- Or why do big toy companies sometimes advocate for regulations
20. 1:00which raise their costs?
21. 1:04Incentives are the key.
22. 1:06- Another example might help us explain.
23. 1:09Way back in 1787, the British government
24. 1:12hired sea captains to ship convicted felons to Australia.
25. 1:16Conditions on those ships were just awful.
26. 1:19On one voyage, more than one-third of the men died
27. 1:22and the rest arrived beaten, starved and sick.
28. 1:25The public was outraged, newspapers called
29. 1:28for better conditions, the clergy appealed
30. 1:30to the captains' sense of humanity, and British Parliament
31. 1:33passed regulations requiring better treatment
32. 1:36of these prisoners.
33. 1:38Unfortunately, those attempted solutions simply didn't work.
34. 1:42The death rate remained shockingly high.
35. 1:45- So Tyler, as a good economist, how would you solve this problem?
36. 1:49- Well, there was one economist at the time who came up
37. 1:52with a novel solution.
38. 1:53It was implemented and it basically worked.
39. 1:56Instead of paying the captains for each prisoner
40. 1:59who embarked to Australia, the government
41. 2:02would pay the captains only for the prisoners
42. 2:05who arrived alive.
43. 2:08Overnight, the incentives of the sea captains changed.
44. 2:12The survival rate of the prisoners shot up to 99%.
45. 2:16As one observer put it, economy beat sentiment
46. 2:20and benevolence.
47. 2:22- So what's your incentive to learn economics?
48. 2:25People hear that I'm an economist and they ask me
49. 2:27about managing their money.
50. 2:29And economics does have some lessons for investing
51. 2:31in the stock market, but economics is much broader than that.
52. 2:36It's the study of human action, how people make choices,
53. 2:39and how they should make choices under scarcity.
54. 2:43Economics will help you with your choices,
55. 2:46whether picking a career, parenting a child,
56. 2:49or deciding how much education is a truly worthwhile investment.
57. 2:54Overall, economics will give you a deeper understanding
58. 2:58of the key issues of our time.
59. 3:02- Economics can be hard.
60. 3:04Retraining your brain to look at the world
61. 3:06in a different way, isn't always easy.
62. 3:09- But the reward is a new set of eyes
63. 3:12to see the world.
64. 3:13So are you ready to begin?
65. 3:17♪ [music] ♪