...into why I love econ.
Check out this excerpt from a recent post on the Freakonomics blog:
Then, of course, there’s the matter of satisfaction derived from the money itself. Just as a beautiful woman could be described as a “depreciating asset,” so could a rent-free apartment with an unlimited shopping budget. A platinum card may thrill for a few months, but, particularly given the required tradeoff of supplying sexual favors to a man who describes himself as “Danny De Vito with a nicer suit,” it’s also likely to offer diminishing returns.
This Marginal Revolution post about the value of a sports agent is pretty good too.
Both are excellent examples of economic intuition applied to everyday events. I think there are two lessons that come from this. The first is to never underestimate the power of a disciplinary lens. Economics is a powerful method, and allows for systematic analysis into a range of phenomena. The second is to be wary of the danger of going all narrow: sometimes there are insights to be gained from other perspectives. This isn't to say that we should all be jacks-of-trades - I'm a big believer in comparative advantage and returns to specialization. Rather, I think its useful to know the contributions and limits of any one approach, and know where other approaches might fill in any existing gaps.
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