{"id":18230,"date":"2014-07-05T18:58:26","date_gmt":"2014-07-05T16:58:26","guid":{"rendered":"http:\/\/www.w-t-w.org\/en\/?p=18230"},"modified":"2014-07-05T18:58:26","modified_gmt":"2014-07-05T16:58:26","slug":"economics-101-in-a-graduation-speech","status":"publish","type":"post","link":"https:\/\/www.w-t-w.org\/en\/economics-101-in-a-graduation-speech\/","title":{"rendered":"Economics 101 in a Graduation Speech"},"content":{"rendered":"

 <\/p>\n

Nobel Laureate Thomas Sargent \u00a0began with a simple promise. “I will economize on words,” he said. And he did.<\/p>\n

<\/div>\n

Economics is organized common sense. Here is a short list of valuable lessons that our beautiful subject teaches.<\/p>\n

1. Many things that are desirable are not feasible.<\/p>\n

2. Individuals and communities face trade-offs.<\/p>\n

3. Other people have more information about their abilities, their efforts,
\nand their preferences than you do.<\/p>\n

4. Everyone responds to incentives, including people you want to help. That
\nis why social safety nets don’t always end up working as intended.<\/p>\n

5. There are tradeoffs between equality and efficiency.<\/p>\n

6. In an equilibrium of a game or an economy, people are satisfied with their
\nchoices. That is why it is difficult for well meaning outsiders to change
\nthings for better or worse.<\/p>\n

7. In the future, you too will respond to incentives. That is why there are
\nsome promises that you’d like to make but can’t. No one will believe those
\npromises because they know that later it will not be in your interest to
\ndeliver. The lesson here is this: before you make a promise, think about
\nwhether you will want to keep it if and when your circumstances change.
\nThis is how you earn a reputation.<\/p>\n

8. Governments and voters respond to incentives too. That is why governments sometimes default on loans and other promises that they have made.<\/p>\n

9. It is feasible for one generation to shift costs to subsequent ones. That is
\nwhat national government debts and the U.S. social security system do
\n(but not the social security system of Singapore).<\/p>\n

10. When a government spends, its citizens eventually pay, either today or
\ntomorrow, either through explicit taxes or implicit ones like inflation.<\/p>\n

11. Most people want other people to pay for public goods and government
\ntransfers (especially transfers to themselves).<\/p>\n

12. Because market prices aggregate traders’ information, it is difficult to forecast stock prices and interest rates and exchange rates.<\/p>\n

 <\/p>\n

\"Economics<\/a><\/p>\n

 <\/p><\/blockquote>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

  Nobel Laureate Thomas Sargent \u00a0began with a simple promise. “I will economize on words,” he said. And he did. Economics is organized common sense. Here is a short list of valuable lessons that our beautiful subject teaches. 1. Many … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":22,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[13,21],"tags":[],"class_list":["post-18230","post","type-post","status-publish","format-standard","hentry","category-finance","category-financial-literacy"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t