Chapter 3 Primer

Why are there some characters in Braille on the keypad of the high-speed roadside cash machine?Most of the people who patronize these machines are drivers, and there are no blind people among them. According to my student Bill.According to Toya, ATM manufacturers have to equip common street ATMs with Braille keypads, so it's cheaper to make all machines look the same.Otherwise, it is necessary to separate the two types of machines to ensure that the right machine is installed in the right place.If Braille is a hassle for visible users, it's well worth the effort, but they're not in the way.

Let's start from the beginning.In my introductory economics class, I assigned a written assignment: use economic principles to explore interesting problems in chess patterns of events or behavior that you have personally observed. And Mr. Toya's question was exactly the homework he gave me. He handed in two short essays, one of which was titled this.I said in class that there is a limit to the number of words in an article, within 500 words.Many excellent papers are much shorter than this.Do not mix complicated technology in the article.Pretend you're telling a story to a relative who never took an economics class.The best papers can be understood by ordinary people at a glance, and generally do not use any formulas and diagrams.

with Bill.Like Toya's question about ATM keypads, the best papers contain a specious question.For example, one of my favorite issues was 1977 by Jennifer.Dursky asks: Why do brides often spend thousands of dollars on a wedding dress they'll never wear again, while grooms tend to rent cheap gowns even though they might need it for many occasions later? Dursky believes that's because most brides want to look beautiful and stylish on their wedding day, so rental companies have to stock huge numbers of distinctive wedding dresses in forty or fifty of each size.The number of leases for each wedding dress is very small, and it may only be rented out once every four or five years.Therefore, to cover expenses, the company charges a rental fee that is more expensive than buying a set outright.Since it is cheaper to buy, no one will rent.

On the other hand, since the groom is comfortable with the rules, the rental company only needs to prepare one or two dresses of each model.Therefore, each dress can be rented out several times a year, which is much cheaper than buying. This book contains some of the most interesting examples that I have treasured over the years.I dedicate it to people like Bill.Toya and Donnifer.Readers like Dursky who enjoy unraveling the mysteries of everyday human behavior.Although many people think economics is incredible and difficult to understand, its basic principles are simple and practical.By understanding these principles in the light of concrete examples, anyone can easily master it.

Unfortunately, that's not how economics is taught in universities.Not long after I taught at Cornell University, several friends in different cities sent me Ed.This cartoon by Ed Arno: It's my pleasure to introduce Mr. Thornyhead.He's an economist, but he's really nice. opportunity cost concept A comic is a fact, and if people find it interesting it must be because it says something truthful. Long before Arnold's cartoons went viral, I noticed that whenever people in social situations asked me about my profession, they were always a little disappointed when I answered that I was an economist.I can't help asking why.Many people will refer to the introductory economics class they took many years ago, all those horrible graphs.

Nineteen percent of American college students take only one economics course, 21 percent take more than one, and only 2 percent major in economics.People with Ph.D. titles in economics are basically negligible.But those horrible introductory economics classes filled with formulas and graphs owe a lot to these negligible few people.As a result, most of the students who take these classes do not learn much.After six months in class, the students took a test of basic economics knowledge, and they did not much better than students who had never taken an introductory class.What a shame!Is it justified that a course that charges thousands of dollars in tuition does not create any value?

The students don't seem to understand even the most basic principles of economics.If you've taken economics classes, you've at least heard of the term opportunity cost.The opportunity cost of engaging in an activity is the value of other enjoyments you give up to engage in it. For example, suppose you bought an American singer Eric.Free tickets to Eric Clapton's concert tonight.Note, you cannot resell.But another big American singer Bob.Bob Dylan is playing a concert tonight, and you'd love to go too.Dylan's concert tickets cost forty dollars.Of course, you can go to his performance at other times, but the price you can afford is fifty dollars.In other words, if Dylan's ticket costs more than fifty dollars, you'd rather not watch it, even if you have nothing else to do.In addition, there is no other cost to see the performance of the two.How much is your opportunity cost of going to a Clapton concert?

The only thing you have to sacrifice to go to a Clapton concert is to go to a Dylan concert.By not going to a Dylan concert, you're missing out on a performance that was worth fifty dollars to you, but you're also saving the forty dollars you would have paid for a Dylan concert ticket.So, by not going to the Dylan concert, the value you are giving up is fifty-forty = ten (dollars).If you think it's worth at least ten bucks to see a Clapton concert, then you should; if not, go to a Dylan concert. Opportunity cost is generally considered to be one of the two (or three) key concepts to be introduced in an introductory economics class.But according to the solid evidence we now have, most students, no matter how you look at it, fail to grasp the concept.

Recently, economist Paul.Ferrero (Paul Ferraro) and Laura.Laura Taylor posed the above Clapton/Dylan questions to groups of students to see if they could answer correctly.They gave multiple-choice questions, and there were only four answers: a. $0; b. $10; c. $40; d. $50 As mentioned earlier, the correct answer is ten dollars, or the value you sacrifice by not going to a Dylan concert.However, when Ferrero and Taylor posed this question to 270 undergraduates who had recently taken an economics course, only seven.Four percent selected the correct answer.Because there are only four options, even if the students choose at random, the correct rate should be 25%.It seems that the students feel ashamed of mastering this knowledge.

Afterwards, Ferrero and Taylor posed the same question to 88 students who had never taken an economics course, and this time the correct rate was 17.Two percent is twice as high as for students who have taken an economics class, but still lower than the chance of getting it right by random selection. Why don't students who take economics courses do better?I think the main reason is that in a typical introductory class, opportunity cost is just one of the hundreds of concepts professors throw at students, and it's vague and brushed off.If students don't spend enough time on it and rehearse it in different examples, they can't really understand it.

But Ferrero and Taylor raise another possibility: The lecturers who teach economics don't themselves grasp the basic concept of opportunity cost.At the annual meeting of the American Economic Association in 2005, they asked the same question to 199 professional economists, only 21.Six percent of people chose the correct answer, twenty five.1% of people think that the opportunity cost of going to Clapton's concert is 0, 25.Six percent thought it was $40, and twenty-seven.Six percent thought it was fifty dollars. Ferrero and Taylor examined the leading textbooks on introductory economics and found that most did not give enough attention to opportunity cost to help students answer Clapton-Dylan's problem. They also noticed that textbooks that were more advanced than introductory did not introduce the concept patiently and deeply.In the go-to textbook for college microeconomics, the term opportunity cost is not even found in the index. However, opportunity cost helps explain a whole host of interesting behavioral patterns.Here's an example: We all know that there are huge cultural differences between the big cities on the coast of the United States and the small cities in the Midwest.Why are the residents of Manhattan generally rude and impatient, while the residents of Topeka, the capital of Kansas, are friendly and courteous? Of course, you may disagree with the premise, but most people seem to find it a neutral descriptor.If you asked for directions in Topeka, people would stop to help you, but in Manhattan, they might not even look at you.Because on this planet, Manhattan has the highest salary level, the most things to do, and the opportunity cost of other people's time is very high.So it's only natural that New Yorkers are a little impatient. I ask students to write natural economics assignments inspired by the questions teachers ask students to answer in introductory biology classes.If you know a little bit about evolution, you'll discover a lot of things you never noticed before.Using this theory, we can identify and think about the basic structures and patterns that make up the world. Why are male walruses so much bigger than female walruses?For example, here's a standard Darwinian question: Why are males larger than females in most vertebrates?For example, a male walrus is more than 20 feet long (one foot = 30.48 centimeters) and weighs more than 6,000 pounds (equivalent to a Lincoln SUV), while a female walrus weighs only 800︱1,200 pounds .Similar sex differences are observed in most vertebrates. According to the theory of evolution, most vertebrates adopt polygamy (that is, as long as the male is strong enough, he can have multiple female partners), so males must compete to obtain females.Male elephant seals sometimes beat each other for hours on the beach until one of them retreats exhausted and bloodied.Only the winner of the battle can enjoy the right to be lucky with hundreds of female walruses. This evolved into a reward for first class, and also explains why male walruses are much larger.In fights with other male walruses, walruses with the mutant gene for bulk were more likely to win, so the next generation of walruses would have a higher chance of having the gene.In short, the reason males are so big is that smaller males rarely get close to females. Male peacocks have large, beautiful tails that spread out for much the same reason.Experiments have shown that female peacocks prefer male peacocks with longer tail feathers, because long tail feathers symbolize good health, while male peacocks afflicted by parasites cannot grow long tails that are glamorous.But for the big male walruses and the peacocks with the beautiful tails, an individual advantage becomes a group disadvantage.For example, a 6,000-pound walrus has a hard time escaping from its predator, the great white shark.It would be a lot better if all male walruses lost half their body weight.In this way, the male walruses fight with each other with the same result as before, and it is easier to get away from the great white shark. In the same way, if the tail feathers of all male peahens are cut in half, on the one hand, the female peahens will still have the same choice as before, and on the other hand, it will be easier to escape when encountering natural enemies.It's a pity that the male walrus insists on a large body, and the male peacock refuses to give up his long tail feathers.Of course, evolutionary competition does not go on indefinitely.After a certain point, the inherent disadvantages of larger size or longer tail feathers gradually outweigh the advantages of easier access to females.This balance of costs and benefits is reflected in the surviving males. The biologist's narrative is interesting.It's coherent and plausible.With that said, if you were looking at monogamous species, where males and females stay together for life, you wouldn't find a difference between the sexes.This is proof of the ancient meaning of the word that there are exceptions to the law, and exceptions to prove the existence of the law. The exception proves the rule.Polygamy leads us to the conclusion that males are larger.And for those animals that don't practice polygamy, males are no bigger than females.For example, albatrosses are monogamous, and according to theory, males and females should be about the same size.And it is true. There are exceptions to the rule: in monogamous albatrosses, males and females are about the same size.Biologists' descriptions of the differences between the sexes are tenable.It’s easy to remember and easy to tell others: if you can tell stories like this and understand why they’re there, your understanding of biology will be a step up from memorizing that birds belong to the class of Aves . The same is true for narrative explanations based on economic principles.Most introductory economics classes don't place much emphasis on narrative (and I used to do the same myself).Instead, they drown students in formulas and diagrams. Mathematics is an important source for the development and progress of economic knowledge, but it may not be an effective carrier for beginners in this class.With the exception of engineering students, and a few students who are deeply trained in mathematics, most students who try to learn economics through formulas and diagrams can never really master the famous way of thinking like an economist.They spend a lot of energy understanding the mathematical details, while ignoring the common sense underlying economic concepts. The human brain is extremely flexible, capable of absorbing new information in countless different forms.But there is an easier way for most brains to absorb information.In general, students struggle with formulas and graphs.But because our species has evolved to be storytelling, almost everyone can absorb corresponding information in narrative form with ease. This came to me by accident when I participated in Cornell University's interdisciplinary writing program more than two decades ago.Research shows that one of the best ways to learn is to write it down.Two proponents of narrative learning theory, Walter.Dole (walter Doyl) and Casey.Carter (Kathy Carter) once pointed out that, at its core, the narrative learning perspective believes that human beings have a common tendency to storyize personal experiences, that is, to interpret information and experiences in a narrative way.Another narrative learning theorist, psychologist Jerome.Bruno (Jerome Bruner) found that children will make things into stories, and when they try to understand life, they will use the narrative perspective to look at personal experiences as the basis for further thinking.If they can't understand things in a narrative structure, they won't remember them well, and they won't be able to pull them out and think about them at any time later. In a word, absorbing narrative information seems to be the specialty of the human brain.My natural economics written assignment directly addresses this strength: it asks the student's essay title to ask a question.I have found it useful to emphasize to students that they want to list the most interesting problems possible.There are three reasons. First, to find an interesting question, they generally have to consider several alternative questions first, which is a useful exercise in itself; second, students who ask interesting questions develop a greater interest in the assignment and put more effort into it ; Third, students who ask interesting questions are more willing to tell others.If you can't take a concept out of the classroom and apply it, you don't really understand it.But once you can use it yourself, it's yours forever. cost-benefit principle The principle of cost-benefit is the source of all economic concepts.It suggests that you should only do it if the additional benefit of the action outweighs the additional cost.What a simple concept, isn't it?But it is not so easy to learn and use. You want to buy an alarm clock at the on-campus grocery store next door for twenty dollars.A friend tells you that the same alarm clock sells for ten dollars at the Kmart in town.Would you go to town and buy this ten-dollar alarm clock?Or just buy it at the grocery store next door?No matter where you buy it, the alarm clock is covered by a manufacturer's warranty should it fail. Of course, there are no absolute right or wrong answers here.Everyone must weigh the associated costs and benefits.But when we ask people what to do in this situation, most of them choose to buy an alarm clock at Kmart.Now look at the next question: You want to buy a laptop for $2,510 at the on-campus grocery store next door.The same computer sells for $2,500 at the Kmart in town.No matter where you buy it, if there is a problem, you must return it to the original factory for warranty.Where would you buy this computer? This time, most people said they would buy it at school.As far as the question itself is concerned, this answer is not wrong.But if we ask a rational person what he should do in both cases, he will say that the cost-benefit principle clearly states that the answer should be the same both times.After all, in both cases, your benefit of going to town is ten dollars, which is the money you save. Cost is what you pay to get into town.In both cases, this is also the same.Since the costs are the same and the benefits are the same, the answer should be the same.However, most people seem to think that going to town to buy an alarm clock and saving 50 percent of the money seems to be much more beneficial than buying a $2,510 computer and saving only ten dollars. many. Too bad that's not the right way to think about it.Thinking in terms of percentages might be appropriate elsewhere, but not here.So, you should obviously weigh the costs and benefits.Seeing how the cost-benefit principle works in unusual examples can lead to interesting stories to tell. Ask your friends these questions and see what they do.This type of dialogue can deepen your understanding and awareness of cost-benefit principles. Immediately after showing the students these examples illustrating a general principle, I give them a problem asking them to apply the principle themselves.Using the examples of alarm clocks and computers, I asked them the following questions. You're about to go on two business trips, but you only have one chance to use your discount card.The air ticket to Chicago is 200 dollars, and after the discount, you can save 90 dollars; the ticket to Tokyo is 2,000 dollars, and you can save 100 dollars after the discount.On which trips should you use the flight discount card? This time, almost everyone answered correctly that it should be used when going to Tokyo, which would save a hundred dollars, which is better than going to Chicago to save ninety dollars.Just because everyone answered correctly doesn't mean it's a bad question to ask.Again, if your goal is to make core concepts part of your applied knowledge, the only way to do that is to practice it over and over again. The questions in this book are chosen not only because they are interesting, but also because they make use of important principles in basic economics.I hope you will find it interesting and relaxing to learn these principles through this book.In addition, these questions are interesting and the answers are short, which can provide readers with a lot of talking material for chatting. I tell students that their answers to the questions should serve as plausible hypotheses to be tested further.They are not meant to be final.me and benBernanke (Ben Beoanke) is planning to Bill.Toya's example of why there are dots in Braille on the highway ATM is included in our introductory economics textbook, and someone sent me an e-mail in a rage, saying that the real reason for this is the Americans with Disabilities Act It is required to do so.He sent me a link to a web page to prove his claim. Sure enough, there is a law mandating that all ATMs have dots in Braille on their keypads, even those next to highways.In some rare cases (say, a blind person arrives at one of these ATMs in a taxi and doesn't want to give the driver his card number and PIN), Braille can come in handy. I wrote back to the caller to say that I had told the students that their answers were not necessarily correct.But I advised him to think again, under what circumstances can the decree be adopted by people?Can such a decree be enacted if it is extremely costly to design Braille on the keypads of highway ATMs?of course not.In fact, adding Braille to keyboards cost next to nothing.Since it is harmless, and may occasionally be useful, legislators feel that it is beneficial and harmless to make such a regulation.In this way, until the end of the year, they can say that they have done some good things this year.In this case, Mr. Toya's explanation seemed to make more sense than that of the angry letterman.In other cases, though, someone is sure to come up with a better or more complete answer. So, when you read the answer section, you might as well take a critical look.Maybe you have relevant knowledge and can improve it.For example, a bridal shop owner told me that there is another reason why brides would rather buy than rent a wedding dress.Most of the wedding dresses are semi-finished products, which require a lot of adjustments before wearing them, and the wedding dresses for rental cannot withstand such repeated tossing.There is some truth to this view, but it has nothing to do with Jennifer.The core economic concepts presented in Dursky's explanation do not conflict.