Tag Archives: thinking economically

01.01.2013 | Economic Humor: A New Year’s Resolution

If one of your New Year’s resolutions is to “think economically,” please remember this top ten list:

Whatever the question, always answer, “There’s no such thing as a free lunch.”
Defend a decision by declaring, “It was worth the opportunity cost.”
Whether you like or dislike government, point to, “The power of the market.”
Explain a love of low prices with, “It’s the law of demand.”
Explain high prices with, “It’s the law of supply.”
Preface a position with, “on the one hand…but on the other…”
Justify your Thai T-shirt, Japanese camera, and Sumatran coffee beans by repeating, “comparative advantage, comparative advantage…”
When asked, “How are we doing?” just cite the GDP, CPI, and S&P.
Know that the size of the pie has nothing to do with food.
And finally, the most dependable way to “think economically” is to remember that, no matter what the topic, “It’s about the economy…”

Note: I wrote this list several years ago and repost it on New Year’s. Enjoy and happy new year!

Posted by: adminEcon
Tags: 2013, economic humor, economists, New Year's resolutions, thinking economically, top ten lists
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12.19.2012 | Cost Benefit Analysis: Hand Drying

How about thinking economically when you dry your hands?

Pulling together 12 studies on hand-drying, Mayo Clinic researchers did a cost benefit analysis of paper towels v. hot air. Because they were most concerned with hospitals and other health care facilities, bacteria were a top topic.

Their conclusions…

It was not even close. Cloth and paper towels provide more bacteria protection than a hot air dryer after we wash our hands. One reason is speed. We tend not to wait long enough with hot air to dry our hands and thereby retain more bacteria. Furthermore, the air from a dryer propels bacteria. Specifically, after 10 seconds of drying with a towel, 4% of the water remains. However, it takes 45 seconds with hot air to get the water residue down to 3%. We should note though that jet dryers do dry hands as efficiently as towels but have other hot air costs, people prefer towels, and hot air is probably more environmentally friendly.

Our bottom Line: There is no free lunch. Looking at the world economically involves recognizing the tradeoffs that our decisions necessitate. Whether the subject is hand-drying, federal entitlements or investing, comparing cost and benefit can lead to optimal choices. As always, economics is about a lot more than money.

Sources and Resources: Consistently excellent, the Conversable Economist blog was the source of my hand-drying example and a summary of this Mayo Clinic paper. For part 1 of “Unexpected Economics,” the hand washing section is here.

Posted by: adminEcon
Tags: choosing means refusing, cost benefit analysis, Mayo Clinic, TANSTAAFL, thinking economically
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04.01.2012 | Should Supreme Court Justices Know Economics?

Just some thoughts today about economics and the Supreme Court. Listening to Tuesday’s oral arguments, I became concerned about some economic basics. Markets and insurance were key ideas. However, no one defined a market and insurance was initially mischaracterized.

In my econ class, we define a market as a process. Determining price and quantity, markets have a demand and a supply side. On the demand side are buyers who are willing and able to purchase different amounts of a good or a service at different prices. Correspondingly, on the supply side are sellers who are willing and able to provide different amounts of goods and services at different prices. In class, we assess markets through the impact of the participants. However, Justice Ginsburg suggested that “…the people who don’t participate in this market are making it much more expensive for the people who do; …”

As for insurance, Justice Kagan said, “…health insurance exists only for the purpose of financing health care…We don’t get insurance so that we can stare at our insurance certificate. We get it so that we can go and access health care.” Accurately, the attorney for the respondents (opposing the individual mandate) said, “…I’m not sure that’s right. I think what health insurance does and what all insurance does is it allows you to diversify risk. And so it’s not just a matter of I’m paying now instead I’m paying later. That’s credit. Insurance is different than credit…”

Curious, I checked the Justices’ bios. Justice Kennedy attended the London School of Economics. Otherwise, I found little evidence of economics in anyone’s background.

My bottom line: Economic thinking provides a disciplined approach that would be meaningful when deciding the scope of the Commerce Clause and defining health insurance.

Posted by: adminEcon
Tags: Affordable Care Act, demand, individual mandate, insurance, risk, supply, Supreme Court oral arguments, thinking economically
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01.01.2012 | New Year’s Resolutions

If one of your New Year’s resolutions is to “think economically,” please remember this top ten list:

10. Whatever the question, always answer, “There’s no such thing as a free lunch.”

Posted by: adminEcon
Tags: New Year's resolutions, thinking economically
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01.01.2011 | A New Year’s Resolution

If one of your New Year’s resolutions is to “think economically,” please remember this top ten list:

10. Whatever the question, always answer, “There’s no such thing as a free lunch.”

9. Defend a decision by declaring, “It was worth the opportunity cost.”

8. Whether you like or dislike government, point to, “The power of the market.”

7. Explain a love of low prices with, “It’s the law of demand.”

6. Explain high prices with, “It’s the law of supply.”

5. Preface a position with, “on the one hand…but on the other…”

4. Justify your Thai T-shirt, Japanese camera, and Sumatran coffee beans by repeating, “comparative advantage, comparative advantage…”

3. When asked, “How are we doing?” just cite the GDP, CPI, and S&P.

2. Know that the size of the pie has nothing to do with food.

1. And finally, the most dependable way to “think economically” is to remember that, no matter what the topic, “It’s about the economy…”

Posted by: adminEcon
Tags: New Year's resolutions, thinking economically
Comments (0) Add a Comment