The sixth big idea of economics takes into account secondary consequences.

What are secondary consequences?

Let’s take the example of rent control in Mumbai, India.

Initially, rent control seems like a good idea -- affordable housing in an otherwise expensive urban center in India. However, if you look a bit deeper, you see the real cost of rent control: landlords have little incentive to keep these buildings in good condition, resulting in deteriorating structures that are unsafe for tenants.

Understanding secondary consequences is key to making good decisions and thinking like an economist.

Stay tuned for more videos in this series, Tyler’s 9 Big Ideas of Economics!

Cowen delivered this talk at the 2018 AP Economics Conference co-hosted by MRU & the St. Louis Fed. If you’re a high school teacher that wants to attend this conference next year, register here: https://bit.ly/2DozLzv

Or join MRU at a future economics teaching event! Visit this page for more information: https://bit.ly/2AQIWq5