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♪ [music] ♪
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- [Tyler] Back to ideas
of two words --
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opportunity cost,
another central economic idea.
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Even when something good happens,
there's a tradeoff, right?
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Sometimes I think
this is more important
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than "incentives matter."
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I'm torn, incentives matter,
opportunity cost, tradeoffs --
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I don't know --
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but it's in the top three
or four ideas of economics.
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It doesn't mean you shouldn't
make an investment,
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but it does suggest
always look at what is the cost.
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Do the best you can.
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What is the tradeoff involved?
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This actually relates back
to my point
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about not always knowing.
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Because if you're considering
a choice -- what school to go to,
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whether you should marry,
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whether you should buy
ping pong balls,
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where to take your next vacation --
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you're giving up something else.
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You generally don't see
in any direct way
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what it is you're giving up.
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So there's an element
of built-in agnosticism here.
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Of course, you have
to make a choice.
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You should use the evidence
and reasoning as best you can.
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But we don't always know.
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An implication
of tradeoffs everywhere
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is you're comparing a seen
to an unseen,
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and you should not always be
totally completely confident
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in your ability to know
what the unseen is like.
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So any policy you favor --
republican, democrat,
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progressive, libertarian, left,
right, whatever, conservative --
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I think the main point is not
to be for or against it,
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but to be able to spell out
like under what conditions
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would my idea be a bad idea?
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And that's a bit of a stretch,
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but if you can teach
your students that.
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I'm not saying they can
always do it off the bat,
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but simply that they should aspire
to be able to do this:
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"I have some idea
under what conditions
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is my idea a bad idea."
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And if they are asking that question
in an earnest, honest way,
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I think in policy, in politics,
in their lives, whatever,
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in education, they will make
better decisions.
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Not, "Here's the big pile
of reasons why I know I'm right" --
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We're actually, mostly pretty good
at doing that.
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We're like biologically
trained to do it --
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but the... "here are the conditions
where I would be wrong."
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The Great Wall of China --
was it a good idea?
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Well, it protected China
against invasion from the North,
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except, of course,
as you probably know,
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invasion from the North came anyway.
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The Great Wall of China,
I am told it is 4,160 miles.
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At its peak,
800,000 people worked on it.
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It's the longest
and biggest wall ever built.
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By one estimate
it contains 4 billion bricks.
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It took two millennia --
not 2 years, not 200 years --
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two millennia to build.
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It has the weight equal
to 8 million elephants.
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And according
to one internet estimate,
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which I do not believe at all --
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I've no idea how they converted
money across time --
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but it cost, over two millennia,
$360 billion.
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I've no idea what that means.
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But if you think
about the Great Wall,
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it had some benefits;
it had an opportunity cost.
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Always think about
what are the tradeoffs.
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If you put on a tariff, you may
create some jobs in one place,
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but you're going
to lose jobs somewhere else.
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♪ [music] ♪
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- [Narrator] Click here
to watch the next episode
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of Tyler Cowen's
"9 Big Ideas of Economics."
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Or, maybe you're
not ready to move on
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and instead want
to learn more about this idea.
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Then you should
check out this video.
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