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- [Tyler] I love economics.

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I began studying economics
when I was 13

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and I haven't stopped yet.

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Economics really has changed
my life and the whole way

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I see the world.

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What's so powerful
about the discipline

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is just how much it shapes
how you understand

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everything around you.

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- [Alex] But perhaps you're asking,
what's my incentive

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to learn economics?

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Well, that's a great question.

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You've already hit on
a key economic insight, incentives.

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For example, why is the service
at a local restaurant

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typically so much better
than from the cable company?

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- Or why do laws
which supposedly protect

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endangered species,
sometimes end up

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with more of those animals
being killed?

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- Or why do big toy companies
sometimes advocate for regulations

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which raise their costs?

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Incentives are the key.

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- Another example
might help us explain.

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Way back in 1787,
the British government

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hired sea captains to ship
convicted felons to Australia.

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Conditions on those ships
were just awful.

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On one voyage, more than one-third
of the men died

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and the rest arrived beaten,
starved and sick.

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The public was outraged,
newspapers called

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for better conditions,
the clergy appealed

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to the captains' sense of humanity,
and British Parliament

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passed regulations
requiring better treatment

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of these prisoners.

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Unfortunately, those attempted
solutions simply didn't work.

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The death rate
remained shockingly high.

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- So Tyler, as a good economist,
how would you solve this problem?

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- Well, there was one economist
at the time who came up

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with a novel solution.

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It was implemented
and it basically worked.

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Instead of paying the captains
for each prisoner

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who embarked to Australia,
the government

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would pay the captains
only for the prisoners

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who arrived alive.

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Overnight, the incentives
of the sea captains changed.

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The survival rate of the prisoners
shot up to 99%.

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As one observer put it,
economy beat sentiment

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and benevolence.

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- So what's your incentive
to learn economics?

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People hear that I'm an economist
and they ask me

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about managing their money.

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And economics does have
some lessons for investing

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in the stock market, but economics
is much broader than that.

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It's the study of human action,
how people make choices,

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and how they should make
choices under scarcity.

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Economics will help you
with your choices,

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whether picking a career,
parenting a child,

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or deciding how much education
is a truly worthwhile investment.

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Overall, economics will give you
a deeper understanding

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of the key issues of our time.

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- Economics can be hard.

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Retraining your brain
to look at the world

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in a different way,
isn't always easy.

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- But the reward
is a new set of eyes

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to see the world.

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So are you ready to begin?

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♪ [music] ♪