Introduction to Economics

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- I love economics. I began
studying economics when I was 13 and I

haven't stopped yet. Economics really has
changed my life and the whole way I see

the world. What so powerful about the
discipline is just how much it shapes, how

you understand everything around you.

- But perhaps you're
asking, what's my incentive to learn

economics? Well, that's a great question.
You've already hit on a key economic

insight, incentives. For example, why is
the service at a local restaurant

typically so much better than from the
cable company?

- Or why do laws which
supposedly protect endangered species,

sometimes end up with more of those
animals being killed?

- Or why do big toy companies
sometimes advocate for

regulations which raise their costs?
Incentives are the key.

- Another example might help
us explain. Way back in 1787, the British

government hired sea captains to ship
convicted felons to Australia.

Conditions on those ships were just awful.
On one voyage, more than one-third of the

men died and the rest arrived beaten,
starved and sick. The public was outraged,

newspapers called for better conditions,
the clergy appealed to the captain's sense

of humanity, and British Parliament passed
regulations requiring better treatment of

these prisoners. Unfortunately, those
attempted solutions simply didn't work.

The death rate remained shockingly high.

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

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

novel solution. It was implemented and it
basically worked. Instead of paying the

captains for each prisoner who embarked to
Australia, the government would pay the

captains only for the prisoners who
arrived alive. Overnight, the incentives

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

As one observer put it, economy beat
sentiment and benevolence.

- So what's your incentive
to learn economics? People hear that I'm

an economist and they ask me about
managing their money. An economics does

have some lessons for investing in the
stock market, but economics is much

broader than that. It's the study of human
action, how people make choices and how

they should make choices under scarcity.
Economics will help you with your choices,

whether picking a career, parenting a
child or deciding how much education is a

truly worthwhile investment. Overall,
economics will give you a deeper

understanding of the key issues
of our time.

- Economics can be hard.
Retraining your brain to look at the world

in a different way, isn't always easy.

- But the reward is a new
set of eyes to see the world.

So are you ready to begin?