Introduction to Economics

{'type': u'plain'}

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- [Tyler] 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's so powerful
about the discipline

is just how much it shapes
how you understand

everything around you.

- [Alex] 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 captains' 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.

And 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?

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