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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 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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the implication
of tradeoffs everywhere
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as 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... "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 at its peak;
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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 two 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 have 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 more
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of Tyler Cowen's
"9 Big Ideas of Economics."
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Or, maybe you're not ready
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to learn more about this idea.
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Then you should
check out this video.
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Or, maybe you are dying to attend
one of our teacher events
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and mingle with other econ nerds.
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Click here for info on that.