By Edmond Conway
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Additional info for 50 Economics Ideas
Finding the motive A criminal robs a bank because he judges the incentive of taking its cash as greater than the disincentive of a spell in jail. A country’s citizens work less hard when tax rates are increased, since the higher charges on their extra cash means they have less incentive to put in that extra hour. People respond to potential rewards. It is the most fundamental rule of economics. Think hard about why you and the people around you take certain decisions. A mechanic fixes your car not because you need to get back on the road again but because he is paid to do so.
At such points there is little doubt it seems pretty dismal, especially when it underlines the challenges and the restraints we face, spells out the reality that we can’t have everything we want and illustrates the fact that human beings are inherently imperfect. The truth, I should add, in typical economist fashion, is far less simple. If it were merely a study of numbers, of statistics and of theories then the dismal science analogy would perhaps hold more ground. However, economics is, to its very heart, the study of people.
The way most of what we now call the Western world (Europe, the US, Japan and a handful of other advanced economies) broke out of the Malthusian trap was by raising agricultural productivity while at the same time, people as they grew wealthier had fewer children. This, alongside the invention of new technologies, helped fuel the Industrial Revolution, and eventually catapulted levels of wealth and health ever higher. Unfortunately, there are parts of the world which are still stuck in the trap.
50 Economics Ideas by Edmond Conway