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THE ESSENCE OF THE ECONOMIC WAY OF THINKING

THE ESSENCE OF THE ECONOMIC WAY OF THINKING. Midwest Conference on Student Learning in Economics November 4, 2004. What Is Economics All About?.

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THE ESSENCE OF THE ECONOMIC WAY OF THINKING

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  1. THE ESSENCE OF THE ECONOMIC WAY OF THINKING Midwest Conference on Student Learning in Economics November 4, 2004

  2. What Is Economics All About? Economics is the social science concerned with the problem of using or administering scarce resources (the means of producing) so as to attain the greatest or maximum fulfillment of society’s unlimited wants (the goal of producing). McConnell and Brue

  3. What Is Economics All About? The Theory of Economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking that helps its possessor to draw correct conclusions. John Maynard Keynes

  4. What Is Economics All About? The economic way of thinking…resembles a magician’s top hat: It seems to be empty; but in practiced hands it produces a fascinating array of surprises. And once you’ve seen for yourself how it’s done, you can go back home and astonish all your friends. Paul Heyne and Thomas Johnson

  5. What Is Economics All About? The economic approach does not assume that individuals are motivated by selfishness or material gain. It is a method of analysis, not an assumption about particular motivations…

  6. What Is Economics All About? Along with others, I have tried to pry economists away from narrow assumptions about self-interest. Behavior is driven by a much richer set of values and preferences. Individuals maximize welfare as they conceive it, whether they be selfish, altruistic, loyal, spiteful, or masochistic. Their behavior is forward-looking, and it is assumed to be consistent over time. Gary Becker

  7. What Is Economics All About? I want beginning students to master a set of concepts that will help them think more coherently and consistently about a wide range of social problems that economic theory illuminates. The principles of economics make sense out of buzzing confusion. They clarify, systematize, and correct the daily assertions of newspapers…

  8. What Is Economics All About? political figures, ax grinders, and barroom pontiffs. And the applicability of the economist’s thought tools is practically unlimited. Students should come to appreciate all of this in a beginning course. Paul Heyne

  9. What Is Economics All About? Here is what I think economics is all about. First, it is about observing the world with genuine curiosity and admitting it is full of mysteries. Second, it is about trying to solve those mysteries in ways that are consistent with the general proposition that human behavior is usually designed to serve a purpose…

  10. What Is Economics All About? The goal, always, is to understand our own world. There are a lot of good reasons to learn about economics, but the reason I have tried to stress in this book [The ArmchairEconomist] is that economics is a tool for solving mysteries, and solving mysteries is fun. Steven Landsburg

  11. What Is Economics All About? When I see something that makes absolutely no sense whatever, I figure there must be a damn good reason for it. Peter De Vries

  12. What Is Economics All About? Economics is the study of mankind in the ordinary business of life. Alfred Marshall

  13. The Essence of EconomicsA Guide to Economic Reasoning • There is no such thing as a free lunch. • Incentives matter. • People choose for good reasons. • Voluntary trade creates wealth. • People earn income by helping others. • Increases in real income depend on increases in real output.

  14. The Essence of EconomicsA Guide to Economic Reasoning • Beware of the law of unintended consequences. • The invisible hand works better than the visible boot. • The U.S. economy is resilient. • A President can’t fix the economy but can harm it in the long run.

  15. The George W. Bush/John F. Kerry Guide to Political Reasoning • Laws are like sausages. It is better not to see them being made. Otto Von Bismarck • Get your facts first, then you can distort them as you please. Mark Twain • A government which robs Peter to pay Paul can always count on the support of Paul. George Bernard Shaw

  16. The George W. Bush/John F. Kerry Guide to Political Reasoning • In America, anyone can become President. That is one of the risks you take. Adlai Stevenson • An honest politician is one who when he is bought will stay bought. Simon Cameron • Diplomacy is the art of saying “nice doggy” until you can find a rock. Will Rogers

  17. The George W. Bush/John F. Kerry Guide to Political Reasoning • I have come to the conclusion that one useless man is called a disgrace, two men are called a law firm, and three or more become a Congress. John Adams • The government deficit is the difference between the amount of money the government spends and the amount it has the nerve to collect. Sam Ewing

  18. The George W. Bush/John F. Kerry Guide to Political Reasoning • A liberal is one who loves the world, but hates his neighbors. A conservative is one who believes in reform but not now. Mort Sahl • Liberals feel unworthy of their possessions. Conservatives feel they deserve everything they’ve stolen. Mort Sahl

  19. The George W. Bush/John F. Kerry Guide to Political Reasoning • The reputation of Congress is lower than quail crap. Alan Simpson

  20. Why Study Economics? • Students need to develop economic ways of thinking and problem solving that they can use in their lives as consumers, savers, entrepreneurs, investors, workers, citizens, and participants in a global economy. • Economics creates a more vivid understanding of costs and benefits than any other subject.

  21. Why Study Economics? • Students who do not appreciate the accomplishments of a market economy will not work to preserve it. • Students must understand economics to become productive members of the workforce.

  22. Why Study Economics? • The case for economic literacy is the case for democracy itself. If war is too serious to be left to military professionals, economic understanding is too important to be left to economists.

  23. Why Study Economics? The purpose of studying economics is to keep people from being deceived by economists. Joan Robinson

  24. Recent Research A Berkeley sociologist found in a study of audiences that: • 25 percent listen. • 25 percent fade in and out. • 50 percent have sexual fantasies.

  25. I hope that you have enjoyed the pleasure of learning about economics.

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