INCENTIVESThe Big Idea andthe Seven Secretsfor Thinking Like anEconomist
INCENTIVESThe Big Idea  •  Positive and negative incentives:     –  grades  •  Direct and indirect incentives:     – Unint...
The Seven Secrets: 	  Life is About Trade-Offs•  Examples of trade-offs:  – College versus working, or a little of    both...
The Seven Secrets: 	  Opportunity Cost•  What is Opportunity Cost?
The Seven Secrets: 	  Marginal Thinking•  What is marginal thinking?
The Seven Secrets: 	  Trade Creates Value•  Trade and Comparative Advantage
The Seven Secrets: 	  Markets Generally Work Well…..•  The market economy:  – eBay, craigslist, stock market,    supermark...
The Seven Secrets:	  …But Markets Sometimes             Need a Hand•  Market failure  – Poorly defined property rights  – ...
The Seven Secrets: 	  Our Decisions Have ConsequencesNow and in the Future•  Consumption and capital goods.•  The business...
The Seven Secrets: 	  There are No Free Lunches•  “Free” is a four-letter word!  – Who is paying?
Thinking Like An Economist - Seven Secrets, One Big Idea
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Thinking Like An Economist - Seven Secrets, One Big Idea

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This slide deck provides an overview of seven secrets and one big idea that will help students think like economists.

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  • Coming to lecture is a little like going to a football game. It is so much better to watch football with 110,000 people. A lecture hall is that way too! Things are more fun and interesting when everyone is participating!
  • Demonstration.
  • Thinking Like An Economist - Seven Secrets, One Big Idea

    1. 1. INCENTIVESThe Big Idea andthe Seven Secretsfor Thinking Like anEconomist
    2. 2. INCENTIVESThe Big Idea •  Positive and negative incentives: –  grades •  Direct and indirect incentives: – Unintended consequences (Born on the First of July) •  Incentives and innovation •  Incentives are everywhere
    3. 3. The Seven Secrets:  Life is About Trade-Offs•  Examples of trade-offs: – College versus working, or a little of both – Cleaner environment or more production
    4. 4. The Seven Secrets:  Opportunity Cost•  What is Opportunity Cost?
    5. 5. The Seven Secrets:  Marginal Thinking•  What is marginal thinking?
    6. 6. The Seven Secrets:  Trade Creates Value•  Trade and Comparative Advantage
    7. 7. The Seven Secrets:  Markets Generally Work Well…..•  The market economy: – eBay, craigslist, stock market, supermarkets – The role of prices•  Adam Smith, the Father of Economic Thought –  It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. –  Wealth of Nations, 1776
    8. 8. The Seven Secrets:  …But Markets Sometimes Need a Hand•  Market failure – Poorly defined property rights – Externalities – Public goods – Market power
    9. 9. The Seven Secrets:  Our Decisions Have ConsequencesNow and in the Future•  Consumption and capital goods.•  The business cycle
    10. 10. The Seven Secrets:  There are No Free Lunches•  “Free” is a four-letter word! – Who is paying?

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