Economy
Discover facts about economy. Small discoveries that change the way you see familiar things.
Economy
Why digital books still cost almost as much
An e-book avoids the press, binding line, and delivery truck, yet it may still cost almost as much as print. Publishers may price it that way to avoid pulling…
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The person buying business software may never use it
A company purchase can be approved by managers while employees do the daily work inside the product. Vendors therefore sell to two audiences: the person…
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Workers paid for 90% of unattended bagels
No one watched the breakroom box, yet workers paid for about 90% of the bagels in an economist’s experiment. People could have taken the pastries without…
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An insurance pool gets sicker when healthy members leave
People expecting high costs have a strong reason to keep coverage. If healthier members drop out as premiums rise, the remaining group's average expenses…
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The principal-agent problem gives mechanics more information than drivers
A mechanic can spot a problem a driver can’t—and may earn more by recommending extra work. That leaves the customer trying to judge a repair from the person…
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Why insulin prices can ignore ordinary shopping rules
Insulin sellers face a buyer who cannot easily say, “Not at that price.” Patients need the medicine, so demand may hold even as prices rise, giving sellers…
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Eighty percent of outcomes come from twenty percent
A company's sales may depend heavily on a small slice of its customers. The Pareto principle describes this kind of imbalance as roughly 80% of results coming…
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Why a telephone is useless until others have one
The first phone owner has nobody to call. Once more people join, each one gains a list of possible callers—and that growing usefulness helps attract still…
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Challenger's disaster exposed the importance of a flexible seal
Cold made the booster joint's O-rings less able to respond as the joint moved during launch. Hot gas escaped through a joint that should have remained sealed.…
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Poker players only win what another player loses
The pot is a pile of money players already brought to the table. When one player wins, the others’ lost bets become the payout; the cards decide whose pocket…
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Humans are terrible at making purely rational choices
A shopper could compare every cereal box, but that takes time and attention. Often, the one at eye level looks good enough—and goes straight into the cart.
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Used car salesmen know way more about the engine
A used-car seller may know far more about the engine and the car’s condition than the person buying it. The buyer has to make a deal with less information.
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People abandon expensive beef for cheaper chicken
When beef costs too much, shoppers may put chicken in the cart instead. They still want meat; they switch to the cheaper option, changing what they buy as…
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Banning alcohol created massive underground syndicates
People still wanted alcohol after it was banned, so illegal suppliers had customers waiting. The trade gave organized crime syndicates a business to build…
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The retirement plan that rewards outliving others
In a tontine, a dead investor’s share doesn’t go to their heirs: it is divided among the surviving investors. Those who outlive the group receive the…
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Freezing a credit card makes an impulse purchase wait
A late-night takeout order can be easier to resist if getting the card means waiting for a block of ice to melt. Freezing it turns a quick impulse into a…
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How hackers steal fortunes from fractions of a cent
A hacker can skim less than a cent from one transaction by changing how banking software handles rounding. Repeated across millions of payments, those nearly…
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Why breaking a window doesn't help the economy
The glazier gets paid after a window breaks, but the shopkeeper gives up the suit he could have bought with that money. The repair bill hides the purchase…
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Countries trade wine for cloth to maximize output
The trade can make sense even if one country is more efficient at producing both goods. Each focuses on the product where its advantage is greatest, then…
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Supply magically creates its own corresponding demand
Say’s Law starts with a producer making goods and paying workers. Those wages give people money to buy goods, so the theory assumes production creates enough…
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The bullet holes on returning bombers told the wrong story
Analysts studied the planes that made it home, so they saw damage on aircraft that had survived those hits. Bombers struck in the engines often never…
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When inconvenient clothes became a display of wealth
Economist Thorstein Veblen argued that costly, impractical clothing could advertise freedom from manual labor. Delicate fabric and restrictive fashion…
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An MLM income chart can leave out the people who earned nothing
A 2024 FTC report examined disclosures from 70 multilevel marketers and found many excluded low or zero earners from headline calculations and omitted…
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Rich families spend a tiny fraction of wealth on food
A wealthy family may spend more dollars on food and still devote only a sliver of its budget to meals. A lower-income household has to use much more of its…
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