Economy
Discover facts about economy. Small discoveries that change the way you see familiar things.
Economy
Marginal propensity to consume tracks spending habits
If someone hands you an extra dollar, how much of it will you immediately burn on a snack? The marginal propensity to consume mathematically calculates the…
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Legal tender forces acceptance for existing debts
Despite what angry people yelling at cashiers think, 'legal tender' does not force anyone to sell you an item for paper cash. It simply means that if you…
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Equation of exchange links money supply to price levels
MV = PQ is the most famous algebra problem in the field. The equation of exchange dictates that the total money supply multiplied by its velocity perfectly…
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Utility provides a theoretical measure of satisfaction
Because economists hate unquantifiable human emotions, they invented a fake unit of measurement. 'Utility' is an entirely theoretical concept used to rank the…
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The Roman goddess behind the words money and mint
Every time you check your balance, you are paying homage to Roman mythology. Ancient Rome established its primary mint in the temple of Juno Moneta, a goddess…
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Wealth acts as a static pool while income is a flow
Making a million dollars doesn't matter if you instantly spend a million and one. A fundamental distinction in theory is that 'wealth' represents a static…
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Ceteris paribus assumes everything else stays frozen
The real world is a chaotic mess of shifting variables, so economists simply pretend it isn't. 'Ceteris paribus' translates to 'all other things being equal.'…
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How green ink helped protect money from counterfeiters
The term 'greenback' isn't just a catchy nickname; it was an anti-piracy measure. In the mid-1800s, early photographic equipment could only reproduce images…
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Why $100 bills outlive $1 bills
The higher the value, the lazier the bill. A $1 note constantly changes hands, getting crumpled, folded, and stuffed into pockets, giving it an average…
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Says law argues that supply creates its own demand
According to Jean-Baptiste Say, just making something naturally generates the ability to buy something else. Say's Law posits that the act of producing goods…
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Macroeconomics studies the forest instead of the trees
While microeconomics worries about why you chose to buy a generic brand, macroeconomics zooms so far out it loses sight of the individual entirely. It…
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Velocity of money tracks how fast cash changes hands
A static dollar does absolutely nothing. The velocity of money measures how rapidly a single unit of currency bounces from one person to another within a…
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Why the dollar's pyramid is unfinished
Conspiracy theorists love to lose their minds over this one, but the truth is aggressively mundane. The Great Seal on the back of the dollar bill features a…
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Scarcity dictates that human wants exceed resources
The entire field of economics only exists because we can't magically summon infinite stuff. Scarcity is the bedrock principle stating that human desires are…
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Why some people literally vote with their feet
If you hate the local mayor, just pack your boxes. The Tiebout model posits that people sort themselves into different municipalities based strictly on their…
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People are more likely to plant orchards when property rights protect future harvests
Nobody plants an orchard if they think the neighbor can just wander over and take the apples. Institutional stability and extremely rigid deed protections…
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When doctors marry doctors, local neighborhoods can become more socially homogeneous
When doctors exclusively marry other doctors, they need somewhere to park their two luxury SUVs. Highly polarized pairing drastically alters municipal…
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Why voters rarely know the whole story
It is terrifying how much classified reality is kept from the very people filling out the ballots. Asymmetric information completely heavily distorts local…
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Gated communities perfectly restrict neighborhood access
Building a wall around your subdivision is just a way to privatize a public good. Club goods allow private groups to entirely exclude non-members from…
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Shared apartments inevitably lead to filthy bathrooms
Nobody wants to be the absolute sucker who cleans the shower for everyone else. When chores are completely decentralized among completely equal roommates,…
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Governments heavily subsidize citizen university attendance
Because a population of entirely uneducated citizens tends to make terrible national choices. Pigovian subsidies heavily support higher learning strictly…
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Local zoning boards systematically block most new housing
There is no fury quite like a local homeowner encountering a proposed apartment complex. Incumbent residents rationally weaponize local board meetings to…
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How your dog’s barking becomes your neighbors’ problem
Your adorable pet is severely disrupting local tranquility paradigms. Unchecked animal noise acts as a textbook negative externality, meaning the owner…
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Aging populations force drastically brutal pension reforms
The math behind outliving your usefulness is mathematically terrifying for governments. A shrinking base of young people cannot indefinitely support an…
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