Friday, April 17, 2009

Top 20 List: Things Economists Say

Geoff Brennan and I spent twenty minutes in the beautiful Pavilion coffee shop here at Duke, thinking about what are the 20 aphorisms that most usefully capture economic wisdom.

The problem with aphorisms is that it takes considerable background to understand them, of course.

But here is our top 20 list. If there is more than one version, we try to give both. If there is an obvious source, we try to give that source. If there is a more general principle, we welcome "other sayings on...."

Starting with #20, and working our way up:

20. Economics is extremely useful, as a form of employment for economists. (Credit to JK Galbraith)

19. If all the world's economists were laid down end to end, around the earth, it would be hilarious. But they still would not reach a conclusion.

18. Give a man a fish, you feed him for a day. Teach a man to fish, and you feed him for a lifetime. (Other sayings on value of human capital.)

17. Do unto others as you would have them do unto you. (An unstable cooperative equilibrium, unless the PD is iterated indefinitely. Then, stable)

16. People want economy. And they'll pay any price to get it. (Credit to Lee Iococca, and kudos to all you Prius owners out there!)

15. Government economists have the same impact on the economy as National Weather Service meteoroligists have on the weather. And the economists and meteorologists are about as good at predicting what will happen tomorrow.

14. Don't put all your eggs in one basket. And if you have more than $100,000, don't put all your cash in one FDIC bank.

13. A stitch in time saves nine. (Other sayings on compound interest and present value)

12. Nothing ventured, nothing gained. (Other sayings that show that, in equilibrium, there is no economic profit on risk neutral investments)

11. There is more than one way to skin a cat. (Other sayings on advantages of competition for spurring innovation)

10. A rising tide lifts all boats. A falling tide smells really bad.

9. The State is the great fiction through which everybody endeavors to live at the expense of everybody else. (Credit to F. Bastiat)

8. In economics, things happen at the margin. The majority is always wrong. (Credit to JK Galbraith)

7. Incentives matter more than intentions

6. The best time to buy real estate is two years ago. The best time to buy a computer is two years in the future.

5. The first law of economics is, there isn't enough to do everything. The first law of politics is to repeal the first law of economics. (Credit to Thomas Sowell)

4. You can't eat your cake, and have it, too. (Other opportunity cost sayings)

3. Whatever is going to happen is happening now. The exception is
equity markets, where whatever is going to happen already happened, yesterday. (Credit to Sylvia Porter)

2. Bygones are bygones. No use crying over spilt milk. (Other sunk cost saysings)

And....a drum roll, please....The #1 best insight of economists, reduced to its most
simple form:



kebko said...

You know, I've been thinking about the free lunch lately, and I think it might actually work a little bit backwards much of the time. After all, the invisible hand gives us free lunches all the time.
I think that people find that discomforting in a way. I think the quest for government economic actions isn't so much a quest for a free lunch, but a reprieve from it - a chance to see something accomplished where you can see clearly that somebody is paying good & hard for it. Wealthy taxpayers must have gotten their gains at someone else's expense, since TANSTAAFL.

Max Sawicky said...

Government economists? Because academic economists were so great at predicting the hyperinflation that would result from unemployment sinking below five percent . . .

I nominate, "Give a man a fish, you feed him for a day. Teach a man to fish, then he asks you, how about giving me another fish?"

Anonymous said...

I've always liked "too many cooks in the kitchen"

Mungowitz said...

Heh heh.

Good point about academic economists.

Government economists are TERRIBLE at predicting.

And academic economists are not good enough at predicting to be government economists.

Max Marty said...

I think 17 should read "Do unto others [as they] do unto you"
Thats how a simple tit-for-tat works anyway.
The way you have it would mean to always cooperate "no matter what" in the hopes they cooperate back... sounds like a losing strategy in the indefinitely iterated PD =\

yngvar said...

Alternative #15: "The economy needs economists, like the weather needs meteorologists."