WEBVTT

00:00:13.297 --> 00:00:18.790
- I love economics. I began
studying economics when I was 13 and I

00:00:18.970 --> 00:00:23.970
haven't stopped yet. Economics really has
changed my life and the whole way I see

00:00:24.150 --> 00:00:28.870
the world. What so powerful about the
discipline is just how much it shapes, how

00:00:29.050 --> 00:00:30.940
you understand everything around you.

00:00:32.036 --> 00:00:34.590
- But perhaps you're
asking, what's my incentive to learn

00:00:34.770 --> 00:00:38.960
economics? Well, that's a great question.
You've already hit on a key economic

00:00:39.140 --> 00:00:44.560
insight, incentives. For example, why is
the service at a local restaurant

00:00:44.740 --> 00:00:48.237
typically so much better than from the
cable company?

00:00:48.678 --> 00:00:52.610
- Or why do laws which
supposedly protect endangered species,

00:00:52.790 --> 00:00:56.051
sometimes end up with more of those
animals being killed?

00:00:56.760 --> 00:00:59.710
- Or why do big toy companies
sometimes advocate for

00:00:59.890 --> 00:01:05.701
regulations which raise their costs?
Incentives are the key.

00:01:06.303 --> 00:01:11.760
- Another example might help
us explain. Way back in 1787, the British

00:01:11.940 --> 00:01:16.131
government hired sea captains to ship
convicted felons to Australia.

00:01:16.131 --> 00:01:21.080
Conditions on those ships were just awful.
On one voyage, more than one-third of the

00:01:21.260 --> 00:01:27.280
men died and the rest arrived beaten,
starved and sick. The public was outraged,

00:01:27.460 --> 00:01:31.603
newspapers called for better conditions,
the clergy appealed to the captain's sense

00:01:31.603 --> 00:01:36.610
of humanity, and British Parliament passed
regulations requiring better treatment of

00:01:36.790 --> 00:01:42.750
these prisoners. Unfortunately, those
attempted solutions simply didn't work.

00:01:42.930 --> 00:01:45.427
The death rate remained shockingly high.

00:01:46.175 --> 00:01:48.966
- So Tyler, as a good economist.
How would you solve this problem?

00:01:48.966 --> 00:01:52.380
- Well, there was one economist at
the time who came up with a

00:01:52.560 --> 00:01:57.680
novel solution. It was implemented and it
basically worked. Instead of paying the

00:01:57.860 --> 00:02:02.750
captains for each prisoner who embarked to
Australia, the government would pay the

00:02:02.930 --> 00:02:10.150
captains only for the prisoners who
arrived alive. Overnight, the incentives

00:02:10.330 --> 00:02:16.226
of the sea captains changed. The survival
rate of the prisoners shot up to 99%.

00:02:16.904 --> 00:02:21.546
As one observer put it, economy beat
sentiment and benevolence.

00:02:22.662 --> 00:02:26.200
- So what's your incentive
to learn economics? People hear that I'm

00:02:26.380 --> 00:02:30.290
an economist and they ask me about
managing their money. An economics does

00:02:30.470 --> 00:02:34.730
have some lessons for investing in the
stock market, but economics is much

00:02:34.910 --> 00:02:40.310
broader than that. It's the study of human
action, how people make choices and how

00:02:40.490 --> 00:02:46.240
they should make choices under scarcity.
Economics will help you with your choices,

00:02:46.420 --> 00:02:51.240
whether picking a career, parenting a
child or deciding how much education is a

00:02:51.420 --> 00:02:56.950
truly worthwhile investment. Overall,
economics will give you a deeper

00:02:57.130 --> 00:02:59.803
understanding of the key issues
of our time.

00:03:01.762 --> 00:03:06.220
- Economics can be hard.
Retraining your brain to look at the world

00:03:06.400 --> 00:03:08.899
in a different way, isn't always easy.

00:03:08.899 --> 00:03:13.341
- But the reward is a new
set of eyes to see the world.

00:03:13.937 --> 00:03:16.336
So are you ready to begin?