Saul Levmore: Monopolies as an Introduction to Economics | Big Think

Saul Levmore: Monopolies as an Introduction to Economics
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Levmore brings the future of economics into sharp focus by contrasting the approaches of the emerging global economic powers of India and China. From the basics of pricing, demand, and competition, to global politics and the future of government, Dr. Levmore makes it easy to see economics at work all around us. This may well be the only field in which thinking about the cost of a chocolate chip cookie or how airline ticket pricing works is expected to provide insights into the machinations of the entire world.
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SAUL LEVMORE:

Dr. Saul Levmore is a renowned academic and professor of law. He is a member of the American Academy of Arts and Sciences as well as the past president of the American Law Deans Association. Dr. Levmore's extensive experience in teaching has made him a highly sought-after expert in various facets of the law. His published works range from game theory and insurance to tax law and intellectual property rights. Most recently, Dr. Levmore has studied topics in public choice, Internet anonymity, financial risk regulation, and double jeopardy. He is the author of "Super Strategies for Games and Puzzles and Foundations of Tort Law." and the co-editor of the book "The Offensive Internet: Speech, Privacy, and Reputation." Dr. Levmore is currently the William B. Graham Distinguished Professor of Law at the University of Chicago.
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TRANSCRIPT:

Hi, I’m Saul Levmore and I teach law or really economics and law at the University of Chicago. It’s my good luck to be her to introduce you to the subject of economics. Well, what is economics?

Let’s play a game of free association. I say “economics,” you say whatever comes to mind. Economics—money. Economics—Wall Street, housing bubble, prices, incentives. Ohh, if you said incentives, that’s pretty sophisticated.

I think it’s easy to see why economics is relevant. Economics is everywhere. Economics is why buildings go up; economics is why cookies cost $3.00. Economics is about getting the seat you want on the plane. Economics is, yeah, it’s about making money, but it’s about human behavior in general. Economics is to the real world around you as meteorology is to the weather, it’s interpreting all the phenomena and figuring out if there’s anything we can do about that. How could that not be relevant to every one of us?

That’s a lot of what we’re going to talk about today. Economics is, formally at least, the study of the allocation of scarce resources. You don’t have enough of something, a lot of people want it, who gets it, how do they get it, what do they give for it, how do you get people to make more of the thing. All of that is economics. I’ll say it again; economics is about the allocation of scarce resources.

Economics is also about puzzles. Economics likes to assume, just to make its job easier, that people are rational. You know, what is a rational person? The rational man is the guy who sees that the price of wheat rises; he gets up earlier in the morning and grows more wheat on his farm. Economics is the guy who buys more of something when the price drops. That’s the rational man.

The rational man loves to download stuff from iTunes when iTunes price goes down, but the rational man also creates more music in his garage and sells it when he gets paid more by people who download it from iTunes. One guy wants the price low; one guy wants the price high. They’re using incentives to communicate with one another.

So economics is about exchanges, economics is about prices, therefore it’s about money and it’s about incentives. Once you have those four things down, you’re beginning to put the package together.
I said that economics was about puzzles. Economics is also about puzzles.

And these puzzles are even deep mysteries, have a lot to do with how economics got started in the first place. Kings would be really confused about some things. They would issue new coins, the coins would go out into the realm and the coins would disappear. Where were these coins going?

Peter the Great, I just read the other day, beheaded some 1,000 people for hoarding coins. And he could never figure out why when he issued silver coins, people would hide them or bury them in the fields. Why didn’t they want to use these coins...

Read the full transcript at https://bigthink.com/videos/everyone-has-their-price-an-introduction-to-economics

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