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43 articles found
Economics
The paradox of thrift is the idea that saving, a virtue for an individual, can harm the economy as a whole when everyone does it at once. This article covers how the paradox works,
Economics
Why do we sit through a dull movie just because we paid for the ticket? This guide explains sunk costs, the bygones principle, why people fall into the sunk cost fallacy, classic e
Economics
The law of diminishing marginal utility describes how the extra satisfaction from getting one more of something keeps shrinking. We look at what marginal utility means, how the ide
Economics
A Giffen good is a good whose quantity demanded rises when its price rises and falls when its price falls, going against the law of demand. We look at where the name came from, why
Economics
Engel's law is the empirical rule that as income rises, the share of total spending that goes to food steadily falls. This piece covers the basic concept, the Engel coefficient and
Economics
Dutch Disease is the phenomenon in which a sudden boom in one sector, such as natural resources, causes other export industries like manufacturing and agriculture to decline. This
Economics
The winner’s curse is when the person who most overestimates an item’s uncertain value wins the auction and overpays. This piece covers its origin in Capen, Clapp and Campbell’s 19
Economics
The Jevons paradox is the phenomenon in which improving the efficiency of resource use ends up increasing total consumption. This piece covers its origins in Jevons’s The Coal Ques
Economics
Can rebuilding after a disaster or war really make a society richer? This piece explains the broken window fallacy through Frédéric Bastiat’s 1850 parable of the seen and the unsee
Economics
Why can good products disappear from a market where buyers cannot judge quality? This article covers Akerlof's 1970 paper, how adverse selection drives good goods out, examples bey
Economics
Why are shared resources so easily ruined? This article explains what the tragedy of the commons means, Hardin's pasture story, the features of common-pool resources, cases such as
Economics
Some goods sell better the more their prices rise. This article explains the Veblen effect, in which the desire to show off drives up demand, covering its meaning and origins, how
