259 economics ideas, each one credited to the book, paper or primary source it comes from. Free to read and swipe on Savvy.
In WWII, analysts wanted to reinforce bombers where returning planes showed the most damage. Statistician Abraham Wald flipped it: those planes came back — the fatal hits were wher…
— Abraham Wald, A Method of Estimating Plane Vulnerability Based on Damage of Survivors
In the old legend, a sage asks a king for one grain on the first chessboard square, two on the second, doubling each time. The final total — 2^64 minus 1 — is about 18 quintillion …
— Traditional; Ibn Khallikan, The wheat and chessboard problem (attested in Ibn Khallikan's biographical dictionary)
In a famous field study, shoppers offered 24 jams were far less likely to buy than shoppers offered 6 — and choosers from big menus report less satisfaction with what they pick. Be…
— Barry Schwartz, The Paradox of Choice: Why More Is Less
Garrett Hardin described a shared pasture where every herder benefits from adding one more cow, even though the pasture collapses if everyone does. Each individual decision is rati…
— Garrett Hardin, The Tragedy of the Commons
Frédéric Bastiat imagined a shopkeeper's window smashed by a careless boy. Onlookers say it's good for the economy — the repairman earns money he'll spend elsewhere. But that money…
— Frédéric Bastiat, Ce qu'on voit et ce qu'on ne voit pas (That Which Is Seen, and That Which Is Not Seen)
The 1637 collapse in Dutch tulip bulb prices is usually cited as history's first speculative bubble, wiping out fortunes overnight. Historian Anne Goldgar's archival research found…
— Anne Goldgar, Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age
Two suspects, held separately, are each offered a lighter sentence for betraying the other. If both stay silent, both get a light sentence; if both betray, both get a heavy one — y…
— Merrill Flood & Melvin Dresher; formalised by Albert Tucker, A Non-Cooperative Equilibrium (formalisation of Flood & Dresher's game)
When a government issues two coins with the same face value but different amounts of precious metal, people quietly hoard the coin with more silver and spend the debased one as fas…
— Henry Dunning Macleod, The Elements of Political Economy
In 1865, William Stanley Jevons noticed something backwards: as steam engines got better at converting coal into useful work, Britain's total coal consumption went up, not down. Ch…
— William Stanley Jevons, The Coal Question
Adam Smith pointed out a puzzle at the heart of economics: water has enormous practical value yet a tiny price, while diamonds have almost no practical use yet command enormous pri…
— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations
David Ricardo showed that even if one country can produce every good more efficiently than another, both still gain by specialising: each should make whatever it gives up the least…
— David Ricardo, On the Principles of Political Economy and Taxation
Legal scholars Michael Heller and Rebecca Eisenberg described the mirror image of the tragedy of the commons: when too many parties each hold a veto right over a single resource — …
— Michael Heller & Rebecca Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research
Economist Charles Goodhart observed that any statistical regularity used as a policy target tends to break down, because people start optimising for the number itself rather than w…
— Charles Goodhart, Problems of Monetary Management: The U.K. Experience
According to a widely repeated story, colonial administrators in Delhi tried to cut the cobra population by paying a bounty for every dead snake — and enterprising residents respon…
— Horst Siebert (coined the term in 2001); origin story's accuracy later questioned by historians, Der Kobra-Effekt: Wie man Irrwege der Wirtschaftspolitik vermeidet
When bidders independently estimate an item's uncertain value — an oil field, a company, a free-agent contract — the winning bid tends to come from whoever overestimated it the mos…
— Edward Capen, Robert Clapp & William Campbell, Competitive Bidding in High-Risk Situations
When buyers can't tell a good used car from a lemon, they'll only pay a price reflecting the average quality. Owners of great cars refuse to sell that cheap and exit the market, le…
— George A. Akerlof, The Market for "Lemons": Quality Uncertainty and the Market Mechanism
Saving more feels responsible for any one household in a downturn. But if everyone cuts spending at the same time, total demand falls, businesses earn less, and jobs and wages disa…
— John Maynard Keynes, The General Theory of Employment, Interest and Money
Ronald Coase argued that when a factory's pollution harms a neighbor, the law doesn't need to pick a side: if both parties can bargain cheaply, they'll strike a deal reaching the e…
— Ronald H. Coase, The Problem of Social Cost
Playing a Beethoven quartet still takes four musicians the same time it took two centuries ago; there's no factory-style productivity gain available. Yet their wages must keep pace…
— William J. Baumol and William G. Bowen, Performing Arts: The Economic Dilemma
After the Netherlands found a huge natural gas field in 1959, gas exports pushed up the value of the guilder, making Dutch manufactured goods pricier abroad and hollowing out the e…
— The Economist, The Dutch Disease
Economists Gordon Tullock and Anne Krueger described 'rent-seeking': spending money and effort to capture a bigger slice of existing wealth, through lobbying, licensing restriction…
— Anne Krueger, The Political Economy of the Rent-Seeking Society
The Economist created the Big Mac Index in 1986: comparing a Big Mac's price across countries, converted into a single currency, gives a rough, deliberately tongue-in-cheek gauge o…
— Pam Woodall, The Economist, Big Mac Currencies
Robert Metcalfe argued in 1980 that a network's value scales with roughly the square of its connected users, since each new member can potentially reach everyone already on it — ec…
— George Gilder (naming); Robert Metcalfe (original 1980 claim), Metcalfe's Law and Legacy
In 1970, economist Eugene Fama formalised the efficient-market hypothesis: stock prices instantly reflect all available information, making it near-impossible to consistently beat …
— Eugene F. Fama, Efficient Capital Markets: A Review of Theory and Empirical Work
In 1720, shares of Britain's South Sea Company rocketed from about 128 to over 1,000 pounds after it took over the national debt — then collapsed within months, ruining investors i…
— Encyclopaedia Britannica, South Sea Bubble
Economist Robert Triffin warned in 1960 that a country whose currency serves as the world's reserve must run deficits to supply enough of it for global trade — but those same defic…
— Robert Triffin, Gold and the Dollar Crisis: The Future of Convertibility
Mancur Olson's 1965 book showed that rational self-interest can sabotage a group's shared goals: individuals benefit from a group's wins whether or not they personally contributed,…
— Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups
Smith used the phrase just a single time in his 1776 masterwork, to make a narrow point about merchants preferring to invest at home. It was later generalised by economists, especi…
— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations
Arthur Laffer argued that tax revenue is zero at both a 0% and a 100% tax rate, so somewhere between them lies a rate that maximises what governments actually collect — raise taxes…
— Jude Wanniski, The Way the World Works
Richard Cantillon observed that whoever receives newly created money first can spend it at old prices, while everyone else only feels the effect later, after prices have already ri…
— Richard Cantillon, Essai sur la Nature du Commerce en Général
Jean-Baptiste Say argued in 1803 that producing goods automatically generates the income needed to buy other goods, so economy-wide overproduction should be impossible. Keynes name…
— Jean-Baptiste Say, A Treatise on Political Economy
At a 1906 livestock fair in Plymouth, statistician Francis Galton collected 787 tickets on which fairgoers had guessed the weight of a slaughtered, dressed ox, expecting the averag…
— Francis Galton, Wisdom of the crowd
Rank every city in a country by population, or every word in a language by how often it's used, and a strange pattern appears: the top-ranked item is roughly twice as big as the se…
— George Kingsley Zipf, Zipf's law
Procter & Gamble noticed that retail sales of Pampers diapers barely fluctuated week to week, yet distributor orders swung wildly, and P&G's own orders to raw-material suppliers sw…
— Jay Forrester, Bullwhip effect
In 1936, Keynes compared professional investing to a newspaper contest where readers pick the six prettiest faces from a hundred photos, and the winner matches the average vote. Th…
— John Maynard Keynes, Keynesian beauty contest
In 1958, economist Bill Phillips plotted nearly a century of UK wage and unemployment data and found a clear pattern: when unemployment fell, wage inflation rose, and vice versa. E…
— A. W. Phillips, The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957
A Giffen good is the economic oddity where demand for something rises as its price rises, breaking the basic law of demand. The textbook example for over a century has been Irish p…
— Gerald P. Dwyer and Cotton M. Lindsey, Robert Giffen and the Irish Potato
In 1937, 27-year-old Ronald Coase asked a question economists had oddly overlooked: if free markets coordinate production so well, why don't we all just freelance and contract for …
— Ronald H. Coase, The Nature of the Firm
In 1716, financier John Law convinced the French regent to let him found a national bank and a company holding a monopoly on trade with French Louisiana. Shares in the Mississippi …
— Standard historical accounts, John Law (economist)
Normal demand curves fall as price rises, but for certain luxury goods — designer handbags, rare watches — a higher price can make them more desirable, because the price itself sig…
— Harvey Leibenstein, building on Thorstein Veblen's The Theory of the Leisure Class (1899), Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand
People instinctively think in the face value of money rather than what it can actually buy, so a 3% raise during 5% inflation — a real pay cut — often still feels like good news, w…
— Irving Fisher, The Money Illusion
Governments used to assume relationships seen in historical data — like unemployment falling when inflation rises — would hold after a policy change. Robert Lucas argued this is na…
— Robert Lucas Jr., Econometric Policy Evaluation: A Critique
Offered a choice between a certain win and a slightly-better probable win, most people pick the certainty. But offered the same gamble structured as two probable outcomes instead, …
— Maurice Allais, Le Comportement de l'Homme Rationnel devant le Risque
Rich countries have higher overall price levels not because everything is pricier, but because highly productive tradable industries push up wages economy-wide, and those wages spi…
— Béla Balassa, The Purchasing-Power Parity Doctrine: A Reappraisal
In a Vickrey auction, the highest bidder wins but pays only the second-highest bid, not their own. This quirky rule makes honest bidding a dominant strategy: bidding above or below…
— William Vickrey, Counterspeculation, Auctions, and Competitive Sealed Tenders
In the ultimatum game, one player proposes how to split a sum and a second player can accept or reject it; a rejection means both get nothing. Classical economics predicts responde…
— Werner Güth, Rolf Schmittberger & Bernd Schwarze, An Experimental Analysis of Ultimatum Bargaining
In the Bertrand model, just two firms selling an identical product and competing purely on price drive that price all the way down to marginal cost, wiping out economic profit — th…
— Joseph Bertrand, Book review of Cournot's Recherches
Ricardian equivalence holds that if a government cuts taxes by borrowing rather than raising revenue, forward-looking households anticipate the future taxes needed to repay that de…
— Robert J. Barro, Are Government Bonds Net Wealth?
In 1871, William Stanley Jevons in England and Carl Menger in Austria independently argued that value comes from marginal utility — the satisfaction gained from one more unit — not…
— William Stanley Jevons, The Theory of Political Economy
Harold Hotelling showed in 1929 that rivals fighting for market share tend to minimise the differences between them rather than maximise them. His model of two vendors on a straigh…
— Harold Hotelling, Stability in Competition
In this game, a coin is tossed until it lands heads, doubling the prize with every extra tail — 1 ducat, then 2, then 4, and so on. The expected payout is mathematically infinite, …
— Daniel Bernoulli, Specimen Theoriae Novae de Mensura Sortis
When the Dutch East India Company (VOC) formed in 1602, it raised capital by selling tradable shares to the public, the first company in history to do so. To let investors buy and …
— Wikipedia contributors, Dutch East India Company
Economist R.A. Radford, held in German POW camps during WWII, observed prisoners using cigarettes as money: prices in cigarettes, cigarette-denominated debts, even a makeshift bank…
— R. A. Radford, The Economic Organisation of a P.O.W. Camp
Richard Thaler and Cass Sunstein showed that small changes to how choices are presented, like making retirement savings opt-out instead of opt-in, dramatically shift what people do…
— Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness
In 1896, Vilfredo Pareto observed that roughly 80% of Italy's land was owned by about 20% of the population. Later analysts found the same rough 80/20 split recurring in business, …
— Vilfredo Pareto, Cours d'économie politique
Economist Sam Peltzman found that seatbelt and airbag mandates often failed to cut total road deaths, because drivers who felt safer drove faster and more recklessly. The risk wasn…
— Sam Peltzman, The Effects of Automobile Safety Regulation
Statistician Ernst Engel found that as household income rises, the percentage spent on food falls, even though the actual amount spent on food keeps increasing. This relationship, …
— Ernst Engel, Die Productions- und Consumtionsverhältnisse des Königreichs Sachsen
Economist Hyman Minsky argued that long stretches of stability make investors complacent, pushing them into riskier debt until the financial system turns fragile. A 'Minsky moment'…
— Hyman Minsky, Stabilizing an Unstable Economy
Thomas Malthus argued that population grows geometrically while food production grows only arithmetically, so any gains in income get erased by more mouths to feed. Societies are p…
— Thomas Robert Malthus, An Essay on the Principle of Population
Michael Spence's 1973 model shows employers can't directly observe an applicant's ability, so they lean on costly signals like a college degree instead. Because earning credentials…
— Michael Spence, Job Market Signaling
Thomas Schelling showed that when people can't coordinate directly, they often converge on the same choice anyway by picking whatever option feels most obvious or prominent. Asked …
— Thomas C. Schelling, The Strategy of Conflict
Duncan Black proved that when voters' preferences fall along a single left-right spectrum, the option preferred by the voter exactly in the middle beats every other option under ma…
— Duncan Black, On the Rationale of Group Decision-Making
The lump of labour fallacy is the mistaken belief that an economy has only so much work to go around, so anyone who takes a job - an immigrant, a machine, a retiree working longer …
— David Frederick Schloss, Why Working-Men Dislike Piece-Work
When farmland grows scarce, cultivation spreads onto poorer soil. Ricardo showed that rent is simply the extra output the better land yields over that worst "marginal" plot still i…
— David Ricardo, On the Principles of Political Economy and Taxation
William Jennings Bryan told the 1896 Democratic convention that pegging the dollar only to gold starved the economy of money and crushed indebted farmers. His "cross of gold" line …
— William Jennings Bryan, Historical record
Physiocrat Francois Quesnay believed only farming created new wealth, with merchants and manufacturers just shuffling it around. His Tableau economique traced how farm income flowe…
— Francois Quesnay, Tableau economique
If hog farmers breed more pigs after a year of high prices, the resulting glut crashes the price — so next year they breed fewer, creating a shortage that sends prices back up. The…
— Mordecai Ezekiel, The Cobweb Theorem
Joseph Schumpeter argued that capitalism's defining feature isn't stable competition but a constant churn he called 'creative destruction': new products and firms endlessly overtur…
— Joseph Schumpeter, Capitalism, Socialism and Democracy
Germany financed WWI and its postwar reparations partly by printing money, and paper marks in circulation exploded from about 1.3 trillion at the end of 1922 to nearly 500 quintill…
— Adam Fergusson, When Money Dies: The Nightmare of the Weimar Hyper-Inflation
In 1936, engineer Theodore Wright found that as Curtiss-Wright's cumulative aircraft output doubled, the labor hours needed per plane fell by a consistent percentage rather than a …
— Theodore P. Wright, Factors Affecting the Cost of Airplanes
Irving Fisher argued that when over-indebted borrowers rush to sell assets and repay loans, the resulting fire sales push prices down, which raises the real burden of the debt stil…
— Irving Fisher, The Debt-Deflation Theory of Great Depressions
For decades, foreign governments could exchange US dollars for gold at a fixed rate under the Bretton Woods system. On 15 August 1971, President Nixon announced the US would suspen…
— Nixon administration, Nixon Shock
Friedman argued people don't set spending by this month's paycheck, but by their estimate of long-run, 'permanent' income averaged over a lifetime. A temporary windfall like a tax …
— Milton Friedman, A Theory of the Consumption Function
In 1980, Deng Xiaoping designated Shenzhen — then a small fishing and farming county bordering Hong Kong — as one of China's first Special Economic Zones, allowing market-driven pr…
— State Council of the People's Republic of China, Shenzhen Special Economic Zone
Between 1948 and the mid-1950s, the United States gave over $13 billion — well over $150 billion today — to help rebuild Western European economies, including those of Germany and …
— US Department of State, Marshall Plan
Richard Thaler showed that people mentally sort money into separate 'accounts' based on its source or intended use, even though cash is completely interchangeable. A windfall like …
— Richard Thaler, Mental Accounting Matters
Economist Sherwin Rosen noticed that in markets where technology lets one performer reach a mass audience, recordings, broadcasts, streaming, tiny differences in perceived quality …
— Sherwin Rosen, The Economics of Superstars
QWERTY became the standard typewriter layout in the 1870s and stuck, not because later testing proved it optimal, but because switching costs made a rival layout too expensive to a…
— Paul David, Clio and the Economics of QWERTY
Classical economics assumes people discount future rewards at a steady, consistent rate. Behavioral economists found the opposite: people are far more impatient about delays starti…
— David Laibson, Golden Eggs and Hyperbolic Discounting
Classical economics assumed people gather all available information and pick the optimal choice. Herbert Simon argued real decision-makers face limited time, information and brainp…
— Herbert A. Simon, A Behavioral Model of Rational Choice
Economist Amartya Sen showed that famines are rarely just about how much food exists — they're about who has the money or entitlement to buy it. Bengal's 1943 famine killed an esti…
— Amartya Sen, Poverty and Famines: An Essay on Entitlement and Deprivation
Once a cost is covered by someone else, behavior shifts — drivers with full insurance take fewer precautions, banks make riskier bets when they expect a bailout. Economists call th…
— Kenneth J. Arrow, Uncertainty and the Welfare Economics of Medical Care
Arthur Pigou noticed that factories dumping smoke impose real costs on their neighbours that never show up in the factory's own accounts. His solution — now called a Pigouvian tax …
— Arthur C. Pigou, The Economics of Welfare
Daniel Kahneman and Amos Tversky's 1979 prospect theory found that people weigh losses roughly twice as heavily as equivalent gains — losing £100 takes about £200 of gain to offset…
— Daniel Kahneman and Amos Tversky, Prospect Theory: An Analysis of Decision under Risk
Korea was one country until it split in 1945. The North initially had more heavy industry from Japanese colonial rule and a higher income than the South well into the 1960s. Then t…
— Standard economic accounts of the division of Korea, Economy of North Korea
In his 1964 book, Gary Becker argued that spending on schooling, training, and even health is a form of investment, just like a firm buying machinery: it costs money upfront and pa…
— Gary S. Becker, Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education
Worked out by Robert Mundell and J. Marcus Fleming in the early 1960s, the impossible trinity says a country can have at most two of: a fixed exchange rate, free movement of capita…
— Robert Mundell and J. Marcus Fleming, Impossible trinity
In 1817, David Ricardo showed that even if one country is more efficient at producing every good than another, both still gain from trade — each should specialize in whatever it's …
— David Ricardo, On the Principles of Political Economy and Taxation
By November 2008, Zimbabwe's monthly inflation rate hit an estimated 79.6 billion percent, meaning prices roughly doubled every 24 hours. The central bank printed a 100-trillion-do…
— Steve H. Hanke and Alex K. F. Kwok, On the Measurement of Zimbabwe's Hyperinflation
Standard economic theory predicted a higher minimum wage would cut jobs. In 1994, David Card and Alan Krueger compared fast-food employment in New Jersey, which raised its minimum …
— David Card and Alan Krueger, Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania
Paul Samuelson formalized why goods like national defense or clean air are chronically undersupplied by free markets: once they exist, nobody can be excluded from enjoying them, so…
— Paul A. Samuelson, The Pure Theory of Public Expenditure
John Nash proved in 1950 that in games with any number of players, there's always at least one set of strategies where no single player can do better by switching, given what every…
— John Forbes Nash Jr., Equilibrium Points in N-Person Games
Every choice forecloses every alternative you could have made instead, and economists treat the value of the best forgone alternative as the real cost of a decision — not just the …
— Friedrich von Wieser, Grundsätze der Volkswirtschaftslehre (Principles of Economics)
Whenever one party (the principal) delegates decisions to another (the agent) — a shareholder and a CEO, a patient and a surgeon — their interests rarely align perfectly, and the a…
— Michael C. Jensen & William H. Meckling, Theory of Agency
Each additional unit of something you consume tends to deliver less added satisfaction than the one before it — the first cold drink on a hot day is transformative, the fifth barel…
— Alfred Marshall, Principles of Economics
In July 1944, delegates from 44 Allied nations gathered at Bretton Woods, New Hampshire, and pegged their currencies to the US dollar, which was itself pegged to gold. The system g…
— Wikipedia contributors, Bretton Woods system
In October 2008, someone using the name Satoshi Nakamoto published a nine-page paper describing a currency that needed no bank or government to verify transactions. Bitcoin launche…
— Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System
In 1976, economist Muhammad Yunus lent $27 to a group of stool-makers in Bangladesh who couldn't get credit from traditional banks. The experiment grew into Grameen Bank, which len…
— Wikipedia contributors, Grameen Bank
John Maynard Keynes argued that money spent by government doesn't stop with its first recipient: a paid construction worker spends part of their wage at a shop, whose owner spends …
— John Maynard Keynes, The General Theory of Employment, Interest and Money
A farmer with wheat who wants shoes has to find a shoemaker who happens to want wheat — a 'double coincidence of wants' that barter economies rarely satisfy. Carl Menger argued mon…
— Carl Menger, On the Origin of Money
Laurence J. Peter argued that competent workers keep getting promoted precisely because they're good at their current job — until they land in a role that exceeds their ability, wh…
— Laurence J. Peter & Raymond Hull, The Peter Principle
James Buchanan and Gordon Tullock argued that politicians and bureaucrats aren't selfless public servants — they respond to incentives just like consumers and firms do, favoring po…
— James M. Buchanan & Gordon Tullock, The Calculus of Consent
In September 1992, the UK tried to keep the pound pegged within Europe's exchange rate mechanism at a rate the market didn't believe. George Soros's fund bet heavily against it. Br…
— Michael T. Kaufman, Soros: The Life and Times of a Messianic Billionaire
In the 1920s, Soviet economist Nikolai Kondratiev studied a century of prices, wages and trade data and proposed that capitalist economies move through long waves of roughly 40 to …
— Nikolai Kondratiev, The Long Waves in Economic Life
Through the late 1990s, the promise of the internet sent the price of almost any '.com' stock soaring, regardless of revenue or a working business model. The Nasdaq index rose abou…
— Wikipedia contributors, Dot-com bubble
Estée Lauder chairman Leonard Lauder noticed his company's lipstick sales rose even as the wider economy slumped after 9/11, and again in the 2008 financial crisis, popularising th…
— Wikipedia contributors, Lipstick effect
Italian statistician Corrado Gini devised a way to compress an entire income distribution into a single score between 0 and 1: 0 means everyone earns the same, 1 means one person e…
— Corrado Gini, Variabilità e mutabilità
In 1980, economist Julian Simon challenged biologist Paul Ehrlich to bet on whether resources were running out. Ehrlich picked five metals — chromium, copper, nickel, tin and tungs…
— Wikipedia contributors, Simon–Ehrlich wager
During the 1840s, cheap credit sent British investors piling into railway company shares, and Parliament approved over 260 new railway acts in 1846 alone. At its peak, railway inve…
— Wikipedia contributors, Railway Mania
In 1955, Simon Kuznets proposed that as a country develops, inequality first rises, then falls, forming an inverted U — though he flagged the evidence himself as scarce, with the '…
— Simon Kuznets, Economic Growth and Income Inequality
Quantitative easing is a central bank creating new money to buy government bonds directly from the market, pushing down long-term borrowing costs once ordinary interest-rate cuts r…
— Wikipedia contributors, Quantitative easing
Venetian merchants had used double-entry bookkeeping informally for over a century, but Franciscan friar Luca Pacioli was the first to write the system down in full, inside a mathe…
— Luca Pacioli, Summa de arithmetica, geometria, proportioni et proportionalita
Economist John Kenneth Galbraith coined 'the bezzle' to describe the gap between when an embezzlement happens and when it's discovered — a period when both the thief and the victim…
— John Kenneth Galbraith, The Great Crash 1929
In 1914, Ford Motor Company was losing workers to brutal turnover on its assembly lines. Henry Ford abruptly raised the minimum wage to five dollars a day, roughly double the going…
— Ford Motor Company, Five dollar day
In 1971, economist George Stigler argued that regulatory agencies, over time, tend to be 'captured' by the very industries they're supposed to oversee, since a concentrated industr…
— George Stigler, The Theory of Economic Regulation
Diamond and Dybvig showed mathematically that bank runs can be self-fulfilling: if enough depositors merely expect others to withdraw, rushing to withdraw first is individually rat…
— Douglas W. Diamond and Philip H. Dybvig, Bank Runs, Deposit Insurance, and Liquidity
Kenneth Arrow proved that no ranked-voting rule can simultaneously satisfy a short list of reasonable fairness conditions once there are three or more options. Every electoral or c…
— Kenneth Arrow, Social Choice and Individual Values
Richard Easterlin found that within any country, wealthier people report more happiness — but as whole nations get richer over decades, average happiness barely budges. His explana…
— Richard Easterlin, Does Economic Growth Improve the Human Lot? Some Empirical Evidence
In October 1979, Paul Volcker's Federal Reserve began pushing interest rates to unprecedented heights, sending the fed funds rate to over 20% by 1981. It triggered a brutal recessi…
— Paul Volcker / Federal Reserve, Volcker Shock
In 1694, a group of London merchants lent King William III £1.2 million to fund a war against France, and in return got a royal charter to found the Bank of England. It began as a …
— David Kynaston, The Bank of England: A History
On 19 October 1987, stock markets around the world crashed within hours of each other; the Dow Jones fell 22.6% in one session, still the largest one-day percentage drop in its his…
— U.S. Presidential Task Force on Market Mechanisms, Report of the Presidential Task Force on Market Mechanisms
In mid-1946, Hungary's currency collapsed so fast that prices doubled roughly every 15 hours, and the government issued a banknote worth 100 quintillion pengő. It remains the most …
— National Bank of Hungary historical records, Hungarian pengő
In the 1680s, ship captains, merchants and marine insurers gathered at Edward Lloyd's coffee house near the Thames to trade shipping news and underwrite voyages. That informal meet…
— Lloyd's, Lloyd's of London
When Lehman Brothers filed for bankruptcy on 15 September 2008, it remains the largest bankruptcy filing in US history. Credit markets seized up almost immediately as banks stopped…
— Wikipedia contributors, 2008 financial crisis
In 1934, Simon Kuznets delivered the first comprehensive measure of US national income to Congress, laying the groundwork for what became GDP. He explicitly warned that 'the welfar…
— Simon Kuznets, National Income, 1929–1932
In their 1944 book, John von Neumann and Oskar Morgenstern formalized game theory, showing how rational actors should behave when the best choice depends on what everyone else choo…
— John von Neumann and Oskar Morgenstern, Theory of Games and Economic Behavior
The Smoot–Hawley Tariff Act of 1930 raised US duties on over 20,000 imported goods, meant to protect American jobs as the Great Depression began. Trading partners retaliated with t…
— Wikipedia contributors, Smoot–Hawley Tariff Act
In 1910, a small group of the country's most powerful bankers and a senator spent nine days in seclusion on Jekyll Island, Georgia, disguised as a hunting party to hide their ident…
— Roger Lowenstein, America's Bank: The Epic Struggle to Create the Federal Reserve
In 1962, economist Arthur Okun spotted a stable pattern in US data: when unemployment rises by one percentage point, GDP tends to fall by about two percentage points below its pote…
— Arthur M. Okun, Potential GNP: Its Measurement and Significance
Tobin's Q divides a firm's market value by the replacement cost of its physical assets. A Q above one means the market values the company for more than rebuilding it would cost, so…
— James Tobin, A General Equilibrium Approach to Monetary Theory
Changing a price isn't free - relabelling shelves, reprinting menus, and notifying customers all cost something, even if only a little. Economist N. Gregory Mankiw showed that firm…
— N. Gregory Mankiw, Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly
Economist Charles Tiebout argued that people effectively shop for local government: households move to whichever town offers their preferred mix of taxes and services like schools …
— Charles Tiebout, A Pure Theory of Local Expenditures
When a tax or price control pushes a market away from its free equilibrium, some mutually beneficial trades simply stop happening. Economist Arnold Harberger showed this lost value…
— Arnold Harberger, Monopoly and Resource Allocation
The quantity theory of money holds that in the long run, growth in the money supply mostly shows up as higher prices, not more real output. Irving Fisher formalized this as an equa…
— Irving Fisher, The Purchasing Power of Money
Slap the same fixed cost, like freight, onto a cheap and an expensive version of a good, and the relative price gap between them shrinks. That makes the pricier, higher-quality ver…
— Armen Alchian and William R. Allen, Alchian–Allen effect
In 1949, engineer-turned-economist Bill Phillips built the MONIAC, a room-sized machine that simulated a country's economy by pumping colored water through tanks, valves, and pipes…
— Robert Leeson (editor), A. W. H. Phillips: Collected Works in Contemporary Perspective
Across a ring of islands near Papua New Guinea, the Kula exchange circulates two kinds of ceremonial valuables endlessly: red shell necklaces travel one direction around the ring, …
— Bronisław Malinowski, Argonauts of the Western Pacific
On the Micronesian island of Yap, giant carved limestone discs called rai served as high-value money, some over 3 metres across, quarried on a distant island and paddled home by ca…
— Milton Friedman, Money Mischief: Episodes in Monetary History
Thomas Carlyle coined "the dismal science" in an 1849 essay, not, as is often assumed, to mock Malthus's grim population predictions, but to attack economists like John Stuart Mill…
— Thomas Carlyle, Occasional Discourse on the Negro Question
When bidders each guess independently at the true value of something, like an oil-drilling lease, the winning bid tends to come from whoever overestimated by the most. Engineers st…
— E. C. Capen, R. V. Clapp, W. M. Campbell, Competitive Bidding in High-Risk Situations
Price discrimination is selling the same good to different customers at different prices based on how much each is willing to pay, not on any difference in cost. Economist Arthur P…
— Arthur Cecil Pigou, The Economics of Welfare
From the 16th to 18th centuries, mercantilist doctrine held that a nation grew rich only by exporting more than it imported and hoarding the resulting gold and silver, treating glo…
— Wikipedia contributors, Mercantilism
Michael Rothschild and Joseph Stiglitz showed that when an insurance company can't tell risky customers from safe ones directly, it can offer a menu of contracts, a cheap policy wi…
— Michael Rothschild, Joseph Stiglitz, Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information
In a 1969 essay, Milton Friedman used a thought experiment, a helicopter dropping $1,000 in cash on a community, to explain how a pure increase in the money supply, with nothing el…
— Milton Friedman, The Optimum Quantity of Money
For over 700 years, England's Exchequer recorded debts by notching wooden tally sticks and splitting them in two, one piece for each party. When Parliament finally abolished the sy…
— English Exchequer, Tally stick
After Spain began shipping vast quantities of silver from mines like Potosí in the 1500s, prices across much of Europe rose roughly two to three-fold over the following century, on…
— Earl J. Hamilton, American Treasure and the Price Revolution in Spain, 1501–1650
Facing high grain prices in 1795, Berkshire magistrates meeting at Speenhamland agreed to subsidise low wages out of parish poor relief, tied to the price of bread. Economists late…
— Berkshire magistrates, Speenhamland system
In 1838, Antoine Augustin Cournot modeled two mineral-water sellers who each pick a quantity assuming their rival's output stays fixed. Worked through repeatedly, both firms settle…
— Antoine Augustin Cournot, Recherches sur les Principes Mathématiques de la Théorie des Richesses
Trade theory predicted capital-abundant countries export capital-intensive goods and import labor-intensive ones. In 1953, economist Wassily Leontief tested this on US trade data a…
— Wassily Leontief, Domestic Production and Foreign Trade: The American Capital Position Re-Examined
In 1944, William Beveridge argued that unfilled job vacancies and unemployment move in opposite directions: more openings, fewer jobless, and vice versa. Charting the two together …
— William Beveridge, Full Employment in a Free Society
Square each firm's market share and add them up: the total runs from near zero, for a market of many equal-sized rivals, up to 10,000 for a pure monopoly. Economists Albert Hirschm…
— Orris C. Herfindahl, Concentration in the Steel Industry
Before De Beers' 'A Diamond is Forever' campaign, most American engagement rings held no diamond at all. Copywriter Frances Gerety coined the slogan in 1947, linking a diamond's ph…
— N.W. Ayer agency (Frances Gerety), for De Beers, A Diamond Is Forever
When John Bogle launched Vanguard's First Index Investment Trust in 1976, he aimed to raise up to $150 million; investors put in barely $11 million, and rivals dismissed the whole …
— John C. Bogle, John C. Bogle
Ty Inc.'s $5 beanbag animals became speculative assets in the mid-1990s, with rare designs reportedly reselling for thousands of dollars and Beanie Babies briefly accounting for a …
— Ty Warner, Ty Inc., Beanie Babies
In 1952, Harry Markowitz published 'Portfolio Selection,' showing that combining assets whose prices don't move in lockstep can lower a portfolio's overall risk without sacrificing…
— Harry Markowitz, Portfolio Selection
Hayek pointed out that no central authority can gather the scattered, local knowledge millions of buyers and sellers each hold. A single price for tin, rising or falling, sums up t…
— Friedrich Hayek, The Use of Knowledge in Society
When a failed stock corner triggered runs on New York trust companies in 1907, there was no central bank to step in. J.P. Morgan gathered the city's bankers into his library and pr…
— Robert F. Bruner and Sean D. Carr, The Panic of 1907: Lessons Learned from the Market's Perfect Storm
In 1973, OPEC states cut off oil exports to countries backing Israel in the Yom Kippur War, and prices roughly quadrupled within months. Economies that had never seen inflation and…
— Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power
Solow's 1956 model showed that simply adding more machines and workers hits diminishing returns and can't sustain growth forever. When he ran the numbers on the US economy, most of…
— Robert Solow, A Contribution to the Theory of Economic Growth
In 1789 France issued assignats, paper currency backed by seized Catholic Church land, to pay off state debt. Printing accelerated to fund war and welfare spending, and by 1796 the…
— S. E. Harris, The Assignats
Britain's Corn Laws had taxed imported grain since 1815 to protect domestic landowners, keeping bread prices high. Conservative PM Robert Peel repealed them in 1846 as the Irish po…
— Wikipedia, Corn Laws
By 1900 Standard Oil controlled roughly 90% of US oil refining through aggressive pricing and secret rail rebates. In 1911 the Supreme Court ordered it broken into 34 separate comp…
— US Supreme Court, Standard Oil Co. of New Jersey v. United States
In 1994 the US government needed to sell licenses for wireless spectrum, but no existing auction format handled interdependent, simultaneous items well. Economists Paul Milgrom, Ro…
— Paul Milgrom, Putting Auction Theory to Work
Economist Bruce Yandle noticed that Sunday alcohol-sales bans survived because two very different groups backed them: Baptists who wanted alcohol restricted on moral grounds, and b…
— Bruce Yandle, Bootleggers and Baptists – The Education of a Regulatory Economist
Modigliani and Miller proved that, under idealized conditions with no taxes or bankruptcy costs, a firm's total value is the same whether it's financed mostly with debt or mostly w…
— Franco Modigliani & Merton Miller, The Cost of Capital, Corporation Finance and the Theory of Investment
Robert Shiller's Irrational Exuberance argued in early 2000 that US stocks were dangerously overvalued, driven by feedback loops of hype rather than fundamentals. The dot-com crash…
— Robert J. Shiller, Irrational Exuberance
The Kaldor-Hicks criterion says a change is worth making if the winners could, in principle, compensate the losers and still come out ahead — even if that compensation never actual…
— Nicholas Kaldor, Welfare Propositions in Economics and Interpersonal Comparisons of Utility
Eli Heckscher and Bertil Ohlin argued that trade patterns depend less on which country works harder or smarter and more on what each country happens to have a lot of: land, labor, …
— Eli Heckscher & Bertil Ohlin, Heckscher–Ohlin model
Chartered in 1600 to trade pepper and spices, the English East India Company gradually taxed, administered and conquered vast stretches of the Indian subcontinent, funding a privat…
— William Dalrymple, The Anarchy: The Relentless Rise of the East India Company
In 1990, Pakistani economist Mahbub ul Haq, drawing on Amartya Sen's work on human capability, launched the Human Development Index to challenge the idea that a rising GDP alone pr…
— Mahbub ul Haq (UNDP), Human Development Report 1990
On 6 May 2010, the Dow Jones plunged almost 1,000 points and major stocks briefly traded for pennies before rebounding, all within about half an hour. Regulators eventually traced …
— U.S. Securities and Exchange Commission & Commodity Futures Trading Commission, 2010 flash crash
Add more of one input — fertilizer to a field, workers to a factory line — while holding everything else fixed, and each extra unit eventually adds less output than the one before …
— Anne Robert Jacques Turgot; developed by David Ricardo and Thomas Malthus, Observations sur le mémoire de M. de Saint-Péravy
If gold cost more in London than in New York, traders could buy it cheap in one city and sell it dear in the other until the gap disappeared — the law of one price says arbitrage s…
— Wikipedia contributors, Law of One Price
John Maynard Keynes described a scenario where interest rates fall so low that everyone would rather just hold cash than lend it out or invest it, since the returns aren't worth th…
— John Maynard Keynes, The General Theory of Employment, Interest and Money
Finn Kydland and Edward Prescott showed that a policy which is optimal when announced can stop being optimal once people have already reacted to it — tempting policymakers to break…
— Finn E. Kydland, Edward C. Prescott, Rules Rather than Discretion: The Inconsistency of Optimal Plans
Garrett Hardin argued shared resources are doomed to be overused. Elinor Ostrom studied real fisheries, forests and irrigation systems and found communities often govern commons su…
— Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action
Textbook economics says capital should rush toward poor countries, where it's scarce and returns should be highest. In 1990, Robert Lucas pointed out that hardly any does — investm…
— Robert E. Lucas Jr., Why Doesn't Capital Flow from Rich to Poor Countries?
If capital truly moved freely across borders, a nation's savings rate and its investment rate should barely track each other — money would just chase the highest returns anywhere o…
— Martin Feldstein and Charles Horioka, Domestic Saving and International Capital Flows
Raúl Prebisch and Hans Singer independently argued in 1950 that the price of raw commodities tends to fall over time relative to manufactured goods, so commodity-exporting countrie…
— Raúl Prebisch, The Economic Development of Latin America and Its Principal Problems
In the dictator game, one player decides alone how to split a sum of money with a second player, who has no say and no power to reject the split — unlike the related ultimatum game…
— Wikipedia contributors, Dictator Game
The shadow banking system is the web of hedge funds, money market funds, insurers and other non-bank firms that provide loans and bank-like services without being regulated as bank…
— Wikipedia contributors, Shadow Banking System
In a winner-take-all market, a performer only marginally better than rivals can capture a wildly disproportionate share of rewards — a pattern economists Robert Frank and Philip Co…
— Robert H. Frank & Philip J. Cook, The Winner-Take-All Society
A monopsony is the mirror image of a monopoly: instead of one seller controlling a market, a single dominant buyer does, giving it power to push down what it pays. Economist Joan R…
— Joan Robinson, Monopsony
Long-Term Capital Management used Nobel-winning option-pricing models to run huge, highly leveraged trades that looked almost riskless on paper. When Russia defaulted on its debt i…
— Roger Lowenstein, When Genius Failed: The Rise and Fall of Long-Term Capital Management
After the US loosened rules on savings and loan associations in 1982, many took federally insured deposits into risky real-estate and junk-bond bets, betting big because losses wou…
— Kitty Calavita, Henry N. Pontell, and Robert Tillman, Big Money Crime: Fraud and Politics in the Savings and Loan Crisis
Two drivers race toward each other; whoever swerves first is 'chicken' and loses face, but if neither swerves, both crash. Game theorist Thomas Schelling showed the trick is to cre…
— Thomas C. Schelling, The Strategy of Conflict
Robert Mundell argued a shared currency only works well across regions that can absorb shocks together — through labor mobility, wage flexibility, or transfers between members, sin…
— Robert A. Mundell, A Theory of Optimum Currency Areas
Douglass North argued that the biggest difference between rich and poor nations isn't natural resources or even technology, but institutions: the formal rules like property rights …
— Douglass North, Institutions, Institutional Change and Economic Performance
Paul Krugman's 'new trade theory' explained a pattern classical economics struggled with: industries often cluster tightly in one region, like cars in Detroit or tech in Silicon Va…
— Paul Krugman, Increasing Returns and Economic Geography
Abhijit Banerjee and Esther Duflo pioneered running randomized controlled trials in development economics, the same method used to test new drugs, to see which anti-poverty interve…
— Abhijit Banerjee, Esther Duflo, Poor Economics
Paul Rosenstein-Rodan argued that a single new factory in a poor country often fails even when it makes economic sense, because there's no local market of workers with wages to buy…
— Paul Rosenstein-Rodan, Problems of Industrialisation of Eastern and South-Eastern Europe
In Capital in the Twenty-First Century, economist Thomas Piketty compiled centuries of tax records across many countries and argued that whenever the return on capital (r) outpaces…
— Thomas Piketty, Capital in the Twenty-First Century
Adam Smith opened The Wealth of Nations with an unglamorous example: a pin factory. Making a pin involves roughly eighteen distinct steps, drawing the wire, cutting it, sharpening …
— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations
In Kicking Away the Ladder, economist Ha-Joon Chang combed through the economic history of Britain, the US and other now-wealthy nations and found that virtually all of them used t…
— Ha-Joon Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective
In 1826, Prussian farmer and economist Johann Heinrich von Thünen imagined an isolated city on a flat, featureless plain, and worked out what farmers around it would grow, based pu…
— Johann Heinrich von Thünen, Der isolierte Staat (The Isolated State)
In 1985, the US, Japan, West Germany, France and Britain agreed at New York's Plaza Hotel to jointly intervene in currency markets and push the dollar down. It had risen roughly 50…
— G5 finance ministers and central bank governors, Plaza Accord
A mathematician and an economist fit US manufacturing data to a simple formula: output scales with capital and labour, each raised to its own power. Nearly a century later, the Cob…
— Charles W. Cobb and Paul H. Douglas, A Theory of Production
Comparing dozens of countries from 1971 to 1989, economists found that the more a nation's exports depended on natural resources, the slower its economy grew afterward — even accou…
— Jeffrey D. Sachs and Andrew M. Warner, Natural Resource Abundance and Economic Growth
Clayton Christensen showed that dominant firms fail not from sloppiness but from listening too closely to their best customers, who never ask for the cheap, crude technology quietl…
— Clayton M. Christensen, The Innovator's Dilemma
In 1972, Bhutan's King Jigme Singye Wangchuck declared that "Gross National Happiness is more important than Gross National Product," and the country later built a government index…
— Jigme Singye Wangchuck, Gross National Happiness
In 1933, Justice Louis Brandeis warned in a Supreme Court dissent that US states were competing to weaken their own corporate laws to attract businesses, a dynamic he described as …
— Louis Brandeis, Louis K. Liggett Co. v. Lee (dissent)
Since 2016, the nonprofit GiveDirectly has been paying a basic income of about $0.75 a day to tens of thousands of people in rural Kenya, with no conditions on how it's spent, in t…
— Michael Faye & Paul Niehaus (GiveDirectly), GiveDirectly
When Continental Illinois National Bank teetered on collapse in 1984, federal regulators rescued it rather than risk a chain reaction through the banks that had lent to it. Testify…
— Stewart McKinney (phrase); Continental Illinois bailout, 1984, Too big to fail
In 1962 David Gale and Lloyd Shapley proved that a simple round-by-round proposal process always produces a 'stable' matching, where no pair would rather ditch their assigned partn…
— David Gale and Lloyd Shapley, College Admissions and the Stability of Marriage
Before 1956, loading a cargo ship by hand often cost more than the ocean voyage itself. Truck owner Malcom McLean's standardized steel container let cranes move goods between ship,…
— Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
Resource-rich developing countries usually grow slower than resource-poor ones, the 'resource curse.' Botswana, among the poorest nations at independence in 1966, instead used diam…
— Daron Acemoglu, Simon Johnson, James A. Robinson, An African Success Story: Botswana
The 1990 US Acid Rain Program didn't tell power plants how to cut sulfur dioxide — it capped total emissions and let firms buy and sell pollution 'allowances,' so cuts happened whe…
— US Environmental Protection Agency, under Title IV of the Clean Air Act Amendments of 1990, Acid Rain Program
In 1920, Charles Ponzi promised Boston investors 50% profit in 45 days, claiming he could arbitrage international postal reply coupons. He was really just paying old investors with…
— Charles Ponzi, Ponzi scheme (historical fraud case)
In a classic 1985 study, people who'd already paid for a ski trip were more likely to go even after a better trip became available for the same weekend, because they didn't want to…
— Hal R. Arkes and Catherine Blumer, The Psychology of Sunk Cost
William Nordhaus spent decades building models -- culminating in the DICE model -- that link economic growth to the cost of carbon emissions, letting economists calculate an 'optim…
— William Nordhaus, The Climate Casino: Risk, Uncertainty, and Economics for a Warming World
In 1921, economist Frank Knight argued that true 'risk' -- like a known dice roll -- can be insured away, but genuine 'uncertainty,' where the odds themselves are unknown, can't be…
— Frank H. Knight, Risk, Uncertainty, and Profit
Economist Michael Kremer named his theory after the faulty O-ring that destroyed the Challenger space shuttle: when production requires many tasks to go well, one unreliable step d…
— Michael Kremer, The O-Ring Theory of Economic Development
When Thailand abandoned its dollar currency peg in July 1997 after speculative attacks drained its reserves, panic spread within weeks to Indonesia, South Korea and beyond, wiping …
— IMF and regional central bank records, 1997 Asian Financial Crisis
Hong Kong, Singapore, South Korea and Taiwan had little in the way of natural resources after the Second World War, yet each sustained annual growth above 7% from the 1960s onward …
— World Bank development economists, The East Asian Miracle
In 1989, economist John Williamson listed ten policies -- from fiscal discipline to trade liberalization and privatization -- that Washington-based institutions typically recommend…
— John Williamson, What Washington Means by Policy Reform
In 1958, economist A.W. Phillips plotted nearly a century of UK wage and unemployment data and found a consistent pattern: when unemployment fell, wage inflation rose, and vice ver…
— A.W. Phillips, The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957
If every household tries to save a larger share of its income, total spending in the economy falls, companies earn less, and incomes shrink — potentially leaving total savings unch…
— John Maynard Keynes, The General Theory of Employment, Interest and Money
Robert Lucas argued that traditional economic models, built from historical relationships between things like spending and employment, break down the moment policy actually changes…
— Robert Lucas Jr., Econometric Policy Evaluation: A Critique
Opportunity cost is the value of the next-best option you give up when you make a choice — not just the cash you spend. Spending an evening studying costs you that evening's sleep …
— Friedrich von Wieser, Der natürliche Werth (Natural Value)
When many bidders independently guess the value of something uncertain, like an oil field's reserves, their estimates scatter around the true value. The winning bid is, almost by d…
— E. C. Capen, R. V. Clapp and W. M. Campbell, Competitive Bidding in High-Risk Situations
C. Northcote Parkinson noticed that Britain's Colonial Office kept adding staff throughout the 1930s even as the empire it administered was shrinking, and its Admiralty grew even a…
— C. Northcote Parkinson, Parkinson's Law
Learning enough to cast a genuinely informed vote takes real effort, but a single vote almost never changes a national election's outcome. Anthony Downs argued that weighing those …
— Anthony Downs, An Economic Theory of Democracy
Rational investing says a stock's past purchase price shouldn't affect whether you sell it now — only its future prospects should. Shefrin and Statman found investors do the opposi…
— Hersh Shefrin and Meir Statman, The Disposition to Sell Winners Too Early and Ride Losers Too Long: Theory and Evidence
Before 1973, options contracts were priced mostly by gut feel, with no agreed way to say what a bet on a future stock price was actually worth. Fischer Black and Myron Scholes, bui…
— Fischer Black and Myron Scholes, The Pricing of Options and Corporate Liabilities
Bernie Madoff, a former chairman of NASDAQ, told investors he was earning them steady, unusually consistent returns, when in reality he was simply paying old investors with new inv…
— U.S. Securities and Exchange Commission, SEC Litigation Release No. 20834
Venezuela's currency collapsed so severely in the late 2010s that annual inflation was estimated at over one million percent in 2018, forcing the central bank to lop zeros off the …
— International Monetary Fund, World Economic Outlook
Enron was named 'America's Most Innovative Company' by Fortune magazine six years running, while executives used off-the-books partnerships to hide mounting losses and inflate repo…
— William C. Powers Jr. (Powers Committee), Report of Investigation by the Special Investigative Committee of the Board of Directors of Enron Corp.
In 1993 economist John Taylor proposed a formula for the ideal interest rate, based on just two numbers: how far inflation sits above target and how far output sits below potential…
— John B. Taylor, Discretion versus Policy Rules in Practice
Economists Richard Lipsey and Kelvin Lancaster proved in 1956 that if one condition for a fully efficient economy can't be met, satisfying more of the remaining conditions doesn't …
— Richard Lipsey and Kelvin Lancaster, The General Theory of Second Best
Founded in Florence in 1397 by Giovanni di Bicci de' Medici, the Medici Bank ran semi-independent branches across Europe and used bills of exchange to move money across borders wit…
— Raymond de Roover, The Rise and Decline of the Medici Bank, 1397-1494
Neapolitan banker Lorenzo de Tonti pitched the idea to the French crown in 1653: pool investors' money into one fund whose payout per survivor grows each time a member dies, until …
— Lorenzo de Tonti (originator), Tontine
In 1961, John Muth proposed that people form expectations using all available information, not sluggish rules of thumb, so on average they aren't systematically fooled. Robert Luca…
— John F. Muth, Rational Expectations and the Theory of Price Movements
In 1984, Carl Shapiro and Joseph Stiglitz showed that when firms can't perfectly monitor effort, paying above the market-clearing wage gives workers something to lose by shirking. …
— Carl Shapiro and Joseph E. Stiglitz, Equilibrium Unemployment as a Worker Discipline Device
When Japan's real-estate and stock bubble collapsed in the early 1990s, banks sat on mountains of bad loans instead of writing them off, and growth stalled for years. Paul Krugman …
— Paul Krugman, It's Baaack: Japan's Slump and the Return of the Liquidity Trap
In 1990, Daniel Kahneman, Jack Knetsch and Richard Thaler handed Cornell students coffee mugs, then let owners set a selling price and non-owners set a buying price. Owners wanted …
— Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler, Experimental Tests of the Endowment Effect and the Coase Theorem
Critics mocked DeWitt Clinton's 363-mile canal as 'Clinton's Folly' before it even opened in 1825. Linking the Great Lakes to the Hudson River, it slashed the cost of moving freigh…
— Peter L. Bernstein, Wedding of the Waters: The Erie Canal and the Making of a Great Nation
Before Britain's Limited Liability Act of 1855, backing a failing company could cost shareholders their entire personal fortune, not just their investment. The Act capped their los…
— John Micklethwait and Adrian Wooldridge, The Company: A Short History of a Revolutionary Idea
Buyers didn't even need to complete a purchase to profit — they traded 'binder' contracts on Florida lots for a small deposit, flipping them for quick gains as prices doubled and t…
— Frederick Lewis Allen, Only Yesterday: An Informal History of the Nineteen-Twenties
Ivar Kreuger built a global match monopoly by lending cash-strapped European governments money in exchange for exclusive match rights, raising the funds by selling securities to in…
— Frank Partnoy, The Match King: Ivar Kreuger and the Financial Scandal of the Century
In the ultimatum game, one player proposes how to split a sum and the other can accept or reject, but rejecting means both get nothing. Rational self-interest predicts any positive…
— Werner Guth, Rolf Schmittberger, and Bernd Schwarze, An Experimental Analysis of Ultimatum Bargaining
Hedge funds had bet heavily that GameStop's stock would keep falling. Traders on Reddit's r/WallStreetBets bought shares and call options instead, driving the price up over 1,600% …
— U.S. Securities and Exchange Commission, Staff Report on Equity and Options Market Structure Conditions in Early 2021
Launched by Safaricom in 2007, M-Pesa let anyone with a basic phone send, receive, and store money by text, no bank account required. Within a decade most of Kenya's adults used it…
— Tavneet Suri and William Jack, The Long-Run Poverty and Gender Impacts of Mobile Money
Claudia Goldin found men's and women's earnings track closely until parenthood, then a 'motherhood penalty' appears because many top-paying jobs punish flexible hours, what she cal…
— Claudia Goldin, Career and Family: Women's Century-Long Journey toward Equity
In a 2014 bulletin, the Bank of England explained that commercial banks don't simply lend out pre-existing deposits — they create new money each time they issue a loan, crediting a…
— Michael McLeay, Amar Radia and Ryland Thomas (Bank of England), Money Creation in the Modern Economy
At 8:01am on 26 June 1974, a cashier at a Marsh supermarket in Troy, Ohio scanned a 10-pack of Wrigley's Juicy Fruit gum — the first retail product ever sold using the new Universa…
— George J. Laurer, Universal Product Code
Founded in 1609, the Bank of Amsterdam let merchants deposit debased or foreign coins and receive standardized 'bank money' credited to an account, which traded at a stable, truste…
— Stephen Quinn and William Roberds, The Bank of Amsterdam and the Governance of Money
In the 1950s, the Soviet Union worried the US might freeze its dollar holdings, so it moved its dollars into banks in Europe instead of America. Those dollar deposits, held and len…
— Catherine R. Schenk, The Origins of the Eurodollar Market in London, 1955-1963
In 1993, economist Joel Waldfogel surveyed students on what they'd received as gifts and what they'd have paid for those items themselves. Recipients valued gifts 10-33% below thei…
— Joel Waldfogel, The Deadweight Loss of Christmas
When Fidel Castro let 125,000 Cubans leave for Miami in 1980, the city's labor force grew roughly 7% within months, a textbook shock to labor supply. Economist David Card compared …
— David Card, The Impact of the Mariel Boatlift on the Miami Labor Market
In 1792, 24 New York brokers who met beneath a buttonwood tree on Wall Street agreed to trade securities only with each other and to charge a fixed 0.25% commission, undercutting n…
— Wikipedia contributors, Buttonwood Agreement
After the 1929 crash, the 1933 Banking Act's Glass-Steagall provisions forced commercial banks (which held deposits) and investment banks (which underwrote securities) to become se…
— Carter Glass and Henry B. Steagall (sponsors); U.S. Congress, Glass–Steagall legislation
When the Dutch East India Company (VOC) was founded in 1602, it raised capital by selling tradable shares to the public, an early form of the joint-stock company. To let investors …
— Historical event, Dutch East India Company
Jakob Fugger built a banking and mining empire that financed popes, Habsburg emperors, and the very election that made Charles V Holy Roman Emperor in 1519. Measured as a share of …
— Historical figure, Jakob Fugger
Sociologist Robert K. Merton coined the term 'Matthew effect' in 1968 after noticing that famous scientists tend to get disproportionate credit for discoveries, even in collaborati…
— Robert K. Merton, The Matthew Effect in Science
Introduced in 1696 to raise government revenue without a hated income tax, England's window tax charged homeowners based on how many windows their house had. Many simply bricked up…
— Historical event, Window tax
In any auction where bidders are individually guessing an uncertain true value, the winner is typically whoever overestimated it by the widest margin, not whoever valued it most ac…
— Edward Capen, Robert Clapp, and William Campbell, Competitive Bidding in High-Risk Situations
Jean-Baptiste Say argued in 1803 that producing goods necessarily generates income, and that income necessarily gets spent buying other goods, so economy-wide overproduction couldn…
— Jean-Baptiste Say, Treatise on Political Economy
Nassim Nicholas Taleb's "black swan" events are rare, extreme, and seemingly impossible to predict, yet feel obvious and inevitable in hindsight, think major financial crashes or s…
— Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable
Hume argued in 1752 that if one country somehow accumulated most of the world's gold, its prices would rise so much that its exports would become too expensive to sell, while impor…
— David Hume, Of the Balance of Trade