Thirty-six true stories, experiments and thought experiments that bring the economics syllabus to life. Each card takes a minute to read, credits its original source, and comes with a two-minute starter question and a longer discussion prompt. Project them as lesson starters, use them in form time, or print a set for group work. Free, no sign-up.
For: GCSE, A-level and IB Economics; also great for Business and PSHE
According to a widely repeated story, colonial administrators in Delhi tried to cut the cobra population by paying a bounty for every dead snake β and enterprising residents responded by breeding cobras to cash in. When the bounty was scrapped, the breeders released their now-worthless snakes, leaving more cobras than before. Economists still cite it as the textbook case of a perverse incentive, though historians have found no contemporary records confirming it happened as told.
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 what it was meant to reflect. Call centres that reward call volume get rushed calls; schools that reward test scores get teaching to the test. The measure gets gamed precisely because it now matters.
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. Cheaper, more efficient power made coal-fired machinery profitable across far more industries, and the resulting boom in usage outran the efficiency gains. The same pattern now worries efficiency advocates in energy and computing.
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't eliminated, just shifted onto pedestrians and cyclists outside the protected car. This 'risk compensation' effect shows why safety mandates alone don't guarantee safer outcomes.
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 rational; the collective result is ruin. The same logic now describes overfishing, groundwater depletion and carbon emissions.
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 canoe. Owners rarely moved the stones at all; the island simply agreed on who owned which one, even a stone lying on the seafloor after a shipwreck. Economist Milton Friedman used Yap's stone money to argue that all money ultimately works the same way: by shared belief.
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 issuing IOUs. When Red Cross parcels flooded the camp with cigarettes, prices rose like inflation; when supply dried up, prices fell. He wrote it up as a serious economics paper after the war.
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 quintillion by November 1923. Workers were paid twice a day and raced to spend wages before prices rose again within hours. A new currency, the Rentenmark, backed by mortgaged land rather than gold, finally stopped the collapse in November 1923.
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-dollar note that, by the time it circulated, could barely cover a bus fare. The country abandoned its own currency entirely in 2009, adopting the US dollar and other foreign currencies instead.
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 pengΕ. It remains the most extreme hyperinflation ever documented β worse than Weimar Germany or Zimbabwe β driven by war debts and reckless money printing.
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 system in 1826, officials ordered the accumulated sticks burned in a stove, an overloaded fire that spread and destroyed most of the old Palace of Westminster in 1834.
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 little evidence of the widespread ruin the legend describes β trading was largely confined to wealthy merchants who could absorb the loss. The cautionary tale spread further than the actual damage.
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 β then collapsed within months, ruining investors including Isaac Newton. The inquiry that followed found ministers had taken bribes, and the scandal helped bring Robert Walpole, Britain's first prime minister, to power.
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 Company soared as Law printed paper money to fund the buying frenzy, minting overnight fortunes across Paris. By 1720 the paper money had outrun the colony's real profits, the bubble burst, and Law fled France in disguise.
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 investment consumed a share of UK GDP that historians compare to wartime mobilisation. When the Bank of England tightened credit in 1845, the bubble burst and shares roughly halved β but unlike the South Sea Bubble or tulip mania, the mania left behind a genuinely useful national rail network.
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 tenth of all sales on eBay. Some collectors poured their savings into stockpiles they expected to fund retirement or college. By 1999 the market had collapsed, leaving warehouses of toys worth a fraction of what people paid.
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% in weeks and forcing short sellers to buy back stock to limit losses, pushing the price even higher. Melvin Capital, one of the funds caught short, needed a $2.75 billion rescue within days.
Daniel Kahneman and Amos Tversky's 1979 prospect theory found that people weigh losses roughly twice as heavily as equivalent gains β losing Β£100 takes about Β£200 of gain to offset psychologically. This 'loss aversion' broke from the standard assumption that a pound gained and a pound lost carry equal weight, and became the empirical backbone of behavioral economics. Kahneman won the 2002 Nobel Prize largely for this work; Tversky had died and was ineligible.
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 roughly double what buyers would pay, even though standard theory says merely owning an item shouldn't change its value. The gap, driven by loss aversion, also meant real bargaining frictions the Coase theorem assumes away.
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 responders should accept any positive offer, yet people routinely reject offers below roughly 20-30%, sacrificing cash to punish unfairness β a result replicated across dozens of cultures worldwide.
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 a tax refund gets spent more freely than the same amount earned as salary, and money earmarked for 'savings' stays untouched even while its owner carries high-interest debt elsewhere. Rational economics says a dollar is a dollar; mental accounting says otherwise.
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 their retail price, a pure loss no one gains from. Cash and gift cards, often seen as thoughtless, actually waste nothing at all.
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 'waste' the money already spent. Rationally, money you can never recover should have zero bearing on what you do next. It reliably doesn't.
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 β yet betrayal is each one's individually 'safer' bet regardless of what the other does. Rational self-interest, played out by both sides, locks them into the worse result for everyone.
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 straight beach predicts both drift to the midpoint, even though spreading toward the ends would serve customers better. The same pull explains why competing petrol stations and political parties often converge.
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 credibly commit to not swerving β visibly ripping out your own steering wheel forces the other driver to yield. He used the model to explain Cold War brinkmanship, including the Cuban Missile Crisis.
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 where they'd meet a stranger in New York with no way to communicate, his students overwhelmingly answered noon at the information booth in Grand Central Terminal.
When bidders independently estimate an item's uncertain value β an oil field, a company, a free-agent contract β the winning bid tends to come from whoever overestimated it the most. Economists Edward Capen, Robert Clapp and William Campbell first documented this among oil companies bidding on offshore drilling leases: the 'winners' had systematically outbid the resource's true value and made poor returns for years.
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 everyone else is doing. It generalised game theory far beyond the simple two-player, zero-sum games studied before him, and became foundational to modern economics, from auction design to antitrust policy. Nash shared the 1994 Nobel Memorial Prize in Economic Sciences for the work.
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 the two governments diverged β export-driven markets in the South, closed central planning in the North β and by 2023 South Korea's GDP per capita was estimated at roughly 56 times the North's, making it a textbook natural experiment for how institutions shape prosperity.
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 wage, against neighboring Pennsylvania, which didn't. Employment in New Jersey didn't fall β it rose slightly relative to Pennsylvania, a result that reignited decades of debate among economists.
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 Miami's wages and unemployment to similar cities and found almost no effect on native workers, even the least skilled. It became a landmark natural experiment on whether immigration hurts wages.
In 1980, Deng Xiaoping designated Shenzhen β then a small fishing and farming county bordering Hong Kong β as one of China's first Special Economic Zones, allowing market-driven pricing and foreign investment years before the rest of the country. Within four decades it grew into a manufacturing and tech hub with a population rivaling major world capitals. It became the test case for China's entire shift toward a market economy.
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 diamond revenue, strong property-rights institutions, and fiscal discipline β saving windfalls rather than spending them β to post decades of the world's fastest growth and reach upper-middle-income status.
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 rate, stunning the business world. Turnover collapsed, productivity rose, and many workers could now afford the cars they were building β an early real-world case for what economists now call efficiency wages.