Physician Adam Cifu keeps a binder of every patient of his who has passed away. Every once in a while, he opens it and remembers the lives of his past patients. Morbid? Maybe a little. But it’s just one of the ways Cifu tries to make his practice of medicine more mindful. In this conversation with […] The post What’s Happening Inside Your Doctor’s Head and Heart (with Adam Cifu) appeared first on Econlib.

In a recent interview of Alex Tabarrok, I saw this exchange: Auren Hoffman (52:52.27)Now, your colleague, Tyler Cowen, he recently made an argument that we reached peak economist, that you don’t even need to be an economist anymore to be a member of the Federal Reserve Board. What do you think about that?Alex (53:09.104)Arthur Burns, I think was the first one with a PhD. There’s been quite a few since then, but before there were plenty of people on the Federal Reserve without PhDs in economics. There’s a lot to unpack there:1. Have we reached peak economist? 2. And do we need economists determining monetary policy?In my view, monetary economics peaked in the period before the Great Recession of 2008, and has declined a bit since that time.  The second question is much more difficult to answer.  Let’s begin with an analogy, which shows a common mistake when thinking about this sort of problem.Suppose you are asked for an opinion on how to fix things in democratic country that suffers from poor governance.  What is your solution?   Perhaps you despair over the fact that voters are picking the wrong politicians.  You suggest that the country become a dictatorship, and appoint someone like Lee Kuan Yew as head of state.   I hope you see the problem.  Unless you are the dictator, you don’t get to pick which person gets appointed.  Once a country becomes a dictatorship, it’s a dog-eat-dog world of competition to climb to the top.  The person that succeeds is far more likely to resemble Nicolas Maduro or Vladimir Putin than Lee Kuan Yew. In the case of monetary policy, the issue is not whether Ben Bernanke, Janet Yellen or Jay Powell did the best job; the issue is what type of person is likely to achieve the best outcome.  To complicate things even further, the performance of the Fed chair is not identical to the performance of the Fed as a whole, as decisions are made by committee.  In my view, the Fed as a whole did better under Yellen than either her predecessor or her replacement, but I cannot be sure how much of that was due to her decision-making, and how much was due to the others being dealt a bad hand.  In plain English, it’s complicated.  Other government institutions face similar dilemmas.  Is it necessary to have a law degree to serve on the Supreme Court?  Is it desirable?  Is it necessary to have a finance degree to serve on the SEC?  Is it desirable? It won’t be long before we’ll be asking whether an AI might be just as effective as a human being. I am an elitist, but not a credentialist.  I strongly favor of staffing the Fed with people with a high level of expertise in monetary policy.  (Today, that’s true of some top Fed officials, but not all.)  However, I don’t much care whether they have a PhD in economics.  For instance, I think Tyler Cowen would be an above average Supreme Court justice, despite the fact that (AFAIK) he doesn’t have a law degree.  Of course, he’ll never be appointed because his votes would not be “reliable”.    I have observed that most people are overconfident of their ability to do good monetary policy.  That’s probably also true of me, as it’s always difficult to have an unbiased view of your own ability.  When people are overconfident, they tend to have the following thought process:  “The Fed chair really screwed up there!  I could do a better job than him.”  On the first point they are often correct, on the second point I’m not so sure. People tend to recall their successes much more than there failures, for very natural reasons.  Thus they recall asset price bubbles they correctly called, but forget about the assets that went up much further after they called it a bubble.  I’ve noticed an almost perfect negative correlation between those who had sound opinions on monetary policy in 2009, and those who had sound opinions on monetary policy in 2021—including yours truly. You may have heard the remark about it being better to be governed by a random group of people picked from the Boston phone book rather than the faculty at Harvard.  But on closer examination, is that really true?  Professors hold lots of nutty views, but so do average people.  For instance, polls suggest that average people are supportive of some shockingly authoritarian policy proposals.  And even if average people have sounder views than most professors on “woke” issues, I doubt whether they have sounder views on questions such as where to set the interest rate on bank reserves. Some might argue that they are not advocating picking Fed officials out of the phone book; rather they favor appointing highly experienced people from banking and finance.  Sorry, I’d rather have plumbers appointed to the Fed.  At least with plumbers, we’ll understand that they don’t know what they are doing, and we’d be more likely to constrain them with a restrictive policy rule, or let the Fed staff decide.  Many top people in finance and banking are shockingly ignorant of the basics of monetary economics, but don’t know that.  If you think “reasoning from a price change” is a failure of some economists (and it is) check out some of the comments made by top business people.  “Maybe a big interest rate cut would scare people, and hence reduce demand.”  “Maybe a big interest rate increase would boost demand, by putting more money in the pockets of savers.”  It makes you want to cry.  Among economists, reasoning from a price change is like a low-grade fever.  Among non-economists, it’s a global pandemic. So yes, on average an economist will know more about at monetary policy than a non-economist.  But Fed chairs don’t just need to be smart; they need to be effective leaders, an area where business people often have an advantage.  In the end I suspect this is one of those 55%-45% thing, where economists are slightly better, but non-economists will outperform economists so frequently that it will be hard to discern the difference.  Nonetheless, if serving on the Fed is actually a position where ignorance is better than knowledge, then it’s the only such position that I know of. PS.  In this post I am describing averages.  I’ve met a number of people in business and finance that are well informed on monetary policy. PPS.  In this post, I’m focusing on the issue of monetary policy determination.  Obviously, we need people with banking expertise for banking regulation.  I wish we followed the UK practice of having separate boards for these two tasks. PPPS.  Readers of this blog know that I oppose discretionary monetary policy.  This post is based on the assumption that I won’t get my way, at least for the foreseeable future. (0 COMMENTS)

  Capitalism is the best. It’s free enterprise. Barter. Gimbels, if I get really rank with the clerk, ‘Well I don’t like this’, how I can resolve it? If it really gets ridiculous, I go, ‘Frig it, man, I walk.’ What can this guy do at Gimbels, even if he was the president of Gimbels? He can always reject me from that store, but I can always go to Macy’s. He can’t really hurt me. Communism is like one big phone company. Government control, man. And if I get too rank with that phone company, where can I go? I’ll end up like a schmuck with a dixie cup on a thread. LENNY BRUCE This is the opening quote of one of my favorite books of the early 1970s, David Friedman’s The Machinery of Freedom. I thought of it when I was lying in a bed at Sutter Health in Santa Cruz last Wednesday, waiting for my biopsy to test for prostate cancer. Here’s what had happened. In late April, after I had had some worrying symptoms and a very high PSA score, I had an MRI at the Community Hospital of the Monterey Peninsula (CHOMP.) The test had been ordered by a doctor at Montage Medical Group, a group of doctors affiliated with CHOMP. The MRI showed a high probability of prostate cancer. The next step is to do a biopsy, and the Montage doctor scheduled it for June 11. That seemed kind of slow, but what did I know? As we got closer to June 11, the biopsy was postponed to July 30. Again, I wasn’t really concerned. Prostate cancer tends to develop slowly, and I would have my 2.5 weeks at my cottage in Canada without fretting about the results. But on July 16, while I was in Canada, I received a call from the scheduler at Montage. The doctor had decided to delay my procedure to September 24, a full 8 weeks later. I asked why the change. She wouldn’t, or couldn’t, tell me. I decided to follow the Lenny Bruce strategy: find a competitor. Before I had gone to Canada, a doctor friend at pickleball said that he had heard good things about Sutter Health in Santa Cruz. I got back home on Friday, July 26, and resolved to call Sutter Health on Monday. I pulled up the web site and found 6 urologists. The woman who took my call said that three of them had availability and I should choose one. Since I had no basis for choosing, I asked her to choose. She chose Dr. David Greenwald and I got an appointment with him on Wednesday July 31. I liked him immediately. When he came in, he introduced himself as David Greenwald, not Dr. Greenwald. I told him that I particularly liked his first name. He smiled slightly and then got down to business. I had had Montage fax him my records and he had obviously done due diligence. He told me that one indicator on the MRI suggested that a biopsy should be done quickly and asked me why my Montage doctor had delayed. I told him I didn’t know. So, he lined up a biopsy for August 14, only 2 weeks later. There were 2 choices: do it through the rectum or do it under the scrotum. The latter would require more of an anesthetic but the probability of infection afterwards would be an order of magnitude lower. I liked that. Also, he gave me more information in 5 minutes than my Montage doctor had given in 10 to 15 minutes. The Montage doctor hadn’t even told me that there was more than one procedure. Dr. Greenwald had very specific instructions for my prep: sleep on clean sheets the night before, have a shower the night before and the morning of the procedure using anti-bacterial soap, fast for 8 hours before arriving for my appointment, drink only clear liquids until 3 hours before my appointment, and then not drink at all. I followed them all. As I was lying there waiting for my procedure, I heard the banter among the various nurses. All of them seemed as if they got along with each other. Interestingly, the 3 nurses I most interacted with—two before the procedure and one after—were men. The anesthesiologist introduced himself. He was from India and he and I compared immigration experiences. He seemed competent and had a great sense of humor. I was wheeled into the operating room and they drugged me up. It was wonderful because I didn’t feel a thing. The next thing I knew, I was waking up in the OR and was wheeled back. When one of the nurses did a follow-up phone call the next day, I told her that I liked every single person I had dealt with there and that the difference between Sutter Health and Montage was night and day. (I actually like the staff at Montage but I’m not a fan of the doctor.) In this case, at least, competition in health care worked well. (0 COMMENTS)

Although there are several great commentators on inflation at EconLog, a recent lunch outing with a close friend provoked me to think more deeply about how inflation has been affecting some of my favorite local restaurants. It can be better for customers and the business itself to raise their prices in an inflationary environment.  During the meal, my friend noted that the nominal prices of the meals had gone up. Being economists, we were undismayed by this fact, for two reasons: A) the food we were eating was great, as usual, and B) we understood that the price increase was due in large part to the inflation we have endured over the past few years.  From June 2020 to June 2024, the annual CPI inflation rate was over 5%. The Producer Price Index, an index of prices paid by producers for inputs, soared from 2020 and 2022. Though the latter has come down a bit, pent-up consumer demand for restaurant meals kept prices from retreating as people returned to their normal lives hungry for the activities they enjoyed before the pandemic. It would be unreasonable to assume that the prices of one of our favorite busy local eateries would remain constant over this time.  In fact, I was glad to see that this restaurant had raised its prices. The reason is because businesses facing rising input prices and high demand face a tough choice, especially if they can’t afford a blow to their margins for financial survival. They have two primary options. First, they can increase the prices that their customers pay. Wages – the price for labor – tend to rise in an inflationary environment allowing to customers absorb the increase.  Second, they can cut quality. This invokes the familiar term “shrinkflation.” Instead of giving you 4 slices of meat on the sandwich, they could give you 2. They could add more water to their tomato sauce or stop serving lemons with your beverage. See the Costco hot dog for a case in point. Some methods of reducing quality can be less obvious, like closing earlier or economizing (being stingier with) napkins handed out to customers.  I can recall several instances of the latter option in restaurants I used to love. Although prices were exactly the same as many years before, the quality of their product had changed dramatically for the worse. I’ve disappointedly stopped patronizing those restaurants. The culprit, at least partly, was an inability or refusal to raise prices to cover higher costs and instead using option 2.  Although I had to fork over a few more dollars to get it, my recent trip for roast chicken and fries was just as good as always. I was thankful they chose option 1, and I hope it will help the restaurant stick around for years to come.  Those who would say that higher nominal prices that preserve quality are all well and good for someone like me, but not for those most in need, should note that reduced quality for the same nominal price is a more expensive meal. Don Boudreaux made this point well in a post at Café Hayek in August 2021, where he predicted impending inflation even before “transitory” v. “persistent” debate got underway.  Second, businesses that keep their prices rigid over the long haul can struggle financially and reduce quality to the point where the customer base shrinks in a vicious cycle until the business has to close. Inflation makes local businesses tougher to manage. It could be particularly tough for owners without formal business training.  Finally, businesses don’t cause a general rise in the level of prices – inflation – government policies do, particularly by printing new money to finance government spending. Politicians are quick to blame others for rising inflation because admitting that inflation stems from policies they deliberately supported and carried out is tantamount to political suicide and to be avoided for a self-preserving politician. Businesses that don’t – or can’t – raise prices in response shield them to some degree from the political consequences. Today’s political and digital social environments can discourage businesses from raising prices in response to higher input costs or higher demand. McDonald’s and other chains recently came under fire for prices that have grown to higher than those customers expect fast-food establishments. They and others are attempting to offer new menu choices that deliver value and keep prices lower. Innovative ways of doing this are laudable and praiseworthy in inflationary and otherwise tough economic environments. However, beware the Money Illusion; lower quality for the same price leaves you with a more expensive product. The culprit is inflation, not business operators.   Giorgio Castiglia is the Program Manager for the Project on Competition at the Mercatus Center, and a PhD student in economics at George Mason University. (0 COMMENTS)

Consider the following thought experiment. The government imposes a tax of $1000 on all bankers. One the very same day, the government authorizes a new spending program, a $1000 subsidy to all bankers. How should we think of this combined policy? To me, it’s a nothingburger. Economists used to view reserve requirements as an implicit tax on banks.  That’s because in the old days there was no interest paid on bank reserves, so there was a high opportunity cost of holding reserves.   Now, we have no reserve requirements, but we do pay interest on reserves (IOR).  This was done because policymakers wished to move to a “floor system”, where banks would choose to hold large quantities of reserves.  The adoption of IOR allows the central bank to inject lots of reserves into the system, without driving interest rates down to zero.   You can think of large reserve holdings as a tax on banking, and IOR as an offsetting subsidy. Chris Giles has an article in the FT where he suggests that the BoE move to a system where the tax is maintained but the subsidy is removed: The central bank pays 5.25 per cent on reserves so that it can set the short-term policy interest rate at that level. It is effective, but not the only way to control short-term rates. Instead, it could require banks to hold a fixed amount of money without interest, paying 5.25 per cent only on a small part of the reserves. I don’t like the idea of paying interest on reserves, but I also oppose reserve requirements. Go back to the thought experiment at the top of this post.  Suppose the government suddenly removed the $1000 subsidy to bankers, but kept the $1000 tax in place.  How should we think about that change?  In a technical sense, it involves a cut in government spending.  But it also moves us from a situation where there is no net flow of money to or from bankers, to a situation where all that remains is a $1000 tax on bankers.  That feels like a tax increase. Giles views things differently: One difficulty is that Andrew Bailey, BoE governor, still needs to be persuaded. In 2021 he said the policy would be a tax on banking. The truth is that it would lower public spending. The “truth” is that truth is a slippery concept, especially where terms are poorly defined.  I understand Giles’s point, but I find Bailey’s characterization to be closer to my way of viewing things.  You would be essentially forcing banks to lend lots of money to the British government at a rate of zero percent.  That seems like the imposition of a tax on banking. (0 COMMENTS)

In his book Intuition Pumps and Other Tools for Thinking, Daniel Dennett’s first intuition pump is to extol the virtues of boldly making mistakes. He describes it in this way: Sometimes you don’t just want to risk making mistakes; you actually want to make them – if only to give you something clear and detailed to fix. Making mistakes is the key to making progress. Of course there are times when it is really important not to make any mistakes – ask any surgeon or airline pilot. But it is less widely appreciated that there are also times when making mistakes is the only way to go. Many of the students who arrive at very competitive universities pride themselves in not making mistakes – after all, that’s how they’ve come so much farther than their classmates, or so they have been led to believe. I often find that I have to encourage them to cultivate the habit of making mistakes, the best learning opportunities of all. They get “writers block” and waste hours forlornly wandering back and forth on the starting line. “Blurt it out!” I urge them. Then they have something on the page to work with. This reminds me about the old joke about how one should go about carving an elephant out of granite. The tongue-in-cheek advice is to just start with a big hunk of granite, and then chip away all the parts that don’t look like an elephant. Dennett is advocating a similar approach – throw the unformed granite block of your thoughts out there, and let all the parts that don’t work get chipped away as your mistakes are found and corrected. Dennett cheerfully describes himself as “an experienced mistake-maker myself. I’ve made some dillies, and hope to make a lot more.” But there is a key to being a good mistake-maker, Dennett says, and that is a willingness, even eagerness, to let your ideas get chipped away: The chief trick to making good mistakes is not to hide them – especially not from yourself. Instead of turning away in denial when you make a mistake, you should become a connoisseur of your own mistakes, turning them over in your mind as if they were works of art, which in a way they are…The trick is to take advantage of the particular details of the mess you’ve made, so that your next attempt will be informed by it and not just another blind stab in the dark. Mistakes are good when they are quickly identified, corrected, and learned from. I’m on the record as believing that most new ideas are terrible – and this is true whether the new ideas are coming from private actors in the market, or from policymakers acting from the state. The crucial difference is that in markets, the identification and correction of mistakes is swift, but the same can’t be said for the mistakes of policymakers.  For example, in my post explaining that most new ideas are terrible, I used the example of an upcoming tech product called the R1 Rabbit, and why I thought it would be a flop. Since I wrote that, the product has been released, and the consensus that has developed since then is that the product is, indeed, pretty terrible. Another product I could have mentioned in that post is the Humane AI pin, which seemed even more half-baked to me. This, too, seems to have become the general consensus, and at present Humane is seeing the product returned at a faster rate than they can sell it.  I suspect both of these companies are not long for this world. A significant amount of time, effort, and money was put into building the companies and producing the products. And some people ended up spending money to get a product that turned out to be half-baked. This is certainly not ideal – but the correction is happening swiftly.  Compare this to another bad policy I recently highlighted, when “King William III instigated a tax on windows, on the assumption that dwellings and buildings with lots of windows were likely to be owned by the wealthy, and thus this would serve as a way to tax the rich.” But, as recorded in Scott Hodge’s book Taxocracy, “the tax ‘led to especially wretched conditions for the poor in the cities, as landlords blocked up windows and constructed tenements without adequate light and ventilation.’ Some buildings were constructed with no windows on some floors leading to the ‘propagation of numerous diseases such as dysentery, gangrene, and typhus.’” This, too, was less than ideal. It caused people to live in unnecessarily miserable, dark, and stuffy conditions. Disease spread more rapidly, costing many people their lives and inflicting significant pain and suffering on those who survived. This, too, was eventually fixed – the tax was eventually repealed. But the tax and its ill effects lasted for 150 years before that happened.  Entrepreneurs are not necessarily smarter than state policymakers, nor do they have an intrinsic ability to come up with better ideas. But when entrepreneurs make mistakes, the error doesn’t last long. Policymakers can make mistakes that cause disease, suffering, and death and those policies can continue on for multiple human lifetimes before the error is corrected.  Arnold Kling often used the mantra “Markets fail. Use markets.” Yes – because when markets fail, they fail swiftly and correct swiftly. Dennett advises his students to guard against hiding their mistakes, especially from themselves. But state policymakers have the ability to hide away or overlook their mistakes in a way that simply doesn’t exist in the market, making those mistakes so long-lived as to border on immortality.      (0 COMMENTS)

  My urologist, in his guidelines for preparing me for a biopsy, told me to use a Fleet enema before the procedure. So I went to CVS and found on the shelf the CVS version, which was, of course, cheaper than the Fleet brand. How did CVS make it clear that this was a substitute, besides putting it on the shelf next to the Fleet version? Very cleverly, it made the box very similar, even the color of the box. But of course it couldn’t advertise it as Fleet. So it also says on the box: CVS Health Ready-to-Use Enema is not manufactured or distributed by C.B. Fleet Co., Inc., the distributor of Fleet Enema Saline. In other words, we have satisfied our legal obligation by making clear this isn’t Fleet, but by saying it isn’t, we are also telling customers, the ones who read the fine print, that it’s a competitive product that does the same thing. (0 COMMENTS)

Earlier this year, our dog spent a few weeks in a lot of pain and on a lot of painkillers because a car hit her and broke her pelvis (she’s fine and has gotten back to dragging me all over our local park every day). Taking care of her made me wish going to the doctor or dentist was much more like going to the vet in one very important way: health insurance isn’t involved, so we’re pretty clear about our options and, importantly, how much those options will cost. When we go to the doctor or the dentist, the only price we face is the co-pay, and when we are talking about medical treatments, we don’t learn as much about the menu of options and the price of each. We got our dog fixed up with stitches and medication, paid for it all at once, and now have no additional bills, paperwork, or any unpleasant surprises from insurance companies we need to expect.  No muss. No fuss. No complicated paperwork. No uncertainty. Taking the dog to the vet was more like taking the car to the shop than a doctor’s visit. We went in, they told us what our options would cost, and we chose. By contrast, I don’t have as much incentive to pay attention to costs when my only out-of-pocket expense is a small copay, and the insurance company handles the rest. What the insurance company paid for my visits to the optometrist and the sleep clinic are important parts of my actual compensation, though they don’t feel like it because they don’t show up in my checking account at any point. Would people get the sense that their real incomes were stagnating if they received their raises as salary rather than ever-more-expensive health benefits? But isn’t healthcare a human right? The United Nations says it is–but declaring something a human right doesn’t change the fact that we cannot provide it without resources that we cannot use to produce something else. Of course, we can all think of ways other people waste their money on frivolous nonsense. Still, we might do well to look in the mirror and ask if we need to spend $1,000 on a flight, hotel, and meals to participate in a protest march in Washington, DC, because we think the government needs to provide something for “free.” When we say something should be “free,” that’s a shorthand way of saying “someone else should pay for it”–and eliminating prices does not eliminate costs. It only conceals them. Moreover, the amount of health care people “need” depends on costs. Diabetics don’t have many substitutes for insulin, but hard cases make bad laws, and there are alternative treatments. For many other, more minor ailments, many different ways to treat them needn’t involve doctors’ visits or medication. For example, economist Bryan Caplan recently decided the trivial reduction in mortality risk from a tetanus booster wasn’t worth the pain and suffering from a needle stick and decided not to get one, which created a bit of unnecessary controversy on Twitter because there is a difference between thinking vaccines will hurt you and thinking a vaccine for a non-contagious disease that kills two Americans a year isn’t worth it. Earlier this week, one of my nieces got a splinter while visiting us. Did we call 911 and insist they prep an operating room for the extraction? No, we got out the tweezers. If someone else pays, it’s easier to “need” more health care. “This is the price we pay for health equity and justice,” does not convince me. An ambulance transporting someone with a stomach ache (or a splinter) can’t transport someone else at that point in time. Ambulances require resources: when we say “yes” to another ambulance, we say “no” to another fire truck. The right choice is not clear with prices that make the trade-offs explicit. Taking your dog to the vet shows how the market loves you–and your little dog, too. Life would be easier if going to the doctor were more like taking the dog to the vet.   Art Carden is Professor of Economics & Medical Properties Trust Fellow at Samford University. (0 COMMENTS)

What is the relationship between immigration and the business cycle? Before answering that question, let’s look at some evidence from Statista: [The chart shows apprehensions and expulsions, but the data is widely believed to be highly correlated with successful undocumented migration.] There seems to be a modestly pro-cyclical pattern to the data on undocumented migration.  Apprehensions rose throughout the 1990s, peaking in 2000.  They declined during the subsequent recession, before rising again during the 2004-06 housing boom.  There was a steep drop after the 2008 financial crisis, which led to years of high employment.  Immigration rose during the boom of 2019, and then fell during the Covid recession of 2020.  Immigration was especially high during the period around 2022, when there was a labor shortage and a sharp rise in wages for low skilled workers. So it seems like a pretty clear pattern; a booming economy draws in more immigrants.  Economy — > immigration.  Case closed? Not quite.  I suspect that the causation actually goes in both directions.  Policy driven changes in immigration may also play a role in determining the business cycle.  In previous posts, I suggested that the 2006 crackdown on illegal migration may have contributed to the subsequent housing slump.  (To be clear, tight money was the main cause of the 2008-09 recession.)  It seems plausible that policy changes also impacted the rate of immigration during the Trump and Biden administrations.  A tweet by Catherine Rampell provides some more fine grained data: Rampell links to another tweet that suggests the recent drop in undocumented immigration is due to policy changes in the US and Mexico: Because of retiring boomers and a drop in the birth rate, I expected the number of prime age workers to level off during the 2020s.  That obviously did not happen.  There’s increasing agreement that the big surge in payroll employment over the past 3 plus years has been driven by immigration, much of it undocumented.  (As an aside, many undocumented immigrants now claim asylum, and can work during the multi-year period required to process their claims.  Thus they are not necessarily working in the underground economy.) If I am correct that immigration has helped to drive the recent boom in the economy, then the sharp drop in immigration over the past few months might presage a slowing in the economy.  Is this why the financial markets seem increasingly worried about the risk of recession?  I’m not sure, but it’s something to think about.   (0 COMMENTS)

How do I get students to think about the topic of human capital? I ask them, what is the single most valuable resource in the world?  Oil, water, air?  “People” is usually a tentative answer, indicating uncertainty about the meaning of a resource.  Once it is established that a resource is anything that produces goods and services, people, or human capital is reasonably understood.  I ask for examples. This is always interesting. High school students are deep in the manufactured college application frenzy, convinced that “declaring a major” projects confidence about their future academic plans. Beyond categories such as engineering, computer science, International Relations. or Psychology, students are seldom exposed to the enormity of tasks performed – jobs- that exist even within their intended field of future study.  I then describe a few. A deep sea welder is a scuba expert, who might only spend two hours in the work day hundreds of feet under the sea welding pipes and equipment. A radiation oncologist spends much of her time with patients establishing a relationship over the course of treatment(s) while in close consultation with surgeons and a variety of other medical specialists while studying scans, bloodwork and other data. An iceberg mover is an expert in maritime navigation, working closely with oil companies and environmental agencies, using technology to monitor and even tow icebergs by ship or tugboats to ensure offshore infrastructure. A pet food tester uses his senses to work closely with nutritionists and product developers ensuring  recipes for quality, taste, texture, consistency, spoilage, and overall palatability. I have fun with this ever changing part of my presentation, showing images of workers in their unusual environments. The reality is that most of us will spend in excess of 100,000 hours in our lifetime exchanging our valuable human capital for income in what will likely be a nonlinear succession of jobs within and across fields, where only some of us might achieve expertise in a particular area of work. (A marvelous opportunity to relate the concept of scarcity to the value of field expertise as this concept is introduced in the first week of class). Thinking about human capital at a personal level helps students relate the concept to a macro level of a country’s factors of production.  Forever presented as land, labor, and capital, with entrepreneurship added in recent decades, the factors of production are a foundation for understanding economies. Humans (not governments) make decisions to combine these factors of production into goods and services according to changing individual and collective needs and wants. It is the scarce resource of labor, in a global population of 8.25 billion people, that provides the physical and intellectual work that produces goods and services.  Here I like to revisit the profound wonder of living in a free and responsible society in which our tastes and preferences differ. Our ability to choose among so many options is as significant in our work life as it is in our daily ability to choose the products that satisfy our needs and wants. Additionally, and relevant to our personal choices, is our ability to elect representatives to pursue our community and country’s direction of choice and make decisions about the use of scarce resources. I remind students that this phase of life that will include college and a first job for most (from the elite high school where I teach) is temporary. Some will earn a degree and some will leave before attaining one to begin that first “real” job. They will face many professional and personal decisions in their lives that will affect the trajectory of their careers.  A follow up assignment is to take students through a brief  guided tour of the BLS website. I then encourage students to explore the Occupational Outlook Handbook and to collect information on at least three job titles, including levels of education needed, median salaries, and projected growth rate. I also have them list five or six specific job titles within a larger category of career interest including some they have never heard of or imagined. The site holds a wealth of regularly updated data that is more interesting to young people than even they can imagine before the day’s lesson.  A related but quite different factor of production requires a separate day of teaching. Entrepreneurship. I’ll share that soon.    Alice Temnick is an IB Economics Instructor for the United Nations International School in New York City. (0 COMMENTS)