Good examples of human behavior that can be explained by principles of economics?

Question

can't seem to think right now. can everyone just give me some ideas in everyday life that i could use to explain by economics? they can just be simple things. the more the better, of course. anything at all. thanks.

Answer 1

If one studies economics as chemistry of wealth, there are two properties of wealth based on two general laws of the universe that dictate every economic activity and every decision of every human being. The two laws are Law of Conservation and Law of Equilibrium. Wealth can neither be created nor be destroyed but can be changed from one form to another. Wealth, like matter and energy moves from higher concentration to lower concentration till concentrations at both ends equalize.

Law of Conservation: If quantity of one form of wealth increases, its relative value in terms of the other form decreases. If money increases, prices rise. If goods increase, prices fall. If liquidity increases, interest rates fall. If houses increase, rent per house falls. It is endless.

Law of Equilibrium: Buyers move from costlier to cheaper markets (higher to lower concentration of money) and commodity moves from cheaper to costlier markets (from higher to lower concentration of commodity). When wealth moves from higher concentration to lower concentration, we get any or all of the following benefits:

1. Increased returns or income

2. Increased profits

3. Increased satisfaction

4. Decreased costs

5 Decreased losses.

Unfortunately, the science that deals with nature, properties, composition, laws and classification of wealth has no name as on date.  

Answer 2

Why are people saving more when they go shopping? How does the recession affect people's spending patterns?

I think that would be a good topic of discussion.

Answer 3

If you're interested in human behaviour and economics I suggest you read at least one of these books:

Freakonomics by Steven Levitt

The Undercover Economist by Tim Harford

The Armchair Economist by Steven Landsburg

I've read all three and reckon they're all good but I especially recommend Freakonomics. Since you're American (I presume by your annoying way of spelling 'behavior' which should be spelt 'behaviour') this might be more accessible to you than Tim Harford's book.

I guess if you want an example off the top of my head, I could ask myself as an economist 'why am I answering questions on Yahoo Answers?'. Well maybe it is because the utility I gain from sharing my knowledge of economics outweighs other alternative activities.

Hope this helps.

Answer 4

To me, one of the best examples that human behavior is directly linked to economic principles is the the Dark Ages (450 A.D. to around 1000 A.D.).  

The Dark Ages were those centuries that followed the collapse of the Roman Empire, when for some mysterious reason, most of Europe stopped creating written historical records (that’s why they are called “dark” – because the events of those 500+ years are obscured by the lack of historical recoreds).  

Consider that the events of the centuries of the Roman Empire (300 B.C. to 400 A.D.) and the Ancient Greeks (700 B.C. to 300 B.C) and even the Ancient Egyptians (3000 B.C. 500 B.C.) are pretty well known because abundant written records were created and then survived.

The explanation for why the Dark ages occurred is unknown, but I  believe that the reason the Dark Ages occurred is easily explained by economic principles.   Specifically, the centuries of the Dark Ages in Europe are characterized by terrible marauding armies from the East and Scandinavia: Attila, the Goths, the Vandals, the Vikings, and others.  

It was not the destruction wrought by those groups that caused the Dark Ages (lots of countries easily rebuild after decades of repeated and complete destruction), I believe that it was the de-monetization of Europe that caused the Dark Ages.  After the first few raids, it became financially sensible for the   European cites that were targeted by the marauding armies  to pay them huge sums of money to “leave them alone” i.e. extortion.  Historical records that have survived that say that, for example, German cities annually paid the Goths sums of gold and silver coins that were counted in the hundreds of thousands of coins per year.  

Even after just a few decades of paying raiders not to raid, Europe would have been drained of all hard currency.  Without hard currency, there could be no free markets.  Without free markets, people do not travel, they starve, employers cannot hire anybody (including soldiers), only monks can go to school, and culture withers.  BUT THEN, hooray, around 1000 A.D. banking (credit) was invented, hard currency was not as necessary, and the European economy was reborn.

Which leads to the observatin that abundant hard currency was great for the Roman Empire, but look what happened once Europe invented credit!  The Rennaisance!

Answer 5

1) Fear

2) Greed

Those two are the CORE of Economics.

Answer 6

Static analysis vs dynamic analysis.

Static analysis just takes and economic snapshot of factors and assumes things will be the same.  Dynamic analysis  factors in human nature.

Example: when the Joint Committee on taxation was asked to show th potential gov't revenue if all incomes over 100k were taxed 100

%.  The static analysis showed huge revenues whereas a dynamic look showed that people would quit working after $99k.

Dynamic Analysis at Treasury_What Are the Next Steps?

by Tracy Foertsch, Ph.D.  December 7, 2006 http://www.heritage.org/Research/Taxes/b...

http://www.ibdeditorials.com/IBDArticles...

Answer 7

COSIGN ALBY

Answer 8

Regarding greed, I don't think self-interest should necessarily be interpreted as greed.  

Anything that involves responding to incentives is explained by principals of economics.  

Do you suddenly have motivation to mow the lawn if your dad offers to pay you?  That's an incentive.

Do you buy things when they're on sale?  Those are incentives.  

Do you give your bf/gf cash for their birthday?  No, you probably give them a present you know they'll like.  When you do this, you're signaling that you spent time and thought picking it out for them.  Signaling is a principle of economics.