a. People respond to incentives
b. Not always about money
c. It’s not bad to have incentives toward yourself
2. Price System
a. Why do we have them? What do they do?
b. Measures and captures value towards something without taking a survey.
c. Price is a signal in society
d. There is nothing free. Not about just monetary. Time is also value of forgone opportunities.
e. Impersonal/Tacit knowledge: impersonal system. It works if were impersonal. Think about themselves, if they weren’t it would be a failure. Unique to all of us and guides the price system.
f. Why does no specific person dictate prices: it’s a way for people to meet in a market in an efficient way
3. Wealth and Value
a. Money represents purchasing power
b. Puts a value to everything
d. Unifying principle
e. Good itself has no value: what matters is the service it gives you
f. Buying a water bottle: you’re buying the convenience.
g. Wealth is subjective. How much they value the things they have. Money is not wealth. Wealth is about value. Money has no inherent value.
4. Living Standards
a. Distribution of income has changed drastically. Pi Charts. More of our income to use towards luxuries like costly education, organic food, etc.
b. Why do children decide to have less children?
b.i. Rule of property
5. Cost Benefit
a. Make a decision. What’s the benefit, what’s the cost. Make a decision when the benefit outweighs the cost.
a. Role of competition. Prices change because things aren’t abundant
b. How people react to scarcity
c. The spark : we have the ability to always create more knowledge.
a. Government controls everything
b. Problems: You can’t see how people value things if they set everything.
c. Issue of Knowledge
8. Coordination Problem