Hi y’all! Here are five stories from this week that contained some neat applications of economic principles or are related to teaching:

1. Grocery chains are bigger than ever. See who runs the stores near you [The Washington Post]

2. The US proposed new tariffs of at least 10% on 60 trading partners, which together account for nearly all US imports [BBC]

3. What it would cost to go to every possible Team USA World Cup game [The Wall Street Journal]

4. A study finds that remote work is a bigger contributor to unemployment rates among young people than AI [New York Federal Reserve]

5. Broadway’s $1.9 billion season is the latest sign of consumers splurging on experiences [CNBC]

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Before the World Cup even kicks off, FIFA promised $80 billion in economic impact and 200,000 permanent jobs. Dig into what GDP actually measures, what it misses entirely, and why host cities from Kansas City to New York are quietly absorbing costs that will never show up in July’s victory lap. If you haven’t read it yet, bookmark it now. You’ll want it when the headlines start rolling in in a few months.

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Rehan Alam has been really busy. The owner of The Red Lion soccer bar in downtown New York City has spent the last few weeks hiring extra bartenders, bolting new TVs to the walls, and paying sound engineers to rewire the whole place. Costs for just about everything have been climbing for months, but Rehan is betting on the World Cup, which kicks off this Thursday in Mexico City.

“A boost like this,” he told the BBC, “is definitely going to give us that uplift of spirits.”

Save this article. Because when the tournament ends in July, you are going to hear a version of Rehan’s story amplified by FIFA, mayors, members of Congress. They will cite job numbers and point to packed bars. They’ll call it a transformational moment for the American economy. The press conferences are basically already written.

The World Cup is worth having, but not for the reasons they’ll give us.

FIFA’s Numbers Don’t Add Up (They Never Do)

A few months ago, FIFA president Gianni Infantino told the CNBC Invest in America Forum that the tournament would produce $80.1 billion in gross output, including $30.5 billion in the United States alone. He also claimed the two-month tournament would create 200,000 permanent jobs in the U.S. “The significance of the FIFA World Cup 2026,” he said, “will remain seismic long after the iconic trophy is lifted.”

Seismic. That’s a word that should trigger some skepticism.

To be fair, on paper this one really does look different. Forty-eight teams instead of thirty-two will play one hundred and four matches across Canada, Mexico, and the United States. It’s the biggest World Cup ever, by almost every measure.

But sports economists have heard this refrain before. Drawing on GDP data from every World Cup since 1982, researchers find that hosting produces a marginally positive but statistically insignificant bump in real output. The long-run impact is effectively zero. Heck, twelve of the last fourteen World Cups since 1966 resulted in financial losses for host countries.

Every tournament looks transformative on paper. Almost none of them are, in the data.

The Economic Concept That Explains Why: The Seen and the Unseen

In 1850, the French economist Frédéric Bastiat wrote about what he called the seen and the unseen. When something visible and exciting happens, we count it. Stadium renovations, packed sports bars, and a surge in taxi rides will all show up in press releases about economic impact. What those same press releases will ignore is everything that didn’t happen because of it.

It’s easy to see packed sports bars and think the World Cup is boosting the economy as expected. Some analysts are already pointing to the recent Jobs Report’s bump in hospitality and leisure as evidence the games are working. But what about the entertainment venues and restaurants around the corner? The Italian restaurant that sits half-empty because its regulars are at the sports bar or the movie theatre that has a few extra vacant seats. Residents are just redirecting the money they normally spend each week toward things associated with the World Cup. Their spending is moving around the economy, not growing it.

What about all the new visitors coming to spend money they wouldn’t otherwise have spent here? Tourism spending largely displaces existing visitor flows rather than generating net new activity. Some travelers who would have come to the U.S. this summer are avoiding host cities due to chaos around flights and hotels. We’re getting different tourists, not additional ones.

And then there are all the costs showing up in local newspapers, but won’t ever appear in FIFA’s press releases. Kansas City spent millions to expand its bus system to shuttle fans to matches, but will stop service once the games end. Residents will be left with fewer routes and higher fares than they had before the expansion. At a broader level, 80% of hotels surveyed by the American Hotel and Lodging Association a few weeks ago said World Cup bookings were lagging behind forecasts. It’s a shortfall the association blames on FIFA overbooking room blocks that never reflected real demand, compounded by travel restrictions keeping international visitors away.

GDP Can Count the TVs, But It Can’t Count the Feelings

When FIFA claims $80 billion in gross output and 200,000 permanent jobs, they are making claims that the World Cup will move the needle on Gross Domestic Product. GDP is the measure economists use to track how an economy is doing: it adds up everything a country produces into a single closely-watched number. When it goes up, we say the economy is growing. When it goes down, we worry.

When it comes time to calculate GDP for the next few months, it will count Rehan’s new TVs, his sound engineer, and his new hires’ wages. It will count your hotel stay or the gas you put in your car to get to the venue. All of it shows up.

What it won’t count is psychic income. It will leave out the pride of watching your country compete on the world stage, the joy of a last-minute goal, the sense of belonging that comes from a city full of strangers who are, just for a moment, all rooting for the same thing. These are real and meaningful human experiences, but they won’t show up in the data.

Simon Kuznets, the economist who invented GDP in the 1930s, saw this limitation clearly. He warned that “the welfare of a nation can scarcely be inferred from a measurement of national income.” GDP is a useful instrument, but it was never designed to measure joy. Frameworks like the UN’s Human Development Index, Bhutan’s Gross National Happiness, and the OECD’s Better Life Index all attempt to fill that gap. There’s a growing consensus that output alone is an incomplete picture of how a society is doing. None of them are perfect either, but at least they’re asking the right question.

Final Thoughts

Rehan Alam will probably have a great summer, alongside thousands of other sports bars across North America. But the U.S. economy won’t post a measurably better quarter because of it. The economic impacts FIFA and host city officials report will be overstated. The psychic income will almost certainly be undercounted, because pride and joy are harder to put in a press release.

Host cities agreed to shoulder hundreds of millions of dollars in costs, subsidizing a tournament expected to generate $11 billion in profits for FIFA. Host cities have paid for security, stadium retrofits, and fan festivals. In return, they won’t see a dollar of ticket sales, concessions, merchandise, or parking revenue. That trade-off wasn’t accidental. The cities that said yes knew the terms going in. Some cities, like Chicago, looked at the same contract and walked away.

There is a discussion around public funding that seems to get lost in all of this. Cities spend public money on things that make people happy all the time, but we don’t justify those with GDP projections. City parks don’t turn a profit. Neither do Fourth of July parades, public art installations, or free summer concerts. Most people believe that shared joy is a legitimate use of public resources.

The World Cup could be defended on exactly those terms. A month of collective electricity that involves strangers from a dozen countries crammed into the same bar, losing their minds over the same goal. Rehan’s regulars telling stories about this summer for years. That’s worth something.

But that’s never how it’s sold to cities. Mega-events like the World Cup are sold as a seismic, transformational economic investment. And when FIFA’s president takes the podium in late July and when a host city mayor announces the numbers, that’s the version you’ll hear again.

Now you’ll know what to do with it.

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• Lower-tier Category 3 tickets to group stage matches were $69 four years ago, but FIFA has been selling them for as much as $265 this year [WABE]

• Leisure and hospitality led all sectors with an additional 70,000 jobs in the May 2026 jobs report, well above the 14,000 per month average over the past year [CNBC]

• The Azteca Stadium in Mexico City will become the first venue to host matches at three different men’s World Cups [Euronews]

• The highest concentration of establishments in the United States with “sports bar” in the name was in the St. Cloud, Minnesota metro area, which has more than 10 times the national average concentration of sports bars [Bureau of Labor Statistics]

• For Vancouver alone, the cost of hosting seven matches could reach $729 million, nearly $1.2 million per minute of play [The Mercury News]

Hi y’all! Here are five stories from this week that contained some neat applications of economic principles or are related to teaching:

1. Films are more likely to star a man named Chris or a talking animal than an older woman [Variety]

2. A growing number of US employees plan to fake calling in sick to snag last-minute tickets to World Cup matches when they (hopefully) become cheaper [AOL]

3. East Coast beaches are suddenly overrun with a family-sized beach shade that flaps in the wind, prompting some seaside towns to crack down [Yahoo! Finance]

4. A slowdown in pickleball court construction in US cities suggests that the sport’s boom may be subsiding [Axios | Archive]

5. Former chair Powell uses award speech to warn against politicizing the Fed [Politico]

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Bitcoin has been called the future of money for seventeen years, but the Federal Reserve’s latest survey found that only 2% of Americans actually used crypto to make a purchase last year. Let’s hold crypto up to the economist’s definition of money, which requires passing three distinct tests. If you haven’t had a chance to read it yet, it’s worth a few minutes of your time.

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It’s been seventeen years since a mysterious figure named Satoshi Nakamoto launched Bitcoin in January 2009, born out of a crisis of confidence following the 2008 financial crash. Bitcoin and its peers emerged as an alternative to traditional banking systems that many felt had failed them.

Since then, the predictions have felt relentless. Crypto will replace the dollar. Crypto will make banks obsolete. Crypto will revolutionize how you split dinner, pay your rent, or tip your barista. Every year, a new wave of headlines declares that this is finally the moment mainstream adoption arrives.

Seventeen years later, almost nobody is actually buying anything with it.

The vocabulary is all there: wallets, transactions, exchanges. It looks like money. It’s named like money. So what’s going on? It turns out economists have a very specific definition of what money actually is, and holding crypto up to that definition explains a lot.

And the survey said…

The Federal Reserve recently released the latest edition of the Economic Well-Being of U.S. Households, which it has been publishing annually since 2013. It’s a sweeping look at the financial lives of ordinary Americans, covering topics like how people handle credit, whether they have savings, how they feel about retirement, and whether they could cover an emergency expense. It’s the kind of survey that tells you more about how people actually live than almost any economic report out there.

But one section stood out.

About 10% of adults used crypto in some form last year: buying it, holding it, or transacting with it. That might sound like modest progress, but it’s actually down from 12% in 2021 when the Fed first asked the question.

And even that 10% is misleading. Nearly all of them were simply buying crypto to hold as an investment. Only 2% of adults used it to actually make a purchase or payment.

Which raises a genuinely interesting question: if almost nobody is using it to buy things, is it actually money?

What even is money?

Economists say money has to do three jobs: serve as a medium of exchange, a store of value, and a unit of account. Think of them as three tests. To earn the “money” label, you need to pass all three. Crypto clears one, stumbles through another, and largely skips the third.

Function #1: Medium of Exchange
(Can you actually buy things with it?)

This is money’s most basic job. You work, you get paid, you exchange that payment for food, rent, and concert tickets. The whole point is that it flows easily through the entire economic system. You hand it over, someone accepts it, done.

The Fed’s survey gives us a pretty clear verdict on this one. Of the 2% of adults who used crypto for an actual transaction last year, the most common reason was that the person or business on the other end preferred it. Even among the tiny slice of people using crypto as a medium of exchange, most were doing it because someone asked them to. That’s a currency being tolerated, not one gaining traction.

Function #2: Store of Value
(Does it hold purchasing power over time?)

This is where crypto makes its strongest case, but also where things get complicated.

Gold and real estate both hold value. Bitcoin, over the long arc, has increased dramatically. It’s almost certainly why nearly 90% of holders treat it like a stock rather than a spending account. That instinct isn’t wrong. But “store of value” implies some stability, not upward movement.

The dollar quietly loses ground to inflation over decades, but Bitcoin can swing 40% in either direction within a single year. Imagine you’re a freelance designer paid 0.01 Bitcoin for a job in January. That was worth about $950 earlier this year. But wait until April, and that same Bitcoin might be worth only $700. Same work, but far less money. That’s not a store of value.

Function #3: Unit of Account
(Do people price things in Bitcoin?)

This is perhaps the most obvious failure of cryptocurrency over the past decade. A unit of account serves as a measuring stick that allows people to compare prices across different items.

While a growing number of companies are accepting crypto payments, almost nobody prices in Bitcoin. The dollar is still the ruler. Bitcoin has become just a payment option, like Venmo or Apple Pay.

Until something is the thing you instinctively think in, it hasn’t cleared the final bar.

Final Thoughts

There is one argument crypto supporters make that’s worth taking seriously: maybe crypto has failed the three tests because it hasn’t been given a fair opportunity to pass them.

After all, the dollar isn’t money because it’s inherently valuable on its own. It’s money because the U.S. government says it is. We accept dollars not because they’re backed by gold or guaranteed to hold value, but because everyone around us accepts them too. Money, at its core, is a shared fiction that works because we all agree to believe in it.

So what happens when a government decides to extend that belief to Bitcoin?

In 2021, El Salvador tried exactly that. Bitcoin became legal tender. Businesses were legally required to accept it alongside the U.S. dollar. It was the boldest real-world test the “crypto as money” thesis had ever gotten. A whole economy with an actual mandate. If government endorsement is what makes money money, this was the experiment.

Spoiler: it didn’t work. Bitcoin was rarely used by the public, and in 2025, El Salvador quietly rescinded it as legal tender. The Economist called it a failure, one that brought more costs than benefits to the Salvadoran economy.

That’s worth sitting with for at least a few minutes. When a country requires people to treat something as money, and they still reach for something else, that’s not a marketing problem or a government endorsement problem. That’s a functions-of-money problem.

Maybe that changes with a more stable version of crypto that can clear all three bars. Maybe the dollar itself gets replaced by a currency we haven’t named yet.

But perhaps the most interesting question isn’t whether crypto is money, but rather why we’ve been so eager to call it that before it actually was.

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If this made you think differently about your wallet, digital or otherwise, share it with someone who uses the word “currency” a little too confidently.

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• On May 22, 2010, the first commercial purchase occurred when a programmer traded 10,000 BTC for two Papa John’s pizzas [Guinness Book of World Records]

• 6% of unbanked adults used crypto for payments, compared to 2% of banked adults [U.S. Federal Reserve]

• Approximately 2,300 retailers accept cryptocurrency as payment in the United States [Capital One Shopping]

• Across all U.S. adults, 63% agree that “cryptocurrencies are not to be trusted” [YouGov]

• Data collected in 2024 showed that 8 of 10 Salvadorans did not use Bitcoin, and only 1% of total remittances involved crypto assets [Americas Quarterly]

Hi y’all! Here are five stories from this week that contained some neat applications of economic principles or are related to teaching:

1. See how gas prices have changed in the county where you live [CNBC]

2. RyanAir’s CEO warned that Europe’s weaker airlines might not make it through the summer due to fuel price hikes [CNBC]

3. Auto industry experts predict a motor oil shortage is imminent due to the Iran war [CNN]

4. Minnesota became the first US state to ban prediction markets [NPR]

5. Some of Texas’s oldest barbecue joints close as meat prices skyrocket [Washington Post | Archive]

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If your pay went up this year but your money doesn’t stretch as far, you’re experiencing a hidden pay cut. This week’s article breaks down real wages vs. nominal wages to explain why earning more and affording less isn’t a contradiction, and why the latest inflation report matters for your paycheck.

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You’ve been doing everything right and somehow falling behind. The grocery run last week cost more than it used to, even though you’re buying roughly the same stuff you always buy. Your landlord just sent notice that rent’s going up the next time you renew your lease. And the raise you got earlier this year? It doesn’t quite cover it all. Your paycheck looks a little better each week, but your bank account doesn’t agree.

You’re not bad with money. You’re experiencing something that has a name and a long history of making people feel exactly the way you feel right now.

You’re not imagining it

And you’re not alone. CNN’s most recent polling found that cost of living is now the number one financial stressor for Americans. Not debt. Not job security. Not saving for retirement. Just the basic, grinding cost of being alive: groceries, gas, rent, and all the other stuff you can’t opt out of.

And it’s not just hitting the people you’d expect. Upper-middle-class households are supposed to be the ones with breathing room in the budget, but they report the same squeeze. When people who earn six figures start saying they feel like they’re falling behind, something structural is going on.

Prices going up isn’t new. Prices almost always go up. That’s normal. What’s not normal is prices going up faster than paychecks. People don’t immediately panic when a gallon of gas costs more than it used to. They panic when their paycheck doesn’t stretch far enough to cover it. The real problem isn’t that things cost more, but rather that your wages haven’t kept pace.

So let’s talk about what’s actually happening.

How we measure the invisible

I know you’re tired of hearing about inflation. We all are. But to figure out whether your wages are keeping up, we need to know what prices are doing first. So bear with me.

A few weeks ago, the government reported that consumer prices rose 3.8% over the past year. That’s the headline number that shows up in news alerts and cable news chyrons. And despite the fatigue, people have noticed. Search interest in “inflation” has surged to levels we haven’t seen since prices spiked in 2022, a sign that this isn’t background noise anymore.

That 3.8% comes from a tool called the Consumer Price Index (CPI), which is essentially a giant shopping list. Every month, the Bureau of Labor Statistics tracks the prices of hundreds of goods and services and bundles them into a single number that represents how expensive life has gotten compared to a baseline year. It tries to capture the cost of being a regular person. But because it’s an average, it can hide as much as it reveals.

It turns out that some things actually got cheaper over the past year. Eggs, after their infamous price spike, have come back down. Smartphones cost less than they did a year ago. Books and butter, too. If you happened to spend your money exclusively on those things, you’d think the economy was doing great.

But you don’t. You also pay rent, which is up. You buy gas, which is way up. You pay for childcare, for insurance, for the electric bill. And even the “core” inflation number, which strips out volatile food and energy prices to get at the underlying trend, rose 2.8%, up from the month before. The stuff that fluctuates is expensive. The stuff that doesn’t fluctuate is also expensive.

over at recently published a chart that captures this beautifully: a long, detailed breakdown of every category, showing which items went up, which went down, and by how much over the past year. While its focus was on refuting claims from the White House that things are getting better, it also highlights the range of products the BLS tracks to get to that 3.8% headline.

Platypus Economics

How to Lie with a Chart, by the U.S. Government

I’ve always hated the expression “Figures lie, and liars figure.” I hate it because the language of figures — of graphs and charts — is a beautiful language, and this is a smear…

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25 days ago · 397 likes · 9 comments · Justin Wolfers

Your personal inflation rate depends entirely on what you spend money on. And for most people who spend most of their money on rent, driving, eating, and existing as regular adults, the number that matters is well above 3.8%.

This is what economists mean when they talk about purchasing power. It’s the gap between what a dollar is supposed to be worth and what it actually gets you at the register. The ten-dollar bill in your pocket buys you less lunch than it did a year ago. The bill didn’t change. The lunch did.

Now, let’s talk about why all of that matters for your paycheck.

The hidden pay cut

So if prices are moving in a hundred different directions at once, how do you know whether your paycheck is keeping up? You probably have a sense of your own situation, and whether your last raise felt like a step forward or just treading water. But how do you know if that’s just you, or part of something bigger?

This is where a concept called real wages comes in. That’s a technical-sounding phrase with a very untechnical meaning. It’s also the concept that explains why you may be earning more each week and affording less at the grocery store.

Start with the number you can easily see, which we call your nominal wage. If you made $50,000 last year and you make $51,000 this year, your nominal salary went up by two percent. Congratulations, on paper. But here’s the catch: if prices rose 3.8% over that same period, your two-percent raise didn’t move you forward. It moved you backward. Your real wage measures what your paycheck can actually buy each week, and that number has fallen. Any bump in pay less than 3.8%, and you’re behind.

A few weeks ago, the Bureau of Labor Statistics put a number on exactly how far behind the average American has fallen: real average hourly earnings fell 0.5% from March to April alone. Over the full year, real average weekly earnings dropped from $386.80 to $386.02. That drop may seem small, but consider that over an entire year for every worker in the country. That’s $52 per worker over the past year. It’s not a rounding error for families already stretched thin.

It can feel like a contradiction to earn more money and afford less. But it’s not a contradiction. It’s just two different ways of counting the same money. Nominal wages measure what your employer pays you. Real wages measure what the economy lets you keep.

And the broader picture isn’t encouraging. The personal savings rate is as low as it’s been since the pandemic recession, and credit card spending is through the roof. You might think that signals a recession on the horizon, but the economy is actually growing, even after accounting for inflation.

The problem isn’t that the pie is shrinking, but rather who’s getting a slice. The share of national income going to workers has sunk to its lowest point since 1947. We may collectively be cashing in more dollars than in the past, but those dollars aren’t spending like they used to.

Final Thoughts

You may have noticed that this wasn’t an article about policy. There are loud, ongoing arguments about what causes inflation, what should be done about it, and who deserves blame. You’ll hear plenty of those. This is about something simpler: having the right vocabulary for what you’re experiencing.

Once you understand the split between nominal and real, you start noticing it everywhere. Not just in your paycheck, but in the news, in political promises, in job listings that advertise a salary without mentioning what that salary actually buys in that area. I hope that you’ll hear “wages are up” and think, up compared to what? The next time you get a 3% raise, you’ll instinctively check it against the inflation rate.

But I didn’t write this post to make you cynical. I want you to be critical. The economy is full of numbers that sound good at first but tell a different story with context. The numbers we see most often, like prices, salaries, and GDP, are nominal by default. The real versions take an extra step to find, and now you know to take that step.

So, the next time someone tells you the job market is strong because wages are up, you’ll know the follow-up question: Up in which sense?

It’s a small question. But it changes how you count.

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The best way to fight bad economic math? Better economic literacy. If this piece gave you a sharper way to read the world, pass it along. Share Monday Morning Economist with a friend who deserves the same upgrade.

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• 66% of U.S. adults said inflation is a very big problem facing the nation, up from 63% last year [Pew Research Center[

• Among those workers earning household incomes of $150,000 or more, 57% say their wages aren’t keeping up [CNN]

• 61% of Americans say the economy is getting worse — the largest share of Americans to say this since 2022 [YouGov]

• The overall share of middle-class households that do not make enough to afford basic necessities where they live ranges from 23% to 57% [Brookings Institution]

• Average gasoline prices are above $4.50 per gallon, while diesel prices have nearly doubled [AAA]

Hi y’all! Here are five stories from this week that contained some neat applications of economic principles or are related to teaching:

1. What does it mean when the dollar store is the only store for groceries? [Marginal Indulgence]

2. Companies started putting protein in literally everything, and now intense demand has increased the price of standard whey powder by 50%+ since January [Food Dive]

3. Inside Italy’s secret ‘Cheese Bank,’ where Parmigiano Reggiano becomes financial gold [CNN]

4. Charting young America’s exceptional pessimism on the current job market [Gallup]

5. Someone paid $9 million to have lunch with Warren Buffett and Steph Curry [ESPN]

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Spotify turned twenty last month and gave everyone a look at the first song they ever streamed on the platform. That nostalgia helps us explore switching costs, the reason you’ll probably never cancel your subscription even though you’re free to leave anytime. If you haven’t read it yet, it might change how you think about every app you use.

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Last week, Spotify gave every user a gift to celebrate its twentieth anniversary: a timeline of their entire listening history. Your first song. Your most-played artist. A playlist of your all-time top 120 songs, complete with play counts. If you use Apple Music, YouTube Music, or another platform, you’ve probably seen your own version of this with recaps and personalized playlists. But Spotify went all the way back to day one.

Nearly one out of every eleven people on Earth actively uses Spotify, so there’s a good chance you’ve got a special playlist waiting. Go ahead, open yours up. Check out the first song you ever streamed. Was it really cool or deeply embarrassing? Drop yours in the comments so we can all see what you got.

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Now sit with that feeling for a second. That little tug of recognition, the flash of who you were when you hit play for the first time. Whether Spotify intended it or not, it’s a perfect demonstration of why you’re probably never going to cancel your subscription.

Welcome to switching costs. Before we get too deep, here’s the first song I ever streamed when I joined Spotify back in December 2011. Enjoy!

You’re Free to Go

Here’s the thing about Spotify: you can leave whenever you want. There’s no cancellation fee, no early termination penalty, and no contract locking you in for two years. Apple Music, YouTube Music, Tidal, and Amazon Music are all right there, offering roughly the same catalog of over 100 million songs. On paper, switching should be the easiest thing in the world.

So why haven’t you?

Start by thinking about the research alone. Each platform has its own mix of features, and you probably don’t know which ones match what you actually use. Maybe you rely on Spotify’s AI DJ to queue up music while you cook. Maybe New Music Friday is the only reason you hear anything new. Maybe you’ve organized your entire library around Spotify’s playlist folders. Does Apple Music have an equivalent for all of that? Does YouTube Music? You’d have to investigate each one just to figure out where to go.

Then there’s the rebuild. You’ve got playlists you made for road trips, for studying, for getting pumped right before you hop on the treadmill. Some tools will transfer those track lists over, but they can’t transfer the hundreds of weeks you spent training Discover Weekly to learn whether you’re in a folk-punk phase or a hyperpop phase. Every skip, every replay, every guilty-pleasure listen at 1 a.m. was data. Thousands of tiny decisions, made over years, taught Spotify’s algorithm what you like before you even know you like it. On a new platform, that education starts over from scratch.

And then there’s everything you don’t think about until you’re mid-switch. Spotify is probably connected to your phone, your car, your smart speaker, your running tracker, and maybe even your TV. Each one is another thing to disconnect, reconfigure, and hope works the same way on the new service.

The Price You Don’t See on Your Statement

What you just read about has a name. Economists call it a switching cost, and it’s a measure of the money, time, effort, or frustration of moving from one product to another. It’s one of the oldest concepts in competitive strategy, and you’ve almost certainly encountered the financial version before.

Try closing a bank account sometime: you’ll spend an afternoon updating every autopay, rerouting direct deposits, and ordering new checks if you’re the kind of person who still writes checks. Gyms are notorious for making you come in to cancel, which they know is tough for you to do because you’re probably canceling precisely because you don’t come in. Phone carriers used to charge early termination fees of $300 or more, specifically to make leaving painful.

Spotify won’t charge you a termination fee to leave, but it will still cost you to switch services. That cost is in your data, your history, and the sense that it could take months to train the new algorithm. The financial kind of switching cost makes you angry. This kind makes you loyal.

And Spotify isn’t alone. Think about your Google account, your iCloud storage, your Instagram archive, or your notes app. Anywhere you’ve spent years feeding a system your preferences and your decisions, you’ve been quietly building up a switching cost without realizing it.

Final Thoughts

Here’s a final question worth sitting with for the rest of the day: did Spotify design it this way intentionally?

Spotify didn’t invent playlists to trap you. Discover Weekly exists because personalized recommendations are a genuinely better product. Wrapped exists because people love looking back at their year. These features make Spotify good, but they also, conveniently, make Spotify very hard to leave.

Good product design and strategic lock-in are often the same thing.

This is how platforms quietly accumulate power. Not through contracts or penalties, but by becoming the place where your data lives, where your preferences are understood, where starting over feels like a loss. No one forced you to build 47 playlists, and no one penalizes you for leaving. But every playlist, every thumbs-up, every hour of listening raised the costs a little higher.

There is a fine line between a product that’s hard to leave because it’s good and one that’s hard to leave because the company made it that way on purpose. That’s essentially what the Department of Justice argued when it sued Apple in 2024, alleging the company deliberately built its ecosystem to lock consumers in and make switching to a competitor prohibitively difficult. Spotify isn’t facing that kind of scrutiny, but the underlying economics are the same. The question is always whether the wall exists because the product is great or because someone designed it to keep you inside.

So pull up that first song one more time. When you looked it up earlier, it was just a fun trip down memory lane. Now you know what else it is. It’s a reminder of how much of yourself is woven into this platform and how much it would cost to start over somewhere else.

So, how long have you been listening? And why haven’t you switched?

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If this made you look at your Spotify account a little differently, share it with a friend who needs to see their own switching costs in action. And if someone sent this to you, be sure to subscribe. We break down the economics hiding in everyday life, one story at a time.

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• When faced with another price hike, 61% of paid Spotify users say they’d keep their subscription, but only 4% say they’d definitely cancel [YouGov]

• Since its launch, Spotify users have streamed over 1.2 trillion hours of audio [Spotify Newsroom]

• Spotify’s all-time most-streamed artist is Taylor Swift, most-streamed album is Bad Bunny’s Un Verano Sin Ti, and most-streamed song is The Weeknd’s “Blinding Lights” [Variety]

• The average American makes 47 payments per month, including 31 by card, 6 in cash, and 1 by check [Federal Reserve]

• In March 2024, the DOJ and 16 state attorneys general sued Apple for allegedly monopolizing smartphone markets by locking consumers into its ecosystem [Department of Justice]

Hi y’all! Here are five stories from this week that contained some neat applications of economic principles or are related to teaching:

1. Birmingham, Alabama has the most favorable employment conditions for young people with a college diploma among large metro areas [ADP Research]

2. Delta said it will stop serving snacks and drinks on short flights this summer as airlines deal with rising fuel costs [USA Today]

3. A new study found that cell phone bans in schools led to reduced phone usage during the day, but no impact on test scores, attendance, or perceptions of online bullying [The New York Times | Archive]

4. Lucky Strike has been accused of creating an illegal bowling monopoly [Front Office Sports]

5. Cento Fine Foods is being accused of committing “tomato fraud” by deceiving customers about the legitimacy of its canned San Marzano tomatoes [ABC News]

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Last week’s Canvas hack turned out to be a great case study in game theory. ShinyHunters shut down the biggest learning management system in the country during finals week and demanded payment. But why would anyone pay criminals who could just disappear with the money? We broke down the economics of criminal trust, credible commitment, and why an 18th-century pirate captain would have recognized the playbook immediately.

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Millions of college students around the country sat down last week to cram for their final exams, but found a ransom letter instead of their lecture notes. A cybercriminal group called ShinyHunters had taken over Canvas, the learning management system used by more than 8,000 schools and 30 million users worldwide.

Students at Harvard, Princeton, Columbia, Georgetown, Penn, and hundreds of other schools were locked out of their coursework, their grades, and their messages with professors. The company that owns Canvas put the platform into emergency maintenance mode while schools scrambled to extend deadlines and shuffle finals schedules.

ShinyHunters gave affected schools until May 12 to negotiate a settlement, or they would leak terabytes of stolen data, including names, emails, student IDs, and messages among users. By Friday morning, most universities were back online. At this time, it’s not clear whether Canvas’s parent company, Instructure, paid a ransom or what the return of Canvas access could mean for the hackers’ May 12 deadline.

You may be wondering why anyone would pay a ransom like this and trust the hackers not to release the data. After all, the hackers are criminals. Couldn’t they just take the money and leak the data anyway? That’s a great instinct, and it’s also the central puzzle that other criminals faced hundreds of years ago.

The trust problem

This wasn’t a traditional ransomware attack, where hackers lock you out of your own systems and sell you the key back. ShinyHunters claimed they already had terabytes of data ready to leak online. What they were trying to sell was a promise: pay us, and we won’t publish it.

That makes it a market. But it’s a market with two pretty fatal design flaws.

First, the attackers need victims to believe the threat is real. If the company suspected the attackers were bluffing about the data they claimed to have, there would be no reason to come to the table at all. The victims also need to believe that paying actually buys something. That’s harder to prove. If ShinyHunters took the money and leaked the data anyway, paying the ransom was a waste. The attackers need to be credible in two ways: credible that they will leak if their demands aren’t met, and credible that they won’t if the ransom is paid.

In most legal markets, this trust is much easier to come by. If a seller scams you, you can sue them, report them to regulators, or leave a bad review online. But here there’s no court, no contract, and no consumer protection agency. The buyer has zero legal recourse.

Economists call this a credible commitment problem. For a deal to work, both sides need to believe the other will follow through. After all, if one side can cheat with zero consequences, why wouldn’t they? If you’ve taken a game theory class, you’ve seen this structure before: it’s the one-shot prisoner’s dilemma. The market should collapse under the weight of its own untrustworthiness. And yet it doesn’t. So how does the business model survive?

The pirate solution

The answer takes us, improbably, to the golden age of piracy. Pirates in the 1700s faced essentially the same credible commitment problem that groups like ShinyHunters face today. They operated entirely outside the law. They couldn’t enforce contracts in court. And their business model had a serious vulnerability: fighting was terrible for business.

This is just one aspect that people get wrong about pirates. The goal was never to battle it out on the open sea. A fight with a merchant crew risked losing men, cargo, and potentially the entire vessel. Pirates actually wanted a quick surrender where goods were handed over, and everyone sails away intact. The offer of surrender only works if the merchant crew believes they will be unharmed after handing off the goods. A pirate captain known for slaughtering crews after they surrendered would find that future targets had nothing to lose by fighting to the death. A broken promise today guaranteed a bloody, expensive battle next time around.

This is where the Jolly Roger comes in. The skull-and-crossbones flag was so widely recognized that merchant crews knew exactly what it meant the moment it appeared on the horizon: surrender your cargo, and we’ll let you live. The flag was a signal, but a signal only works when the reputation behind it is believable. Pirates understood the logic held up only as long as the promise was honored.

Individual pirate captains took it a step further by flying their own distinctive flags. A merchant crew that spotted Blackbeard’s flag knew what to expect based on Blackbeard’s specific track record, not just pirates in general. The personal flag attached a name to the promise, and that made the commitment credible.

ShinyHunters operates on exactly the same premise. The group’s name on the ransom note functions like a pirate flag. The group has previously hit AT&T, Ticketmaster, Santander, Coinbase, and now Canvas. When AT&T reportedly paid $370,000 to have stolen data deleted, the data appears to have actually been deleted.

That matters a lot, not because of what it meant for AT&T, but because of what it signals to the next target. The moment a group becomes known for taking the money and leaking data anyway, the signal becomes useless. Future victims refuse to pay, and the revenue stream dies.

Final Thoughts

Hitting Canvas during finals week wasn’t an accident. A university in the middle of summer break might shrug off a few days of downtime. A university with students mid-exam, panicking, unable to access their lecture materials, has an extraordinarily high willingness to pay. ShinyHunters identified the moment when the demand curve for “getting Canvas back” was at its steepest.

We’ve only barely scratched the surface of what pirates can teach us about economic issues facing organizations. Pirate crews wrote constitutions, elected their captains democratically, and divided loot according to transparent formulas. They did all this to solve problems that look remarkably familiar to us today. If you want to go deeper, Peter Leeson’s The Invisible Hook is a fascinating read that uses pirate governance to illuminate how markets, incentives, and institutions worked out on the open seas.

To be clear, none of this should be taken to indicate that cybercrime is admirable. It’s extortion, and it causes real harm. But if you want to understand how the world actually works, you have to be willing to analyze systems that exist outside polite boundaries. This was a market with supply and demand, pricing strategies, reputation mechanisms, and repeated-game dynamics. The fact that it’s illegal doesn’t make it less of a market.

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• Canvas is used by 41% of higher education institutions across North America to deliver courses [Inside Higher Ed]

• ShinyHunters wrote on a threat intelligence website that the initial breach involved data from 275 million students, teachers, and staff at nearly 9,000 schools worldwide [NPR]

• Ransomware hackers raked in a record $1 billion from victims in 2023 [NBC News]

• The Golden Age of Piracy spanned the period from approximately 1650 to 1726 [Library of Congress]

• If the black Jolly Roger was insufficient to make a ship surrender, flying a red flag meant the pirates would fight to the death to capture their target [Royal Museum Greenwich]

Hi y’all! Here are five stories from this week that contained some neat applications of economic principles or are related to teaching:

1. JetBlue said it’s planning to cut flight capacity and hike fares due to surging fuel costs [Reuters]

2. Japan Airlines is using humanoid robots to handle passengers’ luggage on the tarmac at Tokyo’s Haneda airport amid a shortage of (human) labor [The Guardian]

3. Researchers investigating Internet Archive data found that roughly a third (35%) of websites created since 2022 are AI-generated [404 Media]

4. US senators voted to ban themselves from trading on prediction markets like Kalshi and Polymarket amid rising concern about insider trading [CNBC]

5. Why you’re more likely to buy something for $4.99 than $5.00 [The Hustle]

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Spirit Airlines shut down overnight last week with no warning, stranding thousands of passengers mid-trip. The collapse is a textbook example of the shutdown rule in action. Spirit kept flying through years of losses until a sudden spike in jet fuel prices pushed its variable costs above the price of every ticket already sold. If you haven’t read it yet, it’s worth a few minutes.

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Angela Moreno had a wedding to get to. She’d booked her Spirit Airlines flight from Fort Lauderdale to Nashville months ago. Gas was cheaper, the Middle East was quieter, and Spirit’s bright yellow planes were still a reliable way to get somewhere on a budget.

She woke up Saturday morning, started packing, and checked her phone. Her flight didn’t exist anymore. Neither did the airline.

Spirit Airlines officially ceased operations in the early hours of May 2, 2026. There was no farewell tour nor countdown clock. Just a website update, a notification to stranded passengers, and empty check-in counters across the country. It was the largest U.S. airline failure in 25 years.

The failure itself wasn’t a surprise. The airline had been losing money for six straight years, surviving on fumes and restructuring deals while the rest of the industry moved on. What surprised the thousands of passengers left stranded was how suddenly it ended.

As it turns out, that part makes perfect economic sense, too.

A Business Model That Was Already Limping

Spirit wasn’t an innocent victim, exactly. It had filed for bankruptcy twice over the past few years. Its ultra-low-cost model was built around bare-bones fares and fees for everything else, and it has struggled to find its footing after the pandemic.

But “struggling” and “should shut down” are two different things in economics, and that distinction is the whole point of this story.

Imagine you’re in charge of Spirit Airlines. Your company is losing money. Your first instinct may be to shut it down and stop the bleeding. But before you do, your CFO asks you a crucial question: what happens to our costs if we stop flying?

Some costs disappear immediately. Fuel, crew wages, and airport landing fees only exist when planes are in the air. Stop flying, and you stop paying them. These are known as variable costs.

But other costs don’t depend on whether your planes are flying or not. Most commercial airlines, including Spirit, lease their fleet. That means monthly payments were due whether a single seat was sold or not. Debt payments, maintenance contracts, and administrative overhead keep coming in even if the planes are parked in a hangar. These are categorized as fixed costs, and grounding flights doesn’t make them disappear.

So here’s the calculation your CFO is really asking you to make: are we collecting enough money per ticket to at least cover what it costs to operate each flight? If the answer is yes, you keep flying. Grounding the fleet saves you nothing on fixed costs while guaranteeing you collect zero revenue. It’s better to lose a little than to lose everything.

Economists call this the shutdown rule: only stop producing when the price you’re receiving falls below your average variable cost. Until that moment, you keep the planes in the air.

For years, that’s exactly what Spirit did. Losing money on paper, but covering the cost of actually flying each plane. So the planes kept flying. That was until one of the most important variable costs in the airline business stopped behaving the way anyone expected.

Then Came February 28th

On February 28, 2026, U.S. and Israeli forces struck Iran. Within days, traffic through the Strait of Hormuz was severely disrupted, choking off roughly 20% of the world’s oil supply. Jet fuel prices had been stable around $2.30 per gallon, but then started climbing.

By the end of April, jet fuel cost $4.51 a gallon.

That change was devastating for the airline industry, but it hit Spirit particularly hard. Spirit had already sold millions of tickets for passengers heading off for spring break trips, summer weddings, or work conferences at jet fuel prices hovering around $2.30 a gallon. Passengers had already paid. Spirit couldn’t go back and charge them more.

But the cost of actually flying those passengers had just doubled.

That’s the critical sequence that explains Spirit’s overnight shutdown. The airfare was set back when jet fuel prices were stable. Then the cost of fulfilling that obligation exploded. Spirit wasn’t dealing with falling ticket prices like back in 2020. Demand has been fine. The problem was that their average variable cost had risen above the price passengers had already paid. Every flight they operated was now losing money as soon as they got the plane off the ground.

The shutdown rule had kept Spirit flying through years of losses, but it now pointed in the other direction. As long as the average variable cost stays below the price, you keep flying. The moment it crosses above, you stop.

For Spirit, that moment had arrived.

Final Thoughts

Before the planes were fully grounded, Spirit tried to avoid it. The airline went to Washington looking for a lifeline, and the Trump administration floated a $500 million rescue package. But Republican and Democratic lawmakers questioned whether a single airline bailout was a good use of public money, a key group of creditors balked, and by Friday night the deal was dead.

That left Spirit with one final decision: how to exit. The 3 AM announcement with no warning looks cruel from the outside, but it reflects a classic problem of asymmetric information. Spirit knew exactly how bad things were, but its customers had no idea how close to the edge it really was. Had Spirit announced an end date a few weeks out, revenue likely would have collapsed immediately while they were still losing money on each flight during that time. Keeping that information internal until the last possible moment was the only profitable move left.

By Saturday afternoon, the market had already started filling the void. JetBlue announced it would significantly expand service from Fort Lauderdale, one of Spirit’s key hubs. American and Frontier began adding capacity on Spirit’s former routes. This is what Joseph Schumpeter called creative destruction. Markets don’t mourn exits; they respond to them. The gates, the routes, and the pilots and flight attendants suddenly out of work are now raw material for whatever comes next.

So far, Spirit’s collapse is the only major U.S. airline casualty of the Iran war’s fuel shock. But airlines around the world are facing the same problem. Each of them is checking whether what passengers are paying still covers the cost of getting the plane off the ground. The day it can’t will be the day their planes stop flying, too.

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Markets reward good information, and so does this newsletter. If someone in your life would have benefited from reading this before their Spirit flight was canceled, send it their way.

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• Spirit ranked as the eighth-largest US airline in 2025 by the number of seats offered [CNN]

• A typical aircraft lease period will be from 6-10 years for a new single-aisle narrowbody aircraft and up to 12 years for a new, twin-aisle widebody aircraft [flightradar24]

• The Strait of Hormuz is a narrow waterway that carries roughly 20% of the world’s oil supply [US Energy Information Agency]

• A commercial jet typically burns between 750 and 4,600 gallons (2,800–17,400 liters) of fuel per hour, depending on the aircraft size [How Stuff Works]

• The Trump administration offered a $500 million loan that could have given the government up to a 90% stake in Spirit [CNBC]

• Some experts are projecting a 15–23% rise in ticket prices on routes Spirit formerly served [CBS News]

Hi y’all! Here are five stories from this week that contained some neat applications of economic principles or are related to teaching:

1. Minnesota lawmakers have introduced new prize limits for its famed meat raffles to account for the increased price of meat [Associated Press]

2. The world’s largest condom producer plans to raise prices by 20–30% over the next few months due to supply chain disruptions from the war in Iran [Reuters]

3. United CEO says he floated merger idea to American chief [CNBC]

4. Budget airlines seek $2.5 billion in relief from the Trump administration [Travel Weekly]

5. Taylor Swift filed trademark applications for clips of her voice and a photograph of her holding a guitar in what looks like an effort to take legal steps against AI imitation [Variety]

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When the pandemic sent millions of workers home, it quietly reshuffled who was doing the grocery shopping in households across the country. A team of researchers found that families paid 3 to 5 percent more for the same goods when a less experienced shopper took over.

If you haven’t had a chance to read this week’s article, it’s a quick one, and the economics behind it are more interesting than you’d expect.

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On any given Tuesday in America, a man is standing in a grocery store aisle holding a can of tomato sauce, texting his wife to ask if it’s the right one. She’s busy, so he buys two cans just to be safe.

It’s a small thing. A little expensive, maybe a little funny. But multiply it across thousands of households each day and several other items in the cart, and it starts to look less like a domestic comedy and more like an economics problem.

Every household runs on a quiet division of labor. One person takes out the trash when the bag is full. Someone else handles the laundry. And one person, usually the same person each week, knows exactly which brand of pasta sauce is never on sale. That last skill is easy to overlook, and surprisingly hard to replace.

When the pandemic pushed millions of workers into their homes, it reshuffled a lot of that division. A team of economists set out to track what happened to household spending when remote work rearranged who was doing the shopping. Their findings go well beyond a funny TikTok moment in that grocery aisle. The real story is an economics lesson about what it costs to lose an expert.

Shopping is a skill, not a chore

Scott Baker, Nicholas Bloom, Stephanie Johnson, and Jana Obradović tracked household spending before and after workers shifted to remote work based on the premise that people working from home are more likely to take on shopping duties. When a less-experienced household member started doing more of the shopping, the family paid meaningfully more for the same products because of how those new shoppers approached the task.

Three mechanisms drove the difference. First, experienced shoppers make heavy use of promotions and deal purchases, but inexperienced shoppers largely miss those and end up paying closer to full price more often. Second, the new shoppers took more trips but spent less time per trip, leaving little room to browse, compare, or notice that a different brand is cheaper. Third, they drifted toward pricier or more convenient products. When you’re uncertain what the “right” choice is, you default to whatever looks familiar or premium.

What these three patterns have in common is price elasticity, a measure of how sensitive shoppers are to price differences. Experienced shoppers tend to be price-elastic and notice price differences. They respond by switching brands, waiting for a sale, or driving to a different store if the savings justify it

Inexperienced shoppers largely don’t because they tend to be price-inelastic. They tend to reach for the familiar option and move on. Retailers love price-inelastic customers. Household budgets do not.

Where price sensitivity comes from

But what makes someone price-elastic in the first place? This is where another economic concept earns its place in the story: human capital. This is a measure of the skills and knowledge built up through repeated practice that make you more productive at a task.

The experienced shopper carries a mental price index. They know roughly what things should cost, which stores run the best deals on which items, and when to wait for a sale versus when to just grab what you need. They navigate sales cycles, clip coupons, and instinctively comparison-shop across brands. These skills were built over years of doing the same task, week after week.

That accumulated knowledge is precisely what makes them price-elastic. They can respond to price differences because they can see price differences. The new shopper simply hasn’t built that index yet, and the experienced shopper can’t transfer that human capital. The new shopper starts from scratch. The researchers found that when a man switches to remote work (and, in turn, takes on more shopping duties), the family spends about 5% more on similar products.

Those price increases aren’t just a temporary bump up while the new shopper learns the ropes. The research found it to be persistent. That takes us to another concept worth considering: search costs. That’s a measure of the time, energy, and information required to find the best price for something. An experienced shopper has already paid most of those costs. They know where the deals are without having to look. An inexperienced shopper has to pay for them fresh every trip. Perhaps more importantly, they often don’t know what they don’t know. After all, you can’t search for a deal you don’t realize exists.

Final Thoughts

It turns out that price-inelastic shopping tends to be self-reinforcing. Without a baseline sense of what things should cost, there’s no obvious signal that you’re overpaying. The tomato sauce goes in the cart. The bill is a little higher than it used to be. But nothing in the experience tells you why or what to do about it.

But there is something also fundamental about how markets work buried in this research. Prices in a grocery store are not fixed. They vary by brand, by store, by week, and by whether you’re paying attention. Navigating that complexity efficiently requires information, and information takes time and effort to acquire.

Remote work created a large, natural experiment in what happens when shopping expertise gets redistributed inside households. The answer is that price sensitivity doesn’t travel with the grocery list. It stays with the person who built it.

Inexperience has a price. It’s just usually someone else who pays it.

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If you know someone who has ever texted their partner a photo of a tomato sauce label asking “is this the one?”, they need this newsletter. Send it their way. If you’re reading this secondhand, subscribe here so you never miss an issue:

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• 59% of Americans who live with other people say they are very or somewhat satisfied with the current division of tasks in their household [YouGov]

• Moms spend an average of 68 minutes per day on meal preparation, vs. 23 minutes for dads [Pew Research Center]

• Remote workers are 25% more likely to order groceries online at least once weekly, while hybrid workers are 31% more likely to do so [Grocery Dive]

• More than 25% of US adults are using more coupons because of the state of the economy, up from 18% in mid-2021 [Morning Brew]

Hi y’all! Here are five stories from this week that contained some neat applications of economic principles or are related to teaching:

1. A new study asked adults to rate various workplace instant messages for the sender’s “competence” and “appropriateness” when using emojis [Gizmodo]

2. Gen Z-ers are getting angry about artificial intelligence, just not angry enough to quit it [The Verge]

3. Gig workers are increasingly changing their work habits and workload due to high gas prices [CNBC]

4. A new estimate puts the cost of dealing with robocalls, hidden fees, and customer service chatbots that can’t solve most problems at $165 billion [The New York Times]

5. NJ Transit plans to increase the price of a round-trip ticket from New York’s Penn Station to New Jersey’s MetLife Stadium from around $13 to ~$150 during this summer’s FIFA World Cup [Front Office Sports]

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The people who study climate change and environmental policy for a living have strong opinions about what works and what doesn’t. This week’s article broke down where they agree, where they don’t, and what that means for the policies that affect all of us. If you missed it, it’s linked below.

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Every year on April 22nd, the world pauses to think about the environment. And every year, the same questions come up. Is climate change as bad as they say? Should the government do more? Are stricter environmental regulations good or bad for the economy?

Most Americans have opinions on those questions. Nearly half think they will see catastrophic effects of climate change in their lifetimes. Majorities want the U.S. to do more. More Americans think stricter environmental standards would help the economy than hurt it.

But what do the experts think? There’s an old joke that if you put 10 economists in a room, you’ll get 11 opinions. It’s a good joke, but it’s also (at least sometimes) wrong. A team of researchers recently surveyed members of the Association of Environmental and Resource Economists (AERE) to find out where they actually stand.

They wanted to know: where does the profession agree? Where doesn’t it? And has anything changed since they ran the same survey back in 2012? With Earth Day just around the corner, the timing felt right to dig in. But before we do, here’s a question that even the experts couldn’t agree on. What do you think?

The Things They Agree On

So what did they find? Let’s start with where they agree, because on some questions, they really do. When someone has spent their entire career studying what happens when markets are left alone to manage the environment, you might expect them to have strong opinions. It turns out they do.

Nearly 97% agreed that unregulated markets are bad at handling public goods. Think clean air or national defense. These are things everyone benefits from, whether they pay for them or not. Since there’s little profit motive to offer them, private markets tend to underprovide them. Nearly every economist in the survey agreed that this is a problem.

The same skepticism applies to common resources. Think fisheries, groundwater, and forests. These are things anyone can use, but that disappear if overused. Economists call this the tragedy of the commons. Almost 88% agreed that without regulation, that’s exactly what happens.

Then there are externalities. When a factory dumps waste into a river, the people downstream pay a price they never agreed to. That cost doesn’t show up in the factory’s books. About 83% of economists said unregulated markets handle these situations poorly, too.

The pattern is hard to miss. Markets, left alone, struggle with anything shared. Environmental economists are almost unanimous on that.

That skepticism carries over into specific policies, too. About 91% agreed that pollution and hazardous waste sites are disproportionately located near low-income and minority communities. Nearly 89% said they were concerned about climate change. And 81% disagreed that weakening the EPA would improve economic efficiency.

There’s also strong agreement on how to fix pollution. Around 90% favored emissions taxes or tradable permits over rigid emissions standards. The logic is straightforward: set a carbon price and companies figure out the cheapest way to cut emissions. Mandate a specific standard and you lose that flexibility. Economists, as a rule, like flexibility.

The Things They Don’t Agree On

Ask economists whether to tax carbon. Near-consensus. Ask what to do with the money, and the room falls apart. Should the revenue go back to citizens as direct dividends? Reduce the national debt? Fund clean energy programs? No consensus was formed on any of those options. The mechanism is settled, but the politics of redistribution are not.

A lot of the other disagreements follow a similar pattern. There weren’t disputes about whether something is a problem, but about exactly what to do about it. Fisheries were a good example. Economists couldn’t agree on whether ocean fisheries should be managed for maximum sustainable yield or maximum economic yield. Both goals sound reasonable, but they lead to very different places.

Then there were questions gauging their concern on different topics. Economists couldn’t reach a consensus on how worried they were about land conservation, forest conservation, renewable energy, and drinking water quality. That might be a reflection of who’s in the survey. After all, environmental economics is a big field. A researcher who spends their career studying water rights has probably thought deeply about groundwater and less deeply about forest conservation. The results may be capturing specialization, not indifference.

And remember that poll question from the beginning about whether a higher population inevitably means more environmental degradation? No clear majority formed in any direction. It’s not as simple a statement as it may sound.

How Things Have Changed Since 2012

The authors ran a similar survey nearly 15 years ago, which means they can see whether attitudes have changed in that time. Let’s pause for a second to think about what’s happened since 2012. Superstorm Sandy. The Paris Agreement. A global pandemic. Electric vehicles went from novelty to mainstream. You might be wondering whether the people who study the environment for a living have changed their minds in light of all that.

Mostly, no. And that might be the most interesting finding in the whole study.

The authors compared questions that appeared in both surveys and found the results to be remarkably stable. The consensus around energy taxes, sustainable resource management, and international environmental agreements barely moved. A decade of dramatic world events, and the core positions of the profession stayed essentially the same.

There is one notable shift. Economists have grown more skeptical of free market environmentalism, which is the idea that property rights, markets, and tort law are the best tools for protecting the environment. In 2012, about 60% disagreed with that view. By 2023, it was 73%. The profession is moving, slowly but clearly, away from markets as the primary solution. Support for weakening the EPA, already low in 2012, dropped even further.

Whatever is changing in the world, the fundamentals of the profession are holding. Except, it seems, for how much faith economists place in markets to solve the problem on their own.

Final Thoughts

There are a few more things from the study worth sitting with before we close out. The researchers noted that their survey respondents were 70% male, 81% white, 90% PhD-educated, and 77% politically liberal. These are the experts whose research shapes environmental policy. But it’s fair to ask whether a more diverse group of researchers might see some of these questions differently, especially when the details of implementation are exactly where policy gets made.

There’s also one other question the authors raise that I haven’t been able to shake: is too much consensus actually a problem? When a profession agrees on most things most of the time, you have to wonder whether that’s rigorous analysis all pointing in the same direction, or something closer to groupthink. The authors can’t answer that with a survey. But they’re honest enough to ask it.

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Did any of these findings surprise you? Send it to a friend and find out if it surprises them too.

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• Senator Gaylord Nelson (D-WI) was inspired to action after seeing the devastation of the 1969 Santa Barbara oil spill [U.S. Senate]

• Earth Day has been recognized in the United States on April 22 since 1970 [CBS News]

• The first environmental justice cases were brought in 1979 in Texas and in 1982 in North Carolina [U.S. Commission on Civil Rights]

• At the end of 2024, the electric car fleet had reached almost 58 million, about 4% of the total passenger car fleet and more than triple the total electric car fleet in 2021 [International Energy Agency]

Hi y’all! Here are five stories from this week that contained some neat applications of economic principles or are related to teaching:

1. Everest guides accused of poisoning foreign climbers to force fake rescues in $20 million scam [The Independent]

2. Why Is 95% of the world’s bourbon made in Kentucky? [Freakonomics]

3. An Italian court ruled that because Netflix hiked prices without explaining why, it must refund customers up to $576 and reduce their subscription fees [ARS Technica]

4. The Justice Department is investigating the NFL on possible anticompetitive practices related to subscription fee concerns [NBC News]

5. American Airlines is joining Delta, United, Southwest, and JetBlue in raising its checked bag fees as the industry deals with high jet fuel prices [CNBC]

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In honor of Financial Literacy Month, we put our readers to the test with a three-question quiz. This week’s article breaks down where states stand on requiring personal finance education in high schools, what the research says about whether it actually works, and what you can do right now regardless of what your state did or didn’t teach you.

If you haven’t had a chance to read it yet, it’s worth the few minutes.

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April is Financial Literacy Month, and we’re starting this week’s newsletter with a pop quiz. Our version only has three questions, and your score won’t appear in any government database. These questions are part of a broader story of financial education in this country.

After you answer each question, you’ll be able to see how all of our other readers responded. We’ll save the answer key for later.

Pencils ready?

The questions you just answered are known as “The Big Three” financial literacy questions, and only about 28% of American adults answer all three correctly. Those questions come from a broader set used to measure financial literacy across different demographics. Across the full set of questions, only about 48% of U.S. adults ever answer at least half correctly.

If you’re reading this newsletter, you probably already have a sense of why that matters. What you don’t know about money has a way of costing you, often quietly and over a long time.

But what about the next generation? Gen Z is showing more interest in personal finance than prior generations, though that curiosity may be partly driven by the fact that they tend to score the lowest on these tests. Whether they get a formal chance to learn this in school depends a lot on which state they grew up in.

Why Financial Literacy Actually Matters

Let’s be clear about something before we go much further: schools shouldn’t replace economics classes with personal finance classes. The same principles that govern how markets work are the ones that determine whether you build wealth or spend your life treading water. Financial literacy is economics, applied to your own life.

In practical terms, financial literacy measures your ability to understand and act on concepts like budgeting, saving, borrowing, investing, and planning for the future. It means knowing that compound interest works for you in a savings account and against you in a credit card balance. It means understanding that inflation isn’t just a number they mention on the news, but one that shows up directly in the shrinking purchasing power of money sitting in your wallet or tucked away in a low-yield account.

Not understanding these concepts carries real costs. People with lower financial literacy are more likely to carry high-interest credit card debt, take out payday loans, and end up with high-cost mortgages. They’re also more likely to arrive at retirement with inadequate savings; not always because they didn’t earn enough, but often because nobody ever showed them how to make what they earned work harder.

The case for teaching this stuff in school is the same as the case for teaching economics: young people face major financial decisions at 18 that can set them up (or hold them back) for decades. Whether to take out student loans. When to open a credit card. How to read a lease. Most are making those calls without any real foundation for what they really mean.

Before you say they should be learning it at home, the data pushes back. Nearly 70% of parents feel reluctant to discuss money with their kids, and only 28% of children say they talk about it with their parents each week. That gap isn’t being closed at the dinner table, so the challenge falls to schools. Thankfully, one organization has spent decades tracking exactly how well states are answering that call.

The CEE’s Survey of the States

The Council for Economic Education (CEE) was established in 1949 with a simple mission: get economics into classrooms. In the decades since, it has helped build state councils, university centers, and teacher training programs across the country. It developed a standardized economics test and even produced a television series to bring economic education directly to teachers.

In 1999, CEE launched a nationwide survey to track which states require economics in K–12 schools. They would eventually start tracking personal finance requirements as well. The Survey of the States has become the closest thing we have to a reliable national scorecard on this topic. The 2026 edition came out a few weeks ago, and the trend is moving in the right direction for personal finance.

Just a few years ago, fewer than half of the states required high school students to take a personal finance course to graduate. By 2024, that number had jumped to 35. Today it stands at 39, with California, Colorado, Delaware, and Hawaii joining the list in the most recent cycle.

But 11 states and Washington, D.C. still have no personal finance graduation requirement at all. For students in those areas, access to this material depends on which elective they stumbled into or whether someone thought to slip a budgeting lesson into a Friday afternoon.

But “having a requirement” covers a lot of ground. Almost every state (48 of them) requires personal finance to appear in academic standards, and nearly all of them (45 states) require those standards to be taught. How they’re teaching those standards varies considerably. Twenty-six states require a dedicated course that every student must complete. Thirty-seven require that a course be available, but students don’t have to take it. Thirteen states fold the content into another subject, like math or social studies. And only three states require standardized testing on personal finance.

That means in most places, there’s no mechanism to verify whether students learned anything at all. So while personal finance is technically present in nearly every state’s curriculum, whether any given student actually encounters it mostly depends on where they live.

But Does Any of It Actually Stick?

Given the piecemeal approach across states, a fair question follows: does a semester-long class at 16 actually shape how someone handles money at 30? Think back to your own high school years. You probably remember the broad themes of most courses, maybe a few standout lessons. The details? Mostly gone.

But researchers have also been asking the same question, and the answers are more encouraging than the skeptics might expect. Students do learn the material when it’s taught, but does that knowledge survive contact with real life: a first paycheck, a credit card offer, a student loan repayment notice?

A growing body of research suggests it does. Students who completed a state-mandated personal finance course showed higher credit scores and lower delinquency rates through age 22, compared to peers in states without the requirement. The gains grew larger the longer the policy had been in place. A well-implemented mandate, it turns out, also compounds over time.

A broader review spanning 33 countries and more than 160,000 individuals found that financial education works when it’s delivered well. That caveat matters. A graduation requirement on paper doesn’t guarantee great teaching in the classroom, which is why teacher training and curriculum standards also have to be part of the conversation.

This is often where state-focused nonprofits step in. Organizations like the Virginia Council on Economic Education (VCEE) work year-round to make sure teachers receive high-quality professional development grounded in the latest research, delivered by university faculty who are experts in economics and personal finance, as well as K–12 curriculum and instruction. All of it is offered at no monetary cost to school districts, schools, or teachers.

The evidence on improving teacher quality is also hard to argue with. High school students who are taught by high-quality teachers are more likely to enroll in college, earn a four-year degree, and make an average of $10,500 more per year at age 30 than peers taught by lower-quality instructors. Those results are even stronger for students living in low-income communities. The teacher in the room matters enormously.

What You Can Do Right Now?

Here’s something the research suggests but rarely makes headlines: people who want to learn about personal finance tend to outperform people who were simply required to. And if you’re reading a newsletter called the Monday Morning Economist, you probably already have the most important ingredient ot getting started: curiosity.

Whether you’re long out of school or you’re a student in a state that still doesn’t offer personal finance, the knowledge is out there. The best time to engage with it was yesterday. The second-best time is right now. Here are a few concrete places to start:

• Get a baseline. The CEE offers a free Personal Finance Quiz. Five minutes, and it’ll show you where your gaps are more precisely than any general article can

• Learn the fundamentals. The Consumer Financial Protection Bureau (CFPB) publishes free guides on budgeting, debt, and retirement. Khan Academy’s free Personal Finance course assumes no prior knowledge and moves at your own pace.

• Understand your credit. You’re entitled to a free credit report every year from each of the three major bureaus. Actually read it; don’t just check your score!

• Start with what’s already in front of you. If you have a 401(k) through work and you’re not contributing enough to capture the full employer match, that’s the single highest-return financial move most people have available to them. It costs nothing to check.

Those are low-effort starting points. From there, it helps to identify which area of personal finance needs the most attention in your life. A quick note before we get you those answers we promised: we’re economists and educators, not financial advisors. Everything in this article is intended for general educational purposes. Your situation is unique, and any major financial decisions are worth discussing with a qualified financial professional before you act.

The Big Three Answer Key

Question 1: More than $102 (about $110.41, to be exact). That’s compound interest at work: you earn interest on your interest, not just on the original $100. The numbers look modest here, but the same principle is what makes starting a retirement account in your 20s so much more powerful than starting in your 40s.

Question 2: Less than today. Your balance grew, but prices grew faster. That’s purchasing power eroding, and it’s why leaving all your savings in a low-yield account carries a hidden cost that never shows up on your statement.

Question 3: False. Spreading money across many companies through a mutual fund means no single company’s bad quarter can wipe you out. That’s known as diversification, and it’s one of the few genuinely free advantages available to everyday investors.

So, how did you do?

Final Thoughts

There’s a wealth of resources on personal finance developed by some of the best researchers and experts in the field. Most people never touch them. Instead, they turn to voices like Dave Ramsey, or Brian and Bo over at The Money Guy Show, or Caleb Hammer’s unfiltered breakdowns of real people’s financial situations.

These aren’t bad places to start. Each approaches personal finance from a slightly different angle, shaped by different philosophies and, in some cases, different moral or religious frameworks around debt and wealth. Ramsey is famously anti-debt in a way not every economist would endorse wholesale. The Money Guy crew tends to be more numbers-driven and flexible on sequencing. Hammer is more about confronting avoidance head-on.

They disagree on percentages and priorities. But strip away the branding, and the core message is consistent across all of them:

• Track your spending and build a budget you can actually live with

• Set aside an emergency fund, and contribute to retirement as soon as you can

• Avoid unnecessary debt, and when you do have it, attack the high-interest stuff first

That’s most of personal finance. The hard part is doing it when the bills are stacking up, the kids need new shoes, and there’s more month than money. But think of it this way: you don’t go to the doctor only when you’re already sick. The same logic applies here. Carve out an hour each week to check in on your financial health. Review your spending, glance at your savings, and make sure you’re on track. That’s preventative care, and it costs nothing but time.

Developing a habit makes future financial decisions easier. When the car breaks down, you don’t scramble because you have the emergency fund. When dinner out comes up, you don’t feel guilty because you can see where it fits in the monthly budget. When retirement feels impossibly far away, the account is already growing quietly in the background.

Financial literacy isn’t a one-semester course. It’s a practice. And unlike most practices, this one gets less burdensome the longer you keep it. Don’t wait for a crisis to start.

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Here’s one more thing you can do right now that costs nothing: forward this to someone who needs it. Not because they’re bad with money, but because almost nobody was taught this stuff, and the people closest to you deserve the same head start you just gave yourself.

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• Only 12% of American adults who earn less than $25,000 per year answer all three of the Big Three questions correctly [Stanford Initiative for Financial Decision-Making]

• Only 28 states require any economics coursework for graduation [Council for Economic Education]

• Some 83% of U.S. adults said parents are the most responsible for educating their children on the topic [CNBC]

• 36% of Gen Z follow financial influencers and YouTube tutorials to learn as they go [Intuit]

Hi y’all! Here are five stories from this week that contained some neat applications of economic principles or are related to teaching:

1. WNBA players had an ace up their sleeve in pay negotiations: a Nobel Laureate [The Wall Street Journal | MSN]

2. Average MBA tuition has grown ~11% over the last four years as business schools face higher operating costs [Poets & Quants]

3. Confidence in the job market has sunk in the last few years, with only 28% of workers at the end of 2025 saying that now is a good time to find a quality job [Gallup]

4. Virgin Galactic is set to resume commercial spaceflights following a two-year hiatus, with tickets starting at $750,000 [Gizmodo]

5. Graduate degrees in medicine, law, and pharmacy have high returns on investment, but secondary degrees in fields including social work and psychology can actually yield negative returns [Inside Higher Ed]

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President Trump said the US can’t afford to fund daycare because it’s fighting wars, and accidentally restated one of the oldest ideas in economics. This week, we trace the “guns and butter” trade-off from Nazi Germany to LBJ’s Great Society to the current Iran spending debate, and break down the one graph that explains why this choice never goes away.

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An off-the-cuff remark by President Trump during a luncheon last week at the White House has become a political talking point. It’s either a gaffe or a statement of priorities, depending on which cable news channel you were watching.

“We’re fighting wars. We can’t take care of daycare.”

Those particular words are new to the moment, but the sentiment is not. The trade-off between military spending and civilian welfare has been a cornerstone of economic thinking for over a century, and politicians have been making this exact argument for nearly as long. Turns out that economists and political scientists have a name for this particular type of trade-off: “guns and butter.”

Where the Phrase Comes From

You’ll find some version of the guns-and-butter dilemma in almost every introductory economics textbook on the planet. It’s usually in the first couple of chapters, right next to a graph with a curved line on it. We’ll get to that graph later, but let’s see if we can figure out where this phrase came from.

One origin story traces back to the lead-up to World War I. Congress was deadlocked over where to build a facility to produce nitrate, one of those useful chemicals that can be used to make fertilizer or gunpowder. The National Defense Act of 1916 broke the impasse by directing the government to produce nitrates for fertilizer in peacetime and munitions in war. Guns or butter, built into the same factory.

But the phrase as we know it comes from a much darker place.

Germany, 1936. The Nazi regime is rearming at a staggering pace, and the economy is straining under the weight of it. On January 17th, Propaganda Minister Joseph Goebbels declared: “We can do without butter, but, despite all our love of peace, not without arms. One cannot shoot with butter, but with guns.” The phrase entered political language with a very specific meaning: military power matters more than civilian comfort. Full stop.

Fast forward a few decades, and Lyndon Johnson is staring down two enormous commitments at once. The first is an escalating war in Vietnam that saw hundreds of thousands of troops and billions of dollars flowing overseas. The second is the most ambitious domestic agenda in decades: the Great Society would eventually create Medicare, Medicaid, Head Start, and the War on Poverty.

What makes Johnson unique in our story is that he refused to choose. America was the richest country in the history of the world, and he believed it could do both. For a while, it actually worked. The economy was roaring, and Johnson was signing landmark legislation while simultaneously pouring resources into Vietnam.

But eventually, the bill comes due.

Johnson never raised taxes enough to pay for both commitments, so the government was flooding the economy with spending it couldn’t back up. Inflation started creeping upward, and then it started running away. The instability that followed would haunt the country for more than a decade: stagflation, oil shocks, and the miserable economy of the 1970s.

The lesson economists drew from this was brutal and clear: you can try to dodge the guns-or-butter trade-off, but you can’t dodge it forever.

The Graph That Explains Everything

Economists talk about this trade-off as though it were a fundamental law of the discipline. It turns out there’s a single diagram that explains why. It’s called the Production Possibilities Frontier.

Picture a graph. On one axis, you’ve got the guns that represent military spending. On the other, everything else: fertilizer for crops, Medicare, daycare. That’s your butter. Now draw a curve that bows outward, like the edge of a bowl. That curve represents every possible combination of guns and butter an economy can produce given its current set of workers, factories, and technology.

Dump all of a country’s resources into the military, and you’re at the far end of the guns axis. Maximum firepower, no daycare. Dump everything into civilian life, and you’re at the other end. No army, but great schools. Every real country sits somewhere in the middle, along that curve. And the core idea is this: if you’re on the curve, more of one means less of the other. Every dollar spent on a missile is a dollar that didn’t go to a preschool.

But look at the shape of that curve again. It’s not a straight line. Rather, it bows outward. And that’s telling you something else important about the country’s opportunity costs.

Suppose you’re a country that spends almost nothing on the military, and you decide to build your first army base. The workers you pull from the civilian economy are probably the least productive ones there anyway. Maybe you’re converting an underused factory. The cost, in terms of lost butter, is pretty low.

Now imagine you’re already spending massively on the military, and you want to spend even more. You’re pulling teachers out of classrooms, diverting steel from apartment buildings, and taking resources that were really good at making butter and forcing them to make guns. Each additional dollar costs you more and more civilian welfare. Economists call this increasing opportunity costs, and it’s why the trade-off gets more painful the further you push a country toward the endpoints.

Oh, The Places You Can Be

There’s one more thing about the graph worth knowing, because it does influence how the debate is played out. An economy can actually sit in one of three places relative to its frontier.

1. On the curve is where the hardest trade-offs live. You’re using all your resources, so every choice involves a sacrifice.

2. Inside the curve means you’re not using all your resources. You have high unemployment or waste in the system. If you’re here, you might get more guns and more butter just by putting existing resources to better use.

3. Outside the curve isn’t possible on your own unless you do something to grow the economy. That means new technology, more workers, or better infrastructure. This is the argument Johnson was making in the 1960s: America is so productive that the frontier is big enough for everything. He wasn’t wrong about the frontier being large, but even a very large frontier still has a boundary.

“Guns or butter” isn’t really about guns or butter. It’s about the fact that resources are finite, choices have costs, and those costs are real even when politicians pretend they aren’t.

Final Thoughts

When Trump told his guests that the country can’t afford daycare because it’s fighting wars, he was making the most explicit guns-over-butter argument from an American president in several decades. He wasn’t trying to have both, like LBJ. He was picking a side. But if his remarks caught people off guard, it might be because his own administration made the opposite argument just days earlier.

Just a few days before Trump’s remarks, Secretary of State Marco Rubio went on television and lectured Iran about how much better off its people would be if the government stopped wasting its resources on weapons and invested in civilian welfare instead. Rubio was making a guns-and-butter argument about Iran at the same moment his own president was making the identical choice in the opposite direction. The irony was, to borrow a phrase, almost childishly obvious.

Unfortunately, the trade-off is about to get very real. Congress is weighing cuts to federal health spending to help fund the Pentagon’s proposed $200 billion war expenditure, even though polling shows a majority of Americans would rather see that funding go toward domestic social programs. Gas is above $4 a gallon. Oil is past $100 a barrel. Lawmakers will soon need to decide how far along the curve toward guns are we willing to slide, and what butter are we willing to give up to get there?

The answer will be measured in daycare subsidies, Medicare funding, and Medicaid coverage. As one congressman has already put it, the money spent on just a few weeks of the war could fund child care support for every American family. Whether you agree with that framing or not, it’s a textbook illustration of opportunity cost. The money exists, but it can’t be in two places at once.

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• Rearmament was responsible for the bulk of economic growth in Nazi Germany between 1933 and 1938, creating millions of jobs for German workers [BBC]

• LBJ’s increased government spending increased the national debt by 13%, almost double the amount added by JFK, but less than a third of the debt added by President Nixon [The Balance]

• A 71% majority says they’d oppose Congress authorizing spending $200 billion to fund further US military action in Iran, as the Pentagon has proposed [CNN]

• 67% of Americans and 36% of Republicans said Americans should not be willing to pay more for gas during the war [CBS News]