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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• 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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Know someone who’d want to understand the economics behind the headlines? Share this article and help them see the trade-offs hiding in plain sight. And if you’re not already subscribed to Monday Morning Economists, sign up so you never miss an edition.

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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]

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

1. Sony is raising prices for the PlayStation 5 due to pressures in the global economic landscape [CNBC]

2. Legalized sports betting is associated with an increase in 90-day delinquency rates and auto loan delinquencies among people under 40 [Federal Reserve Bank of New York]

3. A record share of white-collar workers are accepting positions that pay less than the ones they held before [Business Insider | Archive]

4. A look at who is really ordering food delivery []

5. An Oregon court fined an attorney $10k for submitting a legal brief that [Gizmodo]

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In 1965, economist Gary Becker argued that time is just as scarce as money and that everything competing for your attention is, in some sense, a competitor. A recent field experiment put that idea to the test in a way Becker never could have imagined. If you haven’t read it yet, it’s worth a few minutes of your time.

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You know the feeling. You pick up your phone to check one thing, and forty-five minutes later, you’re still doomscrolling through Instagram, watching videos of people you’ve never met. Now imagine a friend calls you out on it. They challenge you to set a timer of thirty minutes a day, max. That’s it.

What would you do with all that extra time?

Most people would probably say they’d just switch to a different social media app. More TikTok. More Snapchat. Social media competes with social media, right?

But a group of researchers recently ran an experiment that may suggest otherwise. They paid thousands of people real money to stop using Facebook and Instagram, then tracked exactly where all that freed-up time went using phone tracking data.

It didn’t go to other social networks. It went to gaming apps. To YouTube. And in a result that feels almost quaint, some of it went outside.

Gary Becker’s Theory of Time

Before we talk about their study, you first have to meet Gary Becker. He was a University of Chicago economist who won the Nobel Prize in 1992, and he had a habit that drove some of his colleagues a little crazy. He applied the economic way of thinking to things economists weren’t used to thinking about. We’re talking about topics like crime, marriage, addiction, and discrimination. He treated human behavior like a set of optimization problems.

He published a paper in 1965 that sounds obvious in hindsight but was actually kind of radical for economists at the time. He argued that money isn’t the only scarce resource people have to allocate. Time is too. And people trade off how they spend their hours the same way they trade off how they spend their dollars.

After all, we’ve all got 24 hours each day. Some of those hours go to work. Some go to sleep. The rest gets divided across everything else you want to do with your day. But when two activities compete for the same block of time, they become substitutes. Even if they don’t always look alike.

A Field Experiment on Social Media

The researchers behind the experiment were, in a sense, updating Becker for the modern era. They wanted to know: in the attention economy, who’s actually competing with whom?

The setup was straightforward. Participants were paid to reduce their time on Facebook or Instagram. They were paid a dollar for every quarter-hour reduction in average daily screen time, benchmarked against their past month of usage, and capped at $125 a week. A control group received payments between $15 and $25 each week just for sharing their usage data. Then the researchers watched where all that free time went.

Let me pause here and note that the team included researchers from the University of Chicago, the University of Michigan, UC San Diego, and an economic consulting firm that had done consulting work on behalf of Meta in active antitrust litigation. They disclose it in the paper, but I want to make sure you know it too.

What they found is hard to dismiss. When participants cut back on Facebook, only about 6% of that new free time went toward other personal social networks. For those in the Instagram group, about 16% shifted to other personal social networks. The rest scattered to other apps on their phone, and in some cases, some of them went offline entirely.

Substitutes Don’t Have to Look Alike

Economists have a word for products that people swap in and out for each other: substitutes. The classic examples tend to look a lot alike. Think Coke and Pepsi, butter and margarine, or Lyft and Uber.

But Becker’s framework pushes us to think broader. Since time is also a scarce resource, substitutes don’t have to look alike at all. The results from the experiment make that case clearly:

Browsers. Texting. Games. When Facebook or Instagram disappeared from someone’s daily routine, that’s where the hours went. For the Instagram group specifically, YouTube was the single biggest beneficiary.

Think about what that means. Instagram and YouTube don’t look like competitors. One is photos and short videos from people you know in real life. The other is long videos from creators you’ve probably never met. Different formats, different content, an entirely different feel. And yet they’re fishing in the same pond for you and your attention.

Most of these apps are free. You don’t hand over a credit card to open Instagram. YouTube doesn’t bill you by the hour. But free doesn’t mean costless. The price is just paid in a different currency: the minutes and hours of your day that you can’t get back.

Final Thoughts

This research matters for at least two reasons, and both of them are ending up in court.

The first is about competition. When regulators evaluate whether companies compete with each other, they typically want to know how similar their products are. That determination shapes everything from merger approvals to antitrust cases. The central fight in cases involving social media is over how broadly to draw the market. Is Facebook competing mainly with Instagram and Snapchat? Or is it competing with anything that wants a slice of your attention? The experiment suggests the second view is closer to the truth.

The second reason follows naturally from the first. If the competition for your time extends far beyond social media, that raises an uncomfortable question: what exactly are these companies doing to make sure you stay on their platform instead of wandering off to YouTube or a game or a walk outside? A Los Angeles jury recently answered that question harshly, finding Meta and Google liable for a teenager’s mental distress and ruling that the companies had willfully made their products addictive while knowing the harm they could cause. It was one of the first verdicts in a wave of hundreds of similar suits from schools, attorneys general, and families. Both companies said they disagreed with the verdict and plan to appeal.

The antitrust cases and the addiction cases look different on the surface. But they’re really asking the same question. In a world where everything competes for your time, how far will these companies go to win? The courts are now starting to also ask who’s responsible when those companies go too far.

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• About 7-in-10 U.S. teens say they visit YouTube every day, while 57% say they visit TikTok daily [Pew Research Center]

• About half of U.S. adults say they visit Facebook and YouTube at least once a day [Pew Research Center]

• Gary Becker received the United States Presidential Medal of Freedom in 2007 [The Chicago Maroon]

• Meta (formerly Facebook) generated a total revenue of approximately $201 billion in 2025 [Investopedia]

• A California jury found that Meta and Google were to blame for the depression and anxiety of a woman who compulsively used social media as a small child, and concluded that they pay her $3 million in compensatory damages and an additional $3 million in punitive damages [NPR]

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

1. Americans are looking for ways to cut back as gas prices surge [Bloomberg]

2. WNBA and players union agree to historic pay raises [Morning Brew]

3. Workers craving more flexibility and control over their 9-to-5 schedules are embracing “microshifting” [The Associated Press]

4. Walmart wins patent for AI-powered price changes [Gizmodo]

5. Apple raises external hard drive prices amid chip shortage [Business Insider | Archive]

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If you’ve ever walked out of a salary negotiation wondering whether you left money on the table, there’s a good reason for that feeling. I teamed up with Hannah Williams of Salary Transparent Street to break down why employers almost always know more about what a job pays than you do, and what workers are doing to close that gap. If you missed it, it’s worth a read.

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Here’s a question you probably haven’t thought about in a while: Are you being paid fairly?

You might have a gut feeling. Perhaps you remember what you asked for when you took the job, or vaguely recall reading something on Glassdoor a few years back. But if someone asked you to prove it with real numbers from real people doing comparable work, most of us would come up short.

That’s a feature of how most labor markets in the United States have worked for decades. Wages are one of the most important prices in any economy. Our earnings shape household budgets, career decisions, and how we allocate our time and energy for most of our adult lives. And yet, for most workers, they’re shrouded in secrecy.

Hannah Williams noticed the same thing a few years ago and decided to do something about it. Let’s take a walk together down Salary Transparent Street.

Meet Hannah Williams

Williams is the creator of Salary Transparent Street, a social media project built on a simple premise: ask people what they do for a living, how long they’ve been in that role, and what they earn.

The interviews are short and unscripted. Just a person, their job, and a number.

Since launching the project, she has collected thousands of these conversations. The range of occupations is wide: entry-level service workers, mid-career engineers, nonprofit employees, freelancers, and government contractors. Each one adds a data point to a picture that most workers have never been able to see clearly.

Her videos have reached billions of views across social media. But people aren’t just watching because it’s entertaining. They’re watching because they want to know if they’re being paid what they’re worth.

If you haven’t come across her work yet, it’s worth checking out. Hannah and her partner have made a complex topic feel relatable and actionable for anyone trying to better understand their place in the job market.

The Employer’s Advantage

We want you to pause for a moment and think back to the last time you interviewed for a job. At some point, someone likely asked you what salary you were looking for. You probably had to make your best guess.

You may have looked some data up beforehand, or maybe a friend in the industry gave you a ballpark figure. It’s also completely possible that you just picked a number that felt reasonable and hoped for the best.

The person across the table already knew the answer. Employers typically know the approved range for the role, what current employees are earning, and what previous candidates accepted. You walked in with bits and pieces. They walked in with a spreadsheet.

Economists have a name for this kind of imbalance: information asymmetry. It’s what happens when one side of a transaction knows significantly more than the other. The classic example is used cars. Sellers know the car’s history, but buyers are guessing based on looks. That gap makes it hard to land on a fair price. The same dynamic plays out every time someone negotiates a salary.

When workers don’t know the market rate for a job, employers can end up paying different people different wages for the same work. Economists call this wage dispersion, and it tends to stick around precisely because the information gap does too.

From a firm’s perspective, keeping salaries private makes a lot of sense. It preserves flexibility and keeps labor costs lower than they might otherwise be. From a worker’s perspective, it makes the job market feel like a game where the other side has seen the answer key.

Why Changing Jobs is Harder Than it Looks

There’s another layer here that doesn’t get talked about enough: search costs. These refer to the time, effort, and resources it takes to find the right match in a market. In labor markets, those costs include updating a resume, researching companies, tailoring applications, scheduling interviews, and negotiating offers. The highest cost of all, though, might be uncertainty.

If you don’t know what a role typically pays, you may make a poor estimate of whether it’s even worth applying. Is this company known for underpaying? Would this move represent a step forward in earnings, or a lateral one? Without transparent salary data, those questions are hard to answer.

Transparency reduces that friction. When pay information is accessible, workers can compare opportunities more efficiently. They can identify which industries, companies, or cities offer better compensation. They can spot when a role is offering below-market wages and decide accordingly. The job search becomes less of a shot in the dark.

Transparency also helps workers evaluate compensating differentials. Some jobs pay more because they are genuinely demanding. They may include long hours, physical risk, or high stress. Others pay less because they offer real advantages, like remote flexibility, strong benefits, or meaningful work. Neither of those tradeoffs is obvious without wage data. When workers share their salary alongside details about their job, those tradeoffs become visible.

Final Thoughts

Salary transparency has become a policy question as well as a cultural one. Several states now require employers to post salary ranges in job listings. The intent is good: give workers better information before they apply. But in practice, the results are uneven. Some employers post ranges so wide that they technically comply without telling applicants much. The rule exists, but the useful information still does not.

That’s why the worker-driven transparency Hannah has built through Salary Transparent Street may matter more than any single policy. Instead of waiting for employers to provide information, workers are sharing it themselves.

Labor markets work best when both sides understand the prices involved. When workers know what jobs actually pay, they can negotiate better, choose more wisely, and change jobs without flying blind. That makes the market itself function better.

The next time someone asks what you make, consider answering honestly. The information only has power when people share it.

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If this made you think more carefully about salaries in your own job, consider sending it to a friend. While you’re at it, you can follow Salary Transparent Street on your favorite social media platform: Facebook, Instagram, LinkedIn, TikTok, and YouTube.

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• A Glassdoor poll found that 66% of female professionals do not believe they’re being paid fairly for the work they do, compared to 59% of male professionals [Glassdoor]

• Even the highest-income households derived 62% of their income from wages [Federal Reserve Bank of St. Louis]

• As of January 2026, approximately 42.7% of U.S. adults believe they are paid fairly for the work they do [YouGov]

• 70% of organizations that list pay ranges on job postings say that doing so has led to more people applying to their postings [Society for Human Resource Managers]

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

1. Major League Soccer and the Vancouver Whitecaps have to pay more than $300,000 after featuring Lionel Messi in promos for an Inter Miami game that he didn’t ultimately play in [ESPN]

2. A bill recently passed the Georgia Senate that could allow gold to be used as currency in the state [WABE]

3. A new study finds that certain patterns of AI use are driving cognitive fatigue [Harvard Business Review]

4. Trump’s tariffs are creating jobs in one particular field [Investopedia]

5. Job hopping isn’t the financial boost it used to be [CNBC]

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If you’ve seen the ‘90s nostalgia trend taking over social media, this one’s for you. This week, we took a look at the economics behind the decade. That includes the jobless recovery, the balanced budget, NAFTA, and the dot-com bubble that ended it all. Check it out if you missed it.

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If you’ve been on social media lately, you’ve probably seen celebrities and brands posting nostalgic photo slideshows set to the Goo Goo Dolls’ “Iris.” Halle Berry, Drew Barrymore, and Reba McEntire have all been jumping in. And honestly? It tracks.

The ’90s were a cultural moment. Friends and Seinfeld were must-see TV. Kids were rewinding VHS tapes and begging their parents not to cancel Blockbuster night. Everyone had a Walkman and strong opinions about whether frosted tips were a good idea. Even today, Gen Z considers the ’90s as the decade with the best fashion.

I grew up in the ’90s, so naturally I wanted to reminisce too. But I’m an economist. So instead of posting throwback photos, I’ve been thinking about a different kind of throwback: what was the economy like in the ’90s?

Turns out, there’s a lot worth remembering. Cue up The Goo Goo Dolls and let’s get into it.

The Economy at a Glance

The ‘90s were good. Like, genuinely good. The U.S. created 24 million jobs over the decade, and GDP grew at an average of 3.3% per year. The expansion ran for 120 consecutive months, the longest peacetime run on record. But to understand how it got there, you have to start at the beginning.

The decade opened in rough shape. The banking system was already stressed from the savings and loan crisis of the 1980s, and the 1990 oil price shock following Iraq’s invasion of Kuwait pushed the U.S. into recession. Unemployment climbed to 7.8% by mid-1992. Inflation, meanwhile, was still running above 5%, a hangover from the turbulent ‘70s and ‘80s that the Fed hadn’t fully shaken. Jobs were disappearing, prices were elevated, and the recovery, when it came, was slow. Economists called it a jobless recovery for a reason.

That’s the economy Bill Clinton inherited. His campaign kept a sign on the wall of their war room: “It’s the economy, stupid.” It worked. And once the expansion took hold, it really took hold.

The Fed, led by Alan Greenspan, gradually brought it down to 1.6% by 1998. Low, stable, and largely out of the headlines. That’s usually how you know it’s working. Unemployment followed a similar path, falling steadily through the decade to hit 4% by 2000, a thirty-year low. The U.S. economy was booming. And that boom was about to show up in a very unexpected place.

A Rare Moment of Fiscal Balance

That strong economy led to something that sounds unfathomable today. In 1998, the United States ran a budget surplus for the first time since 1969, and by 2000, it had reached $236 billion.

First, a quick distinction worth making. A deficit is what happens when the government spends more than it takes in during a single year. The debt is the accumulation of all those deficits over time. The U.S. had been running deficits for most of the preceding two decades, and by the early ‘90s, the national debt had grown to roughly $4 trillion. The surplus years didn’t erase that, but they did allow the government to start paying down some it.

So how did the surplus happen? A few things converged. The Clinton administration raised taxes in 1993, and Congress agreed to caps on discretionary spending. It was a politically painful package that passed without a single Republican vote. Then the booming economy went to work. More people employed meant more income tax revenue. More corporate profits meant more corporate taxes. The tech boom added a surge of revenue from capital gains as investors cashed out stock options and equity.

This is a good chance to pause and remember that fiscal outcomes are never just the result of policy choices. Our current annual federal deficits have exceeded $1 trillion for several years running. Politicians from both parties have talked about reducing spending, but the other two ingredients that made the ‘90s surplus possible haven’t materialized.

Free Trade Comes to North America

Now let’s talk about two of the biggest events that reshaped the U.S. economy in the 1990s. The first was NAFTA, first popularized by Ronald Reagan and then negotiated by George H.W. Bush. Clinton signed it into law in December 1993, effectively eliminating most tariffs between the United States, Canada, and Mexico. Significant? Yes. Controversial? Also yes.

The motivation was rooted in the theory of comparative advantage, which is the idea that trade is mutually beneficial when countries specialize in what they produce most efficiently. Tariffs get in the way by raising prices for consumers and shielding domestic producers from competition. Take them away, and trade expands. Everyone wins, at least in theory.

At the aggregate level, the numbers backed it up. Trade between the three countries tripled over the decade. U.S.–Mexico trade alone grew from $81 billion in 1993 to $247 billion by 2000. But the gains weren’t evenly shared, and that tension has never really gone away.

Manufacturing jobs in auto parts, textiles, and other industries migrated south where labor costs were lower, leaving real losses behind in the form of job cuts, stagnant wages, and towns hollowed out by plant closures. NAFTA was eventually replaced by the USMCA in 2020, patching gaps around digital trade, intellectual property, and labor standards that didn’t exist as policy concerns in 1994.

In that sense, NAFTA was a useful first draft, but the underlying debate about who bears the cost of free trade remains unresolved. Trade relations between the three countries are under significant strain today, and whether the framework that took decades to build holds up is one of the more consequential open questions in North American economic policy right now.

The Boom Before the Bubble

If NAFTA reshaped how goods were made and where, the internet changed how people bought them, accessed information, and interacted with the economy entirely. It’s hard to overstate how different daily life looked by the end of the decade. You could buy a book without going to a store, get news without picking up a newspaper, and send a message to someone across the world for free. And that was just the beginning.

Not everyone saw it coming. In 1998, Nobel Laureate Paul Krugman famously predicted the internet’s economic impact would be no greater than that of the fax machine. It’s one of the more memorable misses in modern economic forecasting.

Investors, on the other hand, saw it coming and easily got carried away. The Nasdaq Composite stood at around 415 in 1990 and hit 4,696 by February 2000, a gain of more than 1,000% in a decade. Companies with no revenue, no profits, and sometimes no clear business model were valued in the billions. The rule of thumb became: if it ends in .com, fund it.

The signs of an asset bubble were hard to miss by the end of the decade. Prices weren’t rising because of underlying value, but rather because buyers expected to sell to someone else at a higher price down the road. When new buyers stopped coming in, the market collapsed fast. The Nasdaq lost 78% of its value over the following two years.

Thankfully, the bubble didn’t erase the underlying technology. Pets.com failed, but Amazon survived and Google launched. By the end of 2000, there were 416 million internet users worldwide, up from 2 million a decade earlier. The business models caught up eventually.

Final Thoughts

The ’90s weren’t perfect. NAFTA had real winners and real losers, and the dot-com bubble wiped out a generation of savings. But the decade also showed what a sustained expansion looks like when the fundamentals line up: low inflation, falling unemployment, rising wages, and (briefly) a balanced budget.

We can even see some of those fundamentals happening in our own economy today. Unemployment is around 4%. Inflation has come back down to the 2–3% range after its post-pandemic spike. GDP growth is more modest, closer to 2%. Some analysts are already asking whether the AI investment boom rhymes a little too closely with the dot-com era.

Of course, the big difference is our federal deficit and national debt. The U.S. had room to maneuver in the ’90s. Today, our national debt is more than the size of the economy, which doesn’t give a whole lot of room to make decisions. The ’90s were a window to what’s possible, but whether we get another one like it is an open question. Overall, not a bad decade to look back on. Even without the Goo Goo Dolls.

Think I missed a bigger economic story? Leave a comment and make the case.

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If you know someone who loves the ‘90s or wants to understand the economy a little better, send this their way. I think they’ll appreciate the trip back in time.

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• 65% of Gen Z and 61% of Millennials say the ’90s were fashionable, more than any other decade [YouGov]

• Between 1980 and 1994, 1,617 commercial banks failed (9.14% of all banks) with total assets of $206 billion [FDIC]

• The federal deficit clocked in at $1.78 trillion in 2025 [U.S. Treasury]

• In 2025, the U.S. traded goods worth a combined $872 bilion with Mexico and $719 billion with Canada [U.S. Census Bureau]

• 5.02 billion people around the world used the internet on a regular basis in 2021 [Our World in Data]

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

1. An Ikea plushie is selling for hundreds on eBay thanks to the sudden virality of Punch the baby monkey [Gizmodo]

2. Just over half of U.S. teens say they have used chatbots for help with schoolwork, and 12% say they’ve gotten emotional support [Pew Research Center]

3. 40% of Americans didn’t read a single book in 2025 [YouGov]

4. Researchers in Finland have found robust evidence of a link between pollen and worse academic performance [Gizmodo]

5. A new study finds that scrapping business class could halve aviation emissions [The Conversation]

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Last week, the Dick’s Sporting Goods app briefly ranked No. 3 in the Apple App Store, sitting between Claude and ChatGPT. The feature behind it pays users roughly ten cents a day to exercise, and it turns out to be a surprisingly clean lesson in how companies use economics to identify their best customers. If you missed it, it’s worth a read.

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Last week, something unexpected showed up at the top of Apple’s App Store. Anthropic’s AI assistant, Claude, made it to the top spot following its coverage all over the news. ChatGPT was right behind it at No. 2. Google’s Gemini at No. 4. Some of the most sophisticated software ever built. We’re talking billions of dollars and thousands of engineers. The cutting edge of artificial intelligence.

And sandwiched between them, sitting at No. 3, was the Dick’s Sporting Goods app.

Yes. That Dick’s. The one at the mall.

What was going on?

An App That Pays You to Walk

Dick’s didn’t build a better app than OpenAI. They didn’t invent some breakthrough feature. What they did was offer people something simple: a small, reliable reward for going for a walk.

Buried inside the Dick’s app is a feature called Move. Connect your fitness tracker, and the app starts watching your activity. Hit 10,000 steps in a day, walk three miles, or get 30 minutes of exercise, and you earn three points. Stack up 300 points, and Dick’s will deliver a $10 reward for you to spend in their store.

Do the math, and it comes out to roughly ten cents a day.

Ten cents.

And yet thousands of people downloaded the app specifically for this. Social media lit up with posts about it. People who hadn’t thought about Dick’s Sporting Goods in years suddenly had a reason to download the app.

Ten Cents and the Psychology of Almost

Economists generally sort incentives into three buckets. There are financial incentives, like money, discounts, and rewards. There are social incentives that involve reputation, belonging, and what other people think of you. And there are moral incentives. These rely on an internal sense of doing the right thing. Dick’s isn’t appealing to your conscience or your social circle. They’re going straight for your wallet.

But here’s the thing: the Move program is offering something more subtle than just ten cents a day.

Consider someone who already walks 10,000 steps each day. For them, syncing their fitness tracker feels like finding money in an old pants pocket. They haven’t changed anything about their life. They’re just... collecting a reward they’d been leaving on the table.

And for someone close but not quite hitting their goals, the app creates a visible finish line. You can see your points accumulating. You can see how far you are from $10. This incentive provides a nudge for people right on the edge of their daily goals. Someone who logged 9,200 steps at work might take a quick loop around the neighborhood when they get home to hit 10,000. They’re not doing it because it was good for their health, but rather it was good for their wallet.

The Hurdle is the Point

Consider what this surge in popularity means for Dick’s. Most retail apps have the same problem: nobody opens them. You download one to use a coupon once, and then it sits on your phone for two years collecting digital dust. The Move program gives people a reason to open the app every day to keep an eye on their progress.

And every time someone checks in, they see products and promotions. They’re reminded that the store exists, even if it’s been a while since their last trip to the mall.

But the bigger payoff comes when a user finally hits 300 points and earns their $10 reward. This milestone sends a signal to Dick’s about what kind of customer they have on the app. It’s one who has put in 100 days of activity to get to this point, and they now have money to spend.

What Dick’s is doing has a name in economics: second-degree price discrimination. It sounds complicated, but the idea is simple. Instead of charging everyone the same price, the company creates a hurdle. Customers willing to clear the hurdle by connecting their tracker and logging their exercise to collect points get an effective discount. Everyone else pays full price.

The hurdle is everywhere once you start looking for it. It’s the coupon you have to clip. The rebate you have to mail in. The loyalty card you have to remember to scan. Companies make the process difficult by designed so that only certain customers will bother to claim the reward.

And those are exactly the customers Dick’s wants to know about. Someone who tracks their steps to earn the reward has revealed that they’re engaged, they’re active, and they respond to discounts. They’re the exact customers a sporting goods store most wants to know about.

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Final Thoughts

Step back for a moment and look at what actually happened here. The companies at No. 1, No. 2, and No. 4 are racing to build artificial general intelligence. They are attempting to replicate human cognition in software. The resources involved are staggering.

Dick’s Sporting Goods was right there with them for a few days because they asked a much simpler question: What if we just paid people a little bit to go for a walk?

The AI revolution is real. But this story is a reminder that the oldest forces in economics haven’t lost their power in the economy, or anywhere else.

Sometimes, ten cents is enough.

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If you enjoyed this breakdown, consider sharing it with a friend or family member. Economics often shows up in unexpected places, and sometimes the best examples come from something as simple as a walk around the block.

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• Dick’s Sporting Goods operates more than 850 stores across its various banners, including DICK’S Sporting Goods, Golf Galaxy, Public Lands, and Going Going Gone! [National Golf Foundation]

• In Britain and the US, for example, three in ten (30%) say they exercise 1-3 times a week, next to a quarter in Germany (24%), a third in France (35%), and two in five people in Hong Kong (42%) and the UAE (39%) [YouGov]

• In an experiment designed to get people already going to the gym to go more regularly, the top intervention offered small rewards for returning to the gym after missed workouts [NBC News]

• 37% of Americans haven’t visited a shopping mall in at least a year [YouGov]

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

1. Three-in-ten Americans get their news from email newsletters at least some of the time [Pew Research Center]

2. As schools increasingly ban internet-connected devices in the classroom, some students are turning to iPods and cassette players [The New York Times | Archive]

3. The Anthropic Economic Index reveals the shape of AI adoption across the world [Anthropic]

4. How national income can split teams at the Winter Olympics [Reuters]

5. The tooth fairy is back in growth mode, with payouts up 17% [Axios]

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What happens when staying home suddenly costs $30 an hour? That’s what New York City showed during last week’s snowstorm, when higher wages brought workers out to clear sidewalks. This week’s story highlights a simple but powerful idea: people respond to incentives.

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Every few months, the same complaint seems to come up again. Whether it’s on social media, standing in line at an understaffed business, or in casual conversation, the same claim surfaces: “No one wants to work anymore.”

And then last week, New York City offered $30 an hour to shovel snow, and more than 1,400 people signed up in a single day.

The people didn’t change. The price of their time did.

This story shows up in labor markets all the time. A job needs to get done, but not enough people are willing to do it at the current pay. Then the pay increases, and suddenly, people show up.

That’s exactly what played out as a major snowstorm approached the Northeast. Just before the snow began to fall, the mayor announced the new wage.

And just like that, a quiet weekend at home started to look a little more expensive.

This Isn’t About Being a Good Neighbor

The mayor could have asked residents to step up out of a sense of community, to pitch in and help their neighbors dig out. Mayors make those appeals all the time, and sometimes they work at the margins. But they tend to run into a simple constraint: people’s time has value.

And this wasn’t easy work. Shoveling snow is cold, physical, and inconvenient even on a normal day. During a major blizzard, it’s worse. Travel was restricted, schools were closed, and conditions were severe enough that most people were planning to stay inside.

A simple request to “pitch in” wasn’t likely to move many people. If anything, this is exactly the kind of work people avoid when they have the choice.

So the decision came down to a tradeoff.

Every hour spent outside clearing sidewalks is an hour not spent inside, staying warm and comfortable. At low wages, that’s an easy choice. Staying home wins.

At $30 per hour, that same choice looks different. A few hours on the couch now comes with a new price tag. Staying home effectively costs $30 per hour in lost income.

That shift is what brought people outside.

The Work vs. Leisure Tradeoff

Economists formalize this idea as the work–leisure tradeoff. Leisure isn’t just vacations or time off. It’s anything that isn’t paid work. That includes staying under a blanket, avoiding the cold, or tackling something else at home.

Work, by contrast, is when you’re paid to give those things up. The city was already paying about $19 per hour for emergency snow removal. There was always an opportunity cost to staying home, but that wage wasn’t high enough to pull many people out into the cold.

When wages are low, leisure is relatively cheap. Giving up income doesn’t cost much, so staying home feels like the better option.

But when the wage increased to $30 per hour, leisure became more expensive. It’s not because you’re paying for it, but because of what you’re giving up by not working. At $30 per hour, time at home carries a higher opportunity cost.

That’s why higher wages tend to increase the quantity of labor supplied. More people decide that working is worth it.

At extremely high wages, this relationship can reverse. People may work less because they can afford more leisure, a concept known as the income effect. But that’s not what we’re seeing here. In this case, higher wages did exactly what we would expect: they pulled people out of their homes and into the cold.

Why the City Had to Raise Wages

The program itself wasn’t new, but the scale of the storm was becoming an issue. As its arrival got closer, it was clear this one would be larger, more disruptive, and far more urgent. As the storm intensified, so did the need to clear sidewalks.

More snow meant more work and more urgency to get it done quickly. The demand increased, not for workers themselves.

The city wasn’t hiring people for the sake of hiring people. It wanted clear sidewalks. Economists describe this as derived demand, where the demand for labor comes from the demand for a final outcome. Workers were simply the means to get there.

At the previous wage, the existing workforce wasn’t large enough to meet that demand. There weren’t enough people willing to shovel given how demanding the job was and what they’d have to give up to do it.

The result would have been a shortage. Too few workers relative to the amount of snow that needed to be cleared, leaving sidewalks covered and the city struggling to keep up.

So the city raised wages to pull more people into the market. And as economic theory would predict, more workers showed up.

Final Thoughts

As economist Alex Tabarrok puts it, prices are a signal wrapped in an incentive. When New York City raised wages, it didn’t need to convince people to help. The higher pay did that work on its own. Time that would have been spent at home now had a clear market value.

That’s what makes this story useful beyond last week’s snowstorm. Even in the middle of a snowstorm, prices were doing what they’re designed to do: coordinate behavior.

Many employers say they’re struggling to find workers, often framing it as a question of motivation or work ethic. But the pattern looks familiar. When the amount of work increases and wages don’t adjust, shortages follow. It’s not because people don’t want to work, but because they don’t want to work at that wage.

New York adjusted wages quickly. Other employers often don’t.

Instead, they rely on appeals to their current employees. They’ll ask them to pitch in, go the extra mile, or show loyalty when more effort is needed. But those requests don’t change the underlying tradeoff. Wages do.

If you want more labor, raise the price of labor.

Because at the end of the day, people aren’t choosing between working and not working. They’re choosing how to spend their time. And when the price is right, even a snowstorm can turn a quiet day at home into a day on the job.

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• Last week’s snowstorm was the ninth biggest ever for Central Park, which saw 19.7 inches [NBC New York]

• The emergency snow shovelers cleared an estimated 16,000 crosswalks, about 4,166 hydrants, and close to 7,000 bus stops [Office of the Mayor]

• The emergency snow shoveling program was initially offered as temporary employment for men left economically devastated by the panics of 1857 and 1893 [Slate]

• 68% of employers believe there is a lack of “work readiness” in younger generations joining the workforce [The Standard]

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

1. America’s richest people are not its most generous [Forbes]

2. Rent control is the talk of the town in Boston [Morning Brew]

3. There’s a new term for workers freaking out over being replaced by artificial intelligence [Gizmodo]

4. The average price of coffee across US cities went up to $9.37 per pound in January, the most expensive since records began in 1980 [Sherwood News]

5. How consumers plan to spend their tax refunds this year [National Retail Federation]

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Did Norway really “win” the Winter Olympics, or did other countries simply fall short of expectations? This week’s article looked at how population and income can be used to estimate how many medals countries should have won. We then compare it to what actually happened to highlight surprising underachievers and consistent overperformers.

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Every few years, we end up having the same debate about which country actually “won” the Olympics. Is it the country with the most total medals, or the one with the most gold medals? The International Olympic Committee (IOC) doesn’t officially recognize a ranking of participating countries, but it still publishes medal tallies for comparison. Once a new set of Olympic Games begins, it doesn’t take long for the debate to start back up.

That debate tends to matter more in the Summer Olympics, where different rankings can lead to different answers. The Winter Olympics are a bit different. If you’ve watched them for long enough, you know one thing is true: Norway dominates.

It’s a country roughly the same size as Montana, with a population similar to Minnesota. And yet, it consistently piles up medals at a rate that far exceeds much larger countries, often leading in both total medals and golds.

So instead of asking who won based on medal counts, let’s ask a different question: Which countries should have won more medals… and didn’t?

Turning Medals Into an Economics Question

Economists tend to view Olympic success the same way we think about economic output for any industry. Countries “produce” medals using inputs like population (a larger talent pool) and income (the ability to invest in training and facilities). More resources generally lead to more output. Olympic medals are just another kind of output.

That concept was formalized in a 2004 paper by Andrew Bernard and Meghan Busse, who showed that population and income go a long way in explaining Olympic medal counts. Their work focused on the Summer Olympics, where most countries have access to the same sports. But the Winter Olympics are a little different. Not every country is built for snow and ice. The Jamaican bobsled team has been reminding us of this for decades.

Can We Predict the 2026 Olympics?

Over the weekend, I collected data from the 2014, 2018, and 2022 Winter Olympics to estimate how population and income relate to medal counts. I also included controls for whether a country was hosting and a measure of winter exposure based on latitude to capture potential geographic advantages. I initially tested whether broader institutional measures might explain medal performance, but they didn’t have any meaningful effect in this setting.

Once all that data was cleaned and fed into the model, I used those estimated relationships to predict medal counts for the 2026 Winter Olympics and scaled the predictions to match the total number of medals awarded.

From there, we can compare our predictions to the actual results. Countries that exceed expectations are overachievers, while those that fall short are underachievers.

The Countries That Fell Short

Let’s start with the biggest surprises. These are the countries that fell furthest below their predicted medal counts. If you don’t regularly watch the Winter Olympics, this list might be surprising.

Taken as a whole, these aren’t particularly small or poor countries. In fact, that’s exactly why a few of these show up on the list. Based on their population, income, and geography, the model expected several of these countries to win at least a dozen medals. Collectively, they won fifteen.

But a closer look helps explain part of the story. Some countries sent only a handful of athletes. For example, Ireland sent just four competitors. Even the best countries in the world would struggle to earn fifteen medals from just four athletes.

Others face structural constraints. Despite its size and wealth, Great Britain has limited access to consistent snow and ice infrastructure. That makes it harder to develop elite winter athletes year after year.

This doesn’t mean the model is wrong; it’s just incomplete. As statisticians like to remind us, all models are wrong, but some are useful. This one only gives us a foundation for what we might expect if countries converted their geography, population, and income into medals in the same way.

Our model doesn’t capture whether countries have chosen to invest in this athletic space in the first place. That’s where our story takes us next. While some countries may fall short of expectations, others consistently do the opposite.

The Countries That Delivered More Than Expected

Let’s now turn to the countries that exceeded expectations. It includes an interesting mix of countries that vary widely in population and income. By our estimates, they have all converted their resources into medals more effectively than expected.

Some of this makes intuitive sense. Italy came out near the top, but that’s not uncommon for host countries. The United States, China, and Japan all have the scale and resources to support large Olympic programs, but even they managed to outperform expectations.

And then there’s Norway.

Our model predicted that Norway would earn roughly 13 medals, roughly the same as its neighbor Sweden. Norway would shatter its own winter records with more than triple that amount, while Sweden produced a few more than expected.

Both countries have similar economic profiles. While Sweden has a larger population, Norway has a higher level of per capita income. Both are firmly in the part of the world where winter sports are part of everyday life.

Similar region. Similar inputs. Similar predictions.

Very different outcomes.

Absolute vs. Comparative Advantage

Norway isn’t just producing winter medals. It specializes in them. And that’s what separates it from countries like Sweden. Both are producing a large number of elite athletes. Both have the resources, climate, and experience to compete at a high level. But Norway has gone a step further, consistently turning those advantages into medal-winning performances.

Our results reflect a broader economic story about how countries “produce” Olympic success.

Let’s start with what economists call absolute advantage. Countries with larger populations and higher incomes simply have more resources to work with. A bigger population creates a deeper talent pool, while higher income supports better training, coaching, and facilities. In our model, a 10% increase in population is associated with roughly half an additional medal, while doubling income per person is associated with about six additional medals.

But as Norway and Sweden show us, having more resources isn’t enough. What matters is how those resources are used.

Comparative advantage helps explain why countries with similar resources can end up with very different outcomes. Countries specialize in what they’re relatively better at producing. In the Winter Olympics, that advantage often comes from geography. Cold climates and consistent access to snow and ice make it easier to develop athletes in sports like skiing and biathlon.

But geography isn’t the whole story.

Institutions matter too. Some countries have built systems that identify talent early and invest in long-term development. Those systems don’t show up directly in population or income, but they play a key role in turning resources into results.

This helps explain both sides of our results. Countries like Great Britain and Ireland have the resources, but not the same environment or institutional support for winter sports. Countries like Norway combine both geographic advantages and sustained investment to consistently exceed expectations.

Final Thoughts

So who “won” this year’s Olympics? That depends on who you ask. If we shift the narrative from who won the most medals to who exceeded expectations, the answer becomes less obvious and a lot more interesting.

Norway still stands out, not just for winning the most medals, but for continuing to outperform what its size and economy would predict. But it’s not the only contender. Italy shattered its previous record while hosting. The United States outperformed expectations and captured one of the most visible moments of the Games with its hockey victories. And countries like Australia showed that countries can still medal even without a natural winter climate.

That’s what this approach highlights. It doesn’t replace the medal table, but adds another way to interpret it. Even for the countries labeled as underachievers, competing at this level is an extraordinary accomplishment. The goal is simply to help us understand why the results look the way they do.

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• The first Winter Olympic Games were held in 1924 in Chamonix, France [International Olympic Committee]

• Norway has won the most gold medals at every Winter Olympics dating back to Vancouver 2010 [NBC Olympics]

• Ireland has sent a total of 36 athletes to the Winter Olympics since 1992 [Olympic Federation of Ireland]

• Through mid-competition, NBC is averaging approximately 23.9 million to 26.5 million daily viewers in the U.S. across platforms, a 90%–93% increase over the 2022 Beijing Games [KSL.com]

• American athletes earn $37,500 for gold, $22,500 for silver, and $15,000 for bronze medals [USA Today]

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

1. How accessible Winter Olympic sports are, based on where you live in the US [The Washington Post | Archive]

2. Americans’ optimism about the future last year fell to the lowest level since the measurement began in 2009 [Gallup]

3. A Boston Raising Cane’s is facing eviction over the smell of its chicken fingers [WFAB]

4. Artificial intelligence promised to reduce work, but new research says otherwise [Harvard Business Review]

5. The key to boosting US birth rates may be remote work [The New York Times | Archive]

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I was recently interviewed for an episode of The Indicator from Planet Money to talk about the return of Hamburger Helper. Behind the boxed meal’s comeback are some very real economic forces: rising grocery prices, shifting consumer behavior, and a bit of nostalgia-driven decision-making.

This week’s article went beyond the cultural spotlight to examine Puerto Rico’s economy by the numbers. While the island is closely integrated into the U.S. economic system, income levels remain lower, unemployment higher, and growth slower than the mainland. If you missed it, take a few minutes to dive into the data behind the headlines.

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Last week’s Super Bowl halftime show was impressive. Viewership numbers placed it near the top of the record book, and social media buzzed for days. In the middle of America’s biggest sporting event, millions of viewers were immersed in the sights and sounds of Puerto Rico.

Bad Bunny’s performance was more than entertainment. It was a carefully constructed portrait of everyday life on the island: sugarcane stalks on stage, a piragua stand selling shaved ice, barber shops and nail salons, domino tables, boxers sparring under bright lights.

The intent was a cultural celebration. But it also raised an economic question: what does Puerto Rico’s economy actually look like?

Only around two-thirds of Americans can confidently say that Puerto Ricans are U.S. citizens. Even fewer could likely describe how its labor market performs or what industries drive production on the island. The halftime show placed Puerto Rico in the spotlight. This week, we’ll examine the numbers behind it.

A Unique Economic Relationship

Puerto Rico’s economic story is inseparable from its relationship with the United States. Since 1898, the island has been deeply integrated into the U.S. economy, though never fully incorporated as a state. It adopted its own constitution in 1952, yet remains subject to federal law. Residents are U.S. citizens by birth, and goods move freely between Puerto Rico and the mainland.

But integration does not mean equivalence.

Puerto Rico has no voting representation in Congress. Residents generally do not pay federal income taxes on income earned on the island, though they contribute to payroll taxes such as Social Security and Medicare. The island does not control monetary policy or its own currency. When the Federal Reserve adjusts interest rates, Puerto Rico adjusts with it.

For decades, federal tax provisions encouraged pharmaceutical and manufacturing firms to locate production on the island. Those policies helped build a strong industrial base, but investment declined when the incentives were phased out in the mid-2000s. The island entered a prolonged recession that contributed to rising public debt and accelerated out-migration.

Puerto Rico operates inside the U.S. economic system, but without the full policy tools of a state. That distinction shows up clearly in the data.

What Does Puerto Rico Produce?

Based on the halftime show, you might assume Puerto Rico’s economy revolves around tourism and small neighborhood businesses. Those sectors matter, but the data tell a more industrial story.

Manufacturing accounts for roughly 44% of Puerto Rico’s total output. In the United States as a whole, manufacturing contributes closer to 10% of GDP. By production alone, Puerto Rico looks far more industrial than most states.

Pharmaceuticals and medical devices dominate exports, and the island is still a critical hub in the U.S. drug supply chain. But production and employment tell slightly different stories.

When we look at employment, Puerto Rico closely resembles the mainland. Most workers are employed in services like retail, healthcare, education, and government, just as they are across the United States. Manufacturing employs a relatively small share of workers.

So how can manufacturing account for nearly half of output but only a modest share of jobs?

The answer lies in capital intensity. Pharmaceutical production relies on advanced facilities, specialized equipment, and intellectual property. A relatively small workforce can generate substantial output. Output per worker is high, but those gains do not necessarily spread evenly across the broader labor market.

Therefore, services dominate employment. Government employment, in particular, represents a larger share of total jobs in Puerto Rico than in the United States overall. That reflects the structure of the local economy and the underdevelopment of the private sector.

Once centered on sugarcane, agriculture now plays only a minor role in both output and employment. The sugarcane displayed during the halftime show symbolized history more than present-day production. The Puerto Rican economy resembles a specialized manufacturing hub layered on top of a service-oriented labor market. That distinction matters when we examine income and growth.

The Numbers: Puerto Rico vs. the U.S.

Employment shares may look similar, but the broader economic outcomes do not. To compare Puerto Rico and the United States, we turn to four popular indicators: income per person, unemployment, inflation, and economic growth.

Because the U.S. government does not publish all macroeconomic measures for Puerto Rico in the same way it does for the states, these figures rely on data compiled by the International Monetary Fund.

Income per Person

Puerto Rico’s GDP per capita is roughly half that of the United States overall. If ranked alongside the states, the island would fall below Mississippi, currently the lowest-income state.

Despite its large manufacturing sector, much of that output is capital-intensive and tied to multinational firms. The value added does not translate into broad-based income gains across the population. Lower income levels create persistent pressure, particularly for younger and more educated workers.

Unemployment

The unemployment rate has improved substantially from the double-digit levels seen a decade ago, but it remains several percentage points higher than the U.S. average.

Labor force participation is also significantly lower. A smaller share of working-age adults is either employed or actively seeking work. That pattern reflects long-term economic adjustment and demographic shifts.

Inflation

Inflation in Puerto Rico generally moves alongside U.S. inflation. The island uses the dollar, imports most consumer goods, and shares the same monetary policy.

Geography, however, introduces structural cost pressures. Nearly all goods arrive by boat or plane. Shipping regulations under the Jones Act and higher energy costs can elevate baseline expenses. When inflation rises on the mainland, Puerto Rico feels it. When transportation or energy costs increase, those effects can be magnified.

Economic Growth

Growth provides the clearest divergence. Recent data show Puerto Rico’s real GDP growth hovering around zero, while the United States has grown at roughly 2% annually.

Growth determines whether income gaps narrow or widen. An economy that grows more slowly gradually falls behind. Puerto Rico’s slower growth reflects population decline, industrial concentration, and the lingering effects of prolonged recession.

Final Thoughts

The data points to a consistent direction. Puerto Rico shares the currency, monetary policy, and much of the employment structure of the United States. Yet incomes are lower, unemployment is higher, and growth has lagged.

Perhaps the most important consequence of those differences is migration.

Over the past two decades, hundreds of thousands of younger, working-age Puerto Ricans have moved to the mainland United States. Migration is often described as cultural, but it is also economic. When income gaps persist and growth stalls, labor moves toward opportunity.

Higher earnings and stronger labor market outcomes on the mainland create a steady pull, while slower growth at home reinforces the push. Migration can ease short-term labor market pressure, but over time, it shrinks the working-age population and narrows the tax base. An economy that steadily loses younger workers faces structural issues that compound over time.

The halftime show celebrated Puerto Rican culture in vivid detail, but behind that cultural celebration is a complex macroeconomic reality.

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• With a population of about 3.2 million, Puerto Rico is larger than 18 states and the District of Columbia [Institute on Taxation and Economic Policy]

• About 125 million people in the US watched Super Bowl LX, but Bad Bunny’s halftime performance registered an even larger audience: 128.2 million viewers [CNN]

• A 1917 act of Congress established that people born in Puerto Rico are U.S. citizens [Immigration History]

• About 47% of Puerto Ricans lack confidence in their ability to absorb a $2,000 economic shock [CNBC]

• If the residents of Puerto Rico voted in favor of it, 52% of U.S. adults would support their vote [YouGov]

• Puerto Rico’s population shrank by 13.73% between 2000 and 2020, from 3.8 million to about 3.2 million [Financial Oversight & Management Board for Puerto Rico]