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

1. Has capitalism gotten a bum rap? [The Wall Street Journal]

2. Americans estimate they’ll need $1.2 million to retire comfortably, but only 30% think they’ll hit the mark before retiring [CNBC]

3. One artist is selling cubes of trash from the street outside of Taylor Swift and Travis Kelce’s wedding [Fast Company]

4. Compact disc sales are up 16% in the first half of the year [Vice]

5. A $400 pink pineapple exists, but it’s illegal to buy, sell, or even grow it in the country that produces it [The Hustle YouTube]

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The World Cup is over, but don’t let anyone tell you it was an economic success. Reports that it generated billions in economic activity are overstated and undersupported. You can learn more about the economic impact of mega events from our post a few weeks back:

Grocery unit sales fell last month as prices climbed, but the data reveals something more nuanced. Using survey data from Bain & Company and LendingTree, take a walk through the grocery store to learn why the same price increase can be a shrug for one product and a dealbreaker for another. Four factors are driving how you respond to price changes. Have you experienced them all?

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You’re standing in the cereal aisle, and you’re doing math you don’t remember doing on previous shopping trips. The name-brand box of your favorite cereal is $4.29. The store brand is shelved right beside it and only costs $2.29. You wouldn’t have thought twice about grabbing your favorite box last year, but today is different. You put the store brand version in your cart and head to the back of the store to pick up your milk. You’re buying the same amount as last time, even though it’s up 6.6% since this time last year.

You may not realize it in the moment because you’re worried about your final total at checkout. Still, you just performed two completely different economic behaviors in the span of a few minutes. Recent headlines have found that grocery unit sales around the nation dropped 1.8% last month compared to a year ago, all while grocery prices have climbed 2-3%. On the whole, that shouldn’t be too surprising since we know demand curves slope downward.

People are spending more and getting less, but the story is more nuanced. If we look closer at the data, the cuts aren’t landing evenly. Grocery spending overall is bending, but it hasn’t broken. Here’s what the latest data reveals, one aisle at a time.

What the Data Actually Shows

You’re not the only one doing this math in the grocery aisle. Bain & Company’s U.S. Consumer Pulse Wave survey found that 80% of Americans are still trying to spend less overall, and 28% say they’re actively cutting back specifically on groceries. What matters for our story today is how those particular shoppers are cutting back. Among that group, 56% are trading down to cheaper brands, 49% are just buying fewer items, and 44% are leaning harder on coupons and promotions.

If we go back to 2019, a grocery trip that used to ring up around $300 now runs closer to $400. Grocery prices roughly 33% higher than they were in 2019. But not every price hike gets treated the same by shoppers. Some get shrugged off, some trigger a full brand switch, and some just mean an item quietly disappears from the cart altogether. Here’s why.

Why Some Prices Sting More Than Others

Economists have a word for these reactions: elasticity. At its core, it’s just a measure of a consumer’s sensitivity to a price change. When demand is elastic, a price increase sends shoppers running for alternatives. When it’s inelastic, people pay up and barely change their behavior at all.

Let me add a technical caveat real quick. Economists usually talk about elasticity whenever the price of one item or group of items moves, and everything else in a shopper’s life stays exactly the same. That’s not really what’s been happening the past few years, since prices are increasing across the board. If you haven’t gotten a raise in the past year, that distinction probably feels pretty academic. A price increase is a price increase, regardless of whether it’s actually an example of how an economist would measure a “pure” elasticity scenario. It’s worth noting that CEOs and business leaders have been talking about consumers’ reaction to inflation in exactly these terms anyway.

So we’re going to use the term the way it actually shows up in a shopper’s life to answer our simple question. When the price goes up, do you keep buying it anyway, or do you change what’s in your cart? It turns out the answer depends on a handful of factors that quietly decide how elastic any given purchase turns out to be.

How Narrow You Draw the Line

The first factor is how you define what you’re even measuring. Broad categories like “groceries” as a whole are pretty inelastic. Everyone has to eat, so when prices go up, there isn’t much we can do about the total amount of food we buy. Our grocery budgets just absorb the hit instead.

But narrow the frame to “cookies,” and people suddenly have more room to make changes. Cookies aren’t a necessity, so a category-wide price increase means some shoppers just buy fewer of them and others grab a bag of chips instead. If we narrow the framing all the way down to a single product, the reaction gets stronger. Raise the price of Oreos, and shoppers can still switch to chips, but they can also switch to any other brand on that aisle.

This factor is likely what’s driving the shoppers who are trading down to cheaper brands. They aren’t making wholesale changes in their weekly diet, but they are making one swap at a time. The narrower the category, the easier it is to find something else to purchase.

Necessities vs. Everything Else

The second factor is what type of item you’re actually looking at. Some parts of the cart look completely untouched from last year: milk, eggs, bread, butter. Other aisles are getting cut left and right: name-brand cereal, premium frozen meals, specialty drinks, the good cookies. This is the difference between necessities and luxuries.

Few people negotiate with milk and eggs, but a lot more people negotiate with cereal and cookies. Remember when egg prices spiked a few years back? People kept buying them anyway, because breakfast doesn’t really have a substitute for eggs for a lot of families. That’s an inelastic demand. The more elastic response happens with luxury items, which explains why people are skipping the “splurge” items to save money for their necessities.

Why It Took This Long

The third factor is time. In the short run, demand for food is almost perfectly inelastic. You need groceries to make tonight’s dinner regardless of what things cost at checkout. There’s no backup plan for the first time you feel a price spike. You just shake your head in the parking lot, staring at the receipt, wondering what happened.

But give people some time, and they start to adapt. They set up a budget, buy in bulk, or give the store-brand pasta sauce a try and discover it’s actually fine. It’s a slow build, and it’s probably why one of the more striking parts of Bain’s data is showing up only now: after two or three years of elevated grocery prices, unit sales are just starting to decline. The long-run response is finally catching up to years of steady price increases.

The Same Price Tag, Two Different Budgets

The last factor addresses how much room a price increase has to work with in your budget. For a household where groceries eat up 6-8% of the monthly budget, a price increase may not change any decisions. But for a household where groceries make up 30-35% of the budget, that same increase is a much bigger issue. The larger the share of a budget something takes up, the more sensitive people become to its price.

Take meat, for example, which makes up 22-26% of a typical grocery budget. Any price changes in that category have a much larger impact, which explains why rising beef prices have stung so much lately. This factor also helps explain the rise in coupon-clipping and brand-switching more broadly. As price increases work their way up the income ladder, more households start feeling the squeeze, and more households start adopting the same cutting-back habits.

Final Thoughts

Most people affected by food prices have realized that relief probably isn’t coming soon, so they’ve started finding even more ways to cut back. Even the people who look like they have it all together are running some version of the same calculations you are. That’s likely what’s behind the rise of social media cooks showing you how to feed a family for $5 or $10 using dollar-store ingredients.

Of course, we never really touched on the policy side of this story, but it’s worth knowing it exists. Over the past few years, some politicians have pushed for price caps on groceries, while others have floated the idea of city-owned grocery stores to compete on price directly. Whether either approach would actually work (and whether it’s the government’s role to try) is a genuinely contested question. Unsurprisingly, people’s views on it tend to split predictably along party lines. Alas, that’s a conversation for another day.

I can’t help you find a better deal on your favorite cereal or tell you how to stretch this week’s budget. But I can let you know you’re not alone. The math you’re doing in that aisle is the same math showing up in survey after survey, cart after cart, all over the country right now. The next time you’re in the checkout line, you’ll at least know why the box in your cart isn’t the one you would have grabbed a year ago. It’s elasticity, working in real time, and you’re not doing this math by yourself.

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• Household spending on food at home averaged $6,224 in 2024, compared with $3,945 spent on food away from home (restaurant meals, delivery, and takeout combined) [Bureau of Labor Statistics]

• About 66% of Americans now describe grocery costs as unaffordable, up sharply from 45% in February [The Washington Post]

• About 34% of high-income households say they shop several times a week, compared with 25% of middle- and lower-income households [YouGov]

• 19% of Gen Zers, 18% of millennials, 17% of parents of young kids, and 22% of low-income households (under $30,000) say affording food has become very difficult, compared with just 5% of baby boomers [Lending Tree]

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

1. Presenting A.I. agents as digital employees may make human workers worse at spotting errors and more likely to offload accountability [MIT Technology Review]

2. Americans’ reading habits have declined across age groups, gender, and education levels [The Atlantic]

3. A.I. labs are hiring philosophy majors [The New York Times | Archive]

4. Why staying in isn’t the cost-saver it used to be [CNBC]

5. Why recruiters can’t find workers and new grads can’t find jobs (it’s not AI) [The Washington Post | Archiver]

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A quarter of Americans believe they could score a penalty kick against a professional goalkeeper. This week’s piece uses that surprisingly common belief to unpack overconfidence bias, one of the most replicated findings in behavioral economics, and traces it from soccer surveys all the way to individual stock traders and sports bettors. Read the full story to see why the same instinct that makes people so sure they’d nail the shot is quietly costing investors and bettors real money.

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The final whistle blows, and your heart sinks a little as you realize the game will be decided by penalty kicks. You’ve just watched two hours of a back-and-forth match come down to a handful of well-placed shots.

The kicker spots the ball, twelve yards from a professional goalkeeper who has spent their entire adult life doing exactly one job. Last week, we talked about where a kicker should aim if they only had one shot and wanted to maximize their odds of scoring.

Today’s question is simpler: do you think you’d score in that situation?

Of course, we could have flipped the question and asked about the other side of the kick. If we put you in the net as the goalkeeper, could you stop a penalty kick against a professional striker? The numbers come back similarly bold on both sides. A lot of people, watching from their couches, are convinced they’d be fine out there.

A recent survey found that roughly 1 in 4 Americans believe they could score a penalty kick against a professional goalkeeper. It stood out because penalty kicks are uniquely high-pressure moments in sports with intense individual scrutiny and a high-stakes outcome. And yet a lot of people don’t seem fazed by any of that.

We’ll see how our own reader poll stacks up against that. For now, here are the results of that survey:

But I’m different…

I told myself I wouldn’t write another soccer story, but it was hard to pass on these findings. That was a representative survey of U.S. adults. We’re talking about people with no special training in the sport and who have likely never done anything in front of 80,000 people. And still, they’re sure they could do it.

Of course, this isn’t really a story about soccer. It’s a story about economics.

This hubris can be found in a variety of scenarios. Nearly half of all men say that in an emergency, they could land a commercial airplane with an air traffic controller talking them through it on the radio. A notable share of people say they could win a fight against a gorilla. And a majority of people say they could perform CPR on an adult whose heart has stopped, even though only one in six actually know the recommended technique for bystander CPR is chest compressions alone, no rescue breaths.

Notice how wide the contexts are? We’ve got airplane cockpits, wildlife enclosures, cardiac emergencies, and penalty kicks. The stakes are wildly different, yet a suspicious number of people believe they’d clear a hard, objective bar even without knowing what the bar actually requires.

There’s a name for this in behavioral economics: overconfidence bias. It’s the tendency to overestimate our own abilities, our odds of success, and our control over outcomes. It’s one of the most replicated findings in all of behavioral economics, tested across education, dating, investing, health, parenting, you name it. It holds up nearly everywhere researchers look.

Okay, so what?

These are fun surveys, but they’re also all things most of us will never actually be tested on. You’re probably never taking a World Cup penalty kick or landing a commercial plane, and you’re (hopefully) not fighting a gorilla. So why should any of this matter to you?

Stop looking at the examples and start looking at the behavior underneath them. The specific scenario isn’t the point. It’s the belief that you could handle something hard, with no real basis for thinking so. That reflex doesn’t stay contained to hypothetical emergencies you’ll never face. It shows up in decisions you’re actually making, with actual money, right now.

Take investors. Overconfident traders are convinced their read on a stock is sharper than everyone else’s, so they trade more often than cautious ones do. That seems reasonable enough since people who are right more often should act more often. Except the data runs the other way. Studies find that the more actively individual investors trade, the worse their returns tend to be.

Or look at the explosion of sports betting and prediction markets, especially among young men. Over half of American men ages 18 to 49 now have an active sportsbook account, and bettors overwhelmingly say they believe they can make money doing it. And yet only 3 in 10 say they’ve actually come out ahead. The participants in these markets skew younger, more educated, and male. It’s the same group that tends to be more overconfident in plenty of other contexts, too.

There’s nothing inherently wrong with believing in yourself. The issue is that we’re misjudging ourselves in ways that can actually cost us financially (or physically in a fight against a gorilla). These findings aren’t just random noise with some people guessing high and some guessing low until it all washes out. It’s a systematic bias, and one that entire industries are built to profit from.

Final Thoughts

If you didn’t already know it, you now have a name for the flicker of confidence you felt when you read the opening of this article. The real question was never really “would you score?” It’s why you think you would.

That flicker is the same one sitting inside the investor placing one more trade, and the bettor certain this is the pick that finally pays off. It’s not stupidity or even arrogance. It’s something closer to a factory setting in the human mind, running in the background while you’re watching the penalty-kick shootout or logging into your brokerage account.

We could write an entire separate article on prediction markets alone given how fast they’re growing, but that’s a story of its own that we’ll come back to another day. For now, the takeaway is simpler than that. The next time you feel completely sure about something, it might be worth pausing for half a second to ask what that certainty could cost you.

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• Players in the 2026 World Cup have converted just 32 of 49 penalties (65.3%) so far, the lowest since 1966 [Yahoo! Sports]

• 90% of U.S. adults express confidence in their ability to detect and prevent financial scams, yet more than 27% report falling victim at some point [Citi Group]

• 12% of Americans between 18 and 24 years old said they have placed a prediction-market wager, an identical finding for those who were between 25 and 34 years old [Politico]

• In a survey of over 1,200 bettors, nearly a quarter believe they win 75% of the time, even though the break-even threshold in sports betting is around 52.4% [Sports Betting Report]

• Today, 47% of men under 30 say legal sports betting is a bad thing for society, up from 22% who said this in 2022 [Pew Research Center]

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

1. Foreign demand for American government debt is becoming much less reliable [The Economist | Archive]

2. New Jersey became the latest state to pass a law banning surveillance pricing, joining Maryland and Connecticut [Gizmodo]

3. 250 years of the U.S. economy [NPR’s Marketplace]

4. OpenAI is in early discussions to give the US government a share of the company as part of an effort to soften increasing political pressure on the AI industry [CNBC]

5. Google loses fight over record $4.7 billion EU antitrust fine [Reuters]

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We broke down the economics of Love Island last summer, but there’s a brand new cast in the villa and the same forces are at play. This reality show turns out to be a surprisingly fun illustration of matching theory, the economic framework that explains how markets pair buyers with sellers, students with schools, and yes, contestants with partners.

Matt Freese is the USMNT’s starting goalkeeper at the 2026 World Cup, but he’s also a Harvard economics grad who once wrote a research paper on penalty kicks that he refuses to share with the world. His silence turns out to be a surprisingly perfect entry point into game theory, mixed strategies, and why professional kickers keep avoiding the one shot that statistically works best. Read on to find out what the data says, and why nobody can fully perfect the twelve yards between the spot and the goal.

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Growing up, Matt Freese wanted to be a professional athlete. He’d played obsessively since childhood and was good enough to earn a scholarship to play Division 1 soccer. He could have played college soccer just about anywhere, but he picked Harvard. It was the kind of thing that makes a family proud.

But after just a few semesters in Cambridge, his dream opportunity arrived when a professional team came calling. Plenty of people drop out of college, and the reasons vary from chasing a dream to realizing school isn’t the right fit. This was squarely the former. He did what a lot of people would do in his shoes and left campus to take the chance.

Most people who leave school for a job let the degree go quietly after that. But Matt Freese is a little different. He made good use of the free time afforded to professional soccer players by auditing graduate-level sports business classes and cold-emailing professors to see if he could sit in on class. It didn’t take long for him to realize he wanted his degree, so he decided to finish it by taking classes online between practices. In 2022, he graduated from Harvard with a degree in economics.

Somewhere along the way, he wrote a research paper on a rare but consequential moment inside his sport: the penalty kick. He studied the statistical signatures of what a player is about to do before he’s even fully decided to do it himself. That’s all we really know about it, because he hasn’t shared the results with anyone. Asked about it directly, his answer has stayed the same. He’ll talk about it when he’s done playing.

If you don’t know by now, Matt Freese is currently the starting goalkeeper for the United States at the 2026 World Cup. His training in Philadelphia and New York helped build him physically, but what he learned in his economics classrooms has prepared him mentally for the moment that could decide his team’s World Cup.

Twelve Yards, Two Minds

Goalkeepers aren’t the only people obsessed with penalty kicks. Kickers, coaches, and now a small industry of sports scientists all study the same twelve yards, for good reason: a penalty is about as close to a guaranteed goal as soccer gets. Roughly four out of five penalties go in. Once the whistle blows, the math favors the kicker so heavily that the goalkeeper’s job barely resembles goalkeeping at all.

That’s why so many goalkeepers keep a cheat sheet with them, either taped to the inside of their sleeve or, more famously, printed on a water bottle. The notes often highlight each kicker’s preferred foot and which side he tends to favor. If you’re curious, Matt Freese doesn’t bother. After saving three penalties in a shootout, he was asked about his notes. “I had no cheat sheet, nothing like that,” he said. “I had all 20 guys on their roster memorized.” Admittedly, this is a very Harvard-econ-grad way to prepare for a soccer game.

There’s a real puzzle underneath all this preparation, one that would exist whether or not anyone had a cheat sheet at all. The kicker wants to pick the spot the goalkeeper won’t reach. The goalkeeper wants to dive toward the spot the kicker is about to pick. Neither can decide in isolation, because the right answer for each one depends entirely on what the other does.

Suppose you’re a kicker who’s excellent at going low to your right. Should you stick with it for your next kick? If the goalkeeper knows your tendency, he can anticipate the shot and turn your shot into an easy save. But the goalkeeper faces a mirrored version of the same problem. If he commits to diving one way every time, kickers can adjust their shot to the other side and score more frequently.

This back-and-forth decision-making, where one player depends entirely on what the other is doing, is what economists study as game theory. It turns out that penalty kicks are one of the cleanest real-world examples of strategic interdependence there is. Neither player can safely repeat the same choice over and over, which means neither has a dominant strategy. So the only sound approach for both kicker and keeper is a mixed strategy that involves deliberately varying your choices so no pattern ever forms for the other side to exploit.

But players are only human. They have biases and tendencies like anyone else, which is exactly why a goalkeeper would want a water bottle’s worth of them or a Harvard research paper’s worth memorized in his head. But this raises an interesting question about what happens when the kicker walking up to the line has no tendencies on record at all?

The Players With No Patterns

Over the past week, Freese has almost certainly been adding data points to the paper nobody’s allowed to read. The World Cup’s knockout rounds have produced a run of shootouts, and it’s hard to imagine him watching them as just a fan. He’s likely clocking foot plants and run-ups the way a scout studies film. But one of last week’s shootouts probably taught him something about the limits of that work.

Germany was eliminated by Paraguay in a shootout last week. Tied 3-3 in sudden death, four German players in turn declined to take the deciding kick. It finally fell to Jonathan Tah, a center-back who had never taken a competitive penalty in his career. He struck it over the crossbar, and Paraguay won on the next kick, taken by another center-back with little to no penalty pedigree of his own. Across several shootouts last week, more than a few shooters stepped up with career penalty logs that were either empty or nearly empty.

If you only watch soccer once every four years, you’d be forgiven for assuming this is unusual. It isn’t, and there’s a simple reason inexperienced shooters keep ending up on the spot in the sport’s biggest moments. In-game penalties only need one or two trusted takers, but a shootout needs at least five. But teams rarely get to build up shootout experience in the first place because shootouts themselves are rare. They only happen in knockout matches, which are a small fraction of the games any team plays in a year.

Think about what that means for a goalkeeper like Freese. Every scouting report and tendency chart he builds for a typical opponent would have been useless against Tah because there was nothing there to study. The Paraguayan goalkeeper didn’t need to worry too much since Tah’s kick sailed well over the bar. But if you only get one shot at a penalty in your life, where should he have actually aimed it?

The Boring Shot Nobody Takes

Of course, Matt Freese isn’t the only person who’s turned penalty kicks into a research subject. Steven Levitt and devoted the opening chapter of their book Think Like a Freak to exactly this question: where should you actually aim?

After analyzing data on hundreds of professional penalty kicks, a team of researchers found something almost insultingly simple. Goalkeepers dive left 57% of the time and right 41% of the time, which leaves them standing in the center on just 2% of kicks. That means a shot driven straight down the middle is about seven percentage points more likely to score than one aimed at a corner. It’s not all that dissimilar to the famous Panenka chip shot popularized by Antonín Panenka’s shot in the 1976 European Championship final.

So why doesn’t everyone do it? Only 17% of penalties are ever aimed at the center. According to Levitt and Dubner, the answer is about shame, not strategy. A kicker who goes for the corner and gets stopped can blame a great save. A kicker who strikes it down the middle and watches the keeper catch it without diving looks like he didn’t even try.

Tah’s shot missed so badly the announcers kept piling on, but at least he looked like he was trying to beat the keeper outright. A kicker who aims for the middle and gets it saved doesn’t get that cover. He just looks like he wasn’t playing to win.

Final Thoughts

Knowing all this, don’t expect a wave of players to start driving penalties down the middle. If kickers started aiming center more often, goalkeepers would adjust, and the boring shot would stop being a genius shot. The advantage only exists because almost nobody exploits it.

There are other penalty-kick debates economists haven’t settled, either. Pundits will tell you, with total confidence, that a team should always choose to kick first in a shootout, because the pressure of constantly playing catch-up supposedly rattles the team kicking second. Some of the largest studies ever done on this, covering well over a thousand shootouts, back that up. Other studies just as large find no advantage at all.

And then there’s the matter of what a penalty is actually worth. Last week, Neymar scored a penalty in the tenth minute of stoppage time against Norway. On paper, it was identical to any other penalty. But Norway led 2-0, and Neymar’s kick only brought the score to 2-1 in a match Brazil had already lost. A penalty like that carries almost none of the psychological weight of one that could actually change the outcome, and it’s worth wondering how much that changes the contest playing out on the spot.

Which brings us back to Matt Freese and the paper he still isn’t sharing. He may know more about penalty kicks than almost anyone alive. Standing on his line at his first World Cup, he may be about to find out that sometimes, that still isn’t enough.

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Know someone who still thinks aiming for the corner is obviously smarter? Send them this and let them argue with Freese’s economics degree.

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• Across the U.S., there are over 40.4 million people who have completed some college but have not earned a credential [Inside Higher Ed]

• Freese’s father is a neurosurgeon who pioneered gene therapy research, and his mother holds an MBA in healthcare management [US Soccer]

• A record five games at the 2022 World Cup in Qatar were settled by penalty kicks, including the final when Argentina beat France [ABC News]

• Germany had won six consecutive shootouts in all competitions before this World Cup, with their only previous defeat occurring in 1976 following Antonín Panenka’s legendary spot-kick in the semi-final of the European Championship [The Guardian]

• Penalty kicks, where a goal immediately secured victory, were successful 89.1% of the time, but dropped to 60.4% when a miss meant immediate elimination [Wired]

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

1. Hacky sacks are back, but its increased popularity is causing a shortage [NPR]

2. 45% of Americans say they’re not taking a summer vacation this year, mostly due to high costs [NPR]

3. Microsoft increased the price of Xbox consoles, citing rising costs for memory and storage components [CNBC]

4. Investors around the world are dumping tech in what may be a sign that traders have become skittish about the long-term profitability of AI and chipmakers [CNN Business]

5. A small town in Wisconsin is offering young professionals a cash stipend along with comped local experiences and memberships to encourage them to settle down there [USA Today]

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Last week, I finally made it to a World Cup match, but I also came home with an economics lesson I wasn’t expecting. If you’ve ever stood up at a concert or game because everyone in front of you did, you already understand negative externalities. Check it out if you missed it.

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Last week I checked something off my bucket list: attending a World Cup match. My seat was genuinely good; you can see it above. It was the last row of a lower bowl section, just off-center from the back of one of the nets. It’s the kind of seat you snap a picture of and share with your friends as soon as you sit down. The stadium was electric with fans of both Morocco and Haiti showing up with a lot of energy for their team.

I settled in early with a pile full of cheap snacks and cold drinks thanks to Atlanta’s Fan First pricing model. Life, briefly, was excellent.

Like everyone else in the stadium, I was on my feet for the national anthems and kickoff. Haiti came out attacking hard with several shots on goal in the opening minutes that kept most of the stadium on its feet. But as the pressure eased, the back half of my section started to sit. The front half never did. So when the people in Row 12 realized the people in the rows ahead of them weren’t going anywhere, they stood back up. They opted for a slightly better view of the pitch and passed along something else for the people seated right behind them: a wall of blue jerseys and the backs of heads.

Each subsequent row faced the same choice. They could stand and recover their view, or sit and lose it. And one by one, each row slowly stood back up. Each person made a completely rational decision that created a cost for everyone behind them. By the time it reached my row in the back, it didn’t really feel like much of a choice. I could stand alongside everyone else or stare at a stranger’s shoulder blades for 90 minutes.

Sound Familiar?

This experience isn’t unique to World Cup soccer. You’ve probably found yourself in a similar situation at a concert or a parade. Unless you’re in the front row, you’re probably just doing what the people in front of you are doing.

I usually buy tickets higher in the stands or toward the back of a venue for exactly this reason. I’ll trade a worse sightline for a better chance of actually sitting down.

But there’s something different about a stadium compared to a parade route. Stadiums are specifically designed for everyone to sit and still see the game. The seating is tiered so you can see over the head of the person in front of you, but only if everyone is sitting. When I eventually stood up, my view was exactly what it would have been had we all stayed seated.

But I was one of the lucky ones. A father and his young son were seated just in front of us. When everyone stood, the boy’s view got meaningfully worse. It eventually boiled over into a confrontation with the people in front of them because everyone was constantly moving to get a better view. The cascade of standing produced no net gain in view for anyone, but it added real costs for many.

One Person’s Win, Everyone Else’s Problem

Let’s go back to the beginning. I’m talking about those people in the very first row who never sat down in the first place. Honestly, can you blame them? They’re in the front row of a World Cup match! Millions of people are watching at home. This isn’t a baseball game where you’ll regularly spot someone right behind home plate scrolling their phone between pitches. This is the biggest sporting event on the planet, and they are in it.

Psychologists call this Basking in Reflected Glory. When your team is playing, you feel like part of the game. Standing feels like the only appropriate response to what’s happening in front of you. It would feel strange not to stand.

So Row 1 stands, and the benefit stays almost entirely with them. They feel the energy alongside all the people standing around them. Nobody else does.

The cost, though, doesn’t stay with Row 1. It lands on Row 2, who had no say in whether the people in front of them should stand. The benefit was internal to the people who made the choice, while the costs were handed to everyone else.

Meet the Negative Externality

There’s a name for what happened in that stadium. Economists call it a negative externality: a cost imposed on a third party who had no say in the decision that created it.

You’ve likely seen this before, even if you didn’t have a name for it. It’s the person who tosses a soda can out the car window for a marginally cleaner car, but now it’s your neighborhood’s problem. It’s the roommate who’s having a great time playing video games at full volume all night, but you’re lying awake at midnight.

In each case, someone privately benefits while the cost gets distributed to others.

What makes the stadium example unusually rich is that it isn’t just one person generating an externality. It’s a chain of externalities. Every person who stands to recover their view immediately creates a new externality for the row behind. The cost travels like a wave to the back of the section, all because of a single moment in Row 1.

Why Nobody Was Wrong, and Everything Was Wrong

Every person in that stadium made a rational decision about whether or not to stand. Row 1 stood because they felt part of the game. Row 12 stood because the rows ahead never sat down. Every row after that stood because the alternative was staring at someone’s back for 90 minutes. Nobody was being unreasonable, nor were they being malicious. And yet the collective outcome involved our entire section standing, getting the same view we would if we had all sat down.

This is what economists call a coordination failure: individually sensible decisions that interact badly and leave everyone worse off. We got to a worse outcome, not because of bad choices, but because the system didn’t give us a path to the good outcome.

So what are the solutions to externalities? Economists typically reach for two tools. The first is a tax that charges people for the costs they impose on others. A “standing fee” collected by ushers sounds absurd, but that’s essentially the logic. The second is a regulation that just bans standing outright. A handful of venues and performers have tried no-standing policies, and they tend to make the news precisely because they feel so heavy-handed. Both approaches work in theory, but both feel a little strange when you apply them to a soccer match.

The more natural solution is a shared, unspoken expectation that you sit down so everyone can see. It works in plenty of contexts. You don’t see much standing at a baseball game, and tennis crowds stay seated almost religiously. And NBA courtside seats are famous for being seats. No one stands courtside at a basketball game the entire time.

The problem in soccer, especially at the World Cup, is that the norm runs the other way. Standing is part of the culture. At the match I attended, one of the older men a few rows ahead of me walked down a few rows at the start of the match and asked a younger fan to sit down. He got an eye roll and a shrug, and the rest of us stayed standing for the match.

Stadium seating has been engineered specifically so that every person can see over the head of the person in front of them. Sitting was always the efficient outcome. Standing broke a design that was already working. For fans who want to stand the whole match, most venues now offer a Standing Room Only section. The NBA’s Clippers famously built “The Wall” at their arena, a dedicated SRO section that became a defining part of their home atmosphere. The people who want to stand go there, and everyone else gets to sit.

Final Thoughts

Given the situation, I also stood for the majority of the game. By the time the wave reached my row, it was the only move that made sense for me individually. Somewhere in the back of my mind, I knew that it wasn’t going to improve anything for anyone, and I didn’t want to sit squinting at the video board over the middle of the field.

But at least I was in the last row of the section, so I wasn’t creating a new problem for whoever was behind me.

Negative externalities aren’t usually the product of bad people making bad decisions. They’re the product of normal people making normal decisions in a system that doesn’t account for the costs those decisions push onto others. The fix is rarely about convincing individuals to behave differently. It’s about designing systems where the right choice for the individual and the right choice for everyone else are actually the same choice.

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If this made you think of someone, that’s probably a sign you should forward it to them. Negative externalities are more fun to explain when someone else does it first.

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• In its game against Morocco, Haiti scored in its first World Cup after 52 years [Associated Press]

• A record 3.6 million soccer fans have attended this year’s World Cup matches, with weeks left to go in the tournament [NBC News]

• Telemundo reported that its World Cup viewership is “pacing at more than double” the 2022 tournament in Qatar [CNN Business]

• 9,722 people watched all 48 initial World Cup matches on Fox and FS1, according to Nielsen data [Yahoo! Sports]

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

1. Alan Greenspan, economist and longtime head of the Federal Reserve, dies at 100 [NBC News]

2. Anthropic has concepts of a plan for the case where artificial intelligence causes 25% Unemployment [Gizmodo]

3. The World Cup will likely be the biggest gambling event in history [CNBC]

4. The economics of mango mania [The Hustle]

5. Six Japanese companies are suspected of colluding to raise the price of their ice cream as sweltering summer looms [The New York Times]

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Cabo Verde has been the darling of the 2026 World Cup, drawing against Spain and Uruguay with a squad where nearly half the players grew up outside the island. Their experience is a great example of labor mobility and allocative efficiency, two of the most important concepts in labor economics. If you haven’t had a chance to read it yet, it’s worth your time before the knockout rounds begin.

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Cabo Verde has emerged as the undeniable darling of the 2026 FIFA World Cup. Africa’s third-smallest country has a population of roughly 530,000, which is about the same size as the Lexington, Kentucky metro area. The Blue Sharks have already pulled off a stunning draw against reigning European champions Spain in their World Cup debut, then drew this past weekend against Uruguay.

Nearly half of this squad grew up somewhere other than the island, but it’s not like they’re mercenaries sent to fill out one of the tournament’s lowest-ranked rosters. They have genuine African heritage. They were born to families who carried Cabo Verde with them to Europe and North America, but they were shaped by some of the most sophisticated football systems ever built. And now they represent an island most fans couldn’t find on a map.

Cabo Verde is the story everyone is watching, but they aren’t the most extreme example of this phenomenon at the tournament. That title actually belongs to Curaçao, a Dutch Caribbean island of roughly 150,000 people. Of their 26-man World Cup squad, 25 were born and raised in the Netherlands. One player was born on the island itself.

It might look like a quirk of FIFA paperwork, but it’s actually one of the clearest illustrations you’ll ever find of what happens when labor is allowed to flow freely.

The Rules That Made This Possible

At their core, FIFA’s eligibility rules are a mechanism for labor mobility, albeit a carefully regulated one. This isn’t a free-for-all where players shop for whichever passport suits them best. A player can only represent a country based on where they were born, where a parent or grandparent was born, or where they grew up. The details can get complicated fast, but the underlying principle is simple: there has to be a genuine connection.

Players are allowed to switch their affiliation, but there are limits there too. A youth player who represents one country isn’t automatically locked in, but a player who appears in a senior competitive match is. Play in a World Cup or continental championship, and that’s your nation.

Still, the rules allow young players real movement beyond where they were born. Many have genuine options based on a European upbringing, an African grandparent, a Caribbean parent. Coaches of smaller nations actively recruit through lineage, making the case that a player’s heritage is worth representing on the world stage.

For players with African heritage living in Europe, that creates a real choice: wait indefinitely for a call-up to one of the most competitive national squads in football, or represent the country your family comes from. Many choose heritage, and from a purely economic standpoint, that makes complete sense.

Take France, for example, which produces an extraordinary surplus of elite football talent. In this year’s tournament, seventy-five players were born in France but are representing other nations. Its academy system generates more professional-caliber players than any single team can absorb. The same is true, to varying degrees, for the Netherlands, Germany, and England. When the supply of labor vastly exceeds demand in one place, economics predicts that the surplus flows elsewhere.

A Concept Called Allocative Efficiency

Economists have a name for what’s happening here: allocative efficiency. It’s what occurs when resources like labor flow to where they are most valued, increasing total output in the process.

That last part is the key. Allocative efficiency isn’t just about fairness or opportunity. Rather, it focuses on production. When talent sits in the wrong place, total output suffers. When it flows to where it’s most valued, output rises. In a factory, that’s a physical product. At the World Cup, it’s the quality of the matches themselves.

This year’s tournament features 104 games regardless of whether the teams are evenly matched or hopelessly outclassed. The schedule is fixed, but labor mobility changes what happens on the pitch. A Cabo Verde squad built from players developed in top European academies, who play their club football across Portugal, France, and the Netherlands, produces a different game than one fielded entirely from a domestic league on an island of half a million people.

It’s worth noting that the fact that these players are scattered across clubs throughout Europe is itself evidence of the same mechanism. Football’s global transfer market is incredibly efficient, pulling talent toward the clubs that value it most regardless of borders. When that same talent flows into a Cabo Verde shirt, it doesn’t just benefit Cabo Verde. It benefits everyone watching.

From the Pitch to the Broader Economy

Imagine a defender with Cabo Verdean heritage, developed in European academies and skilled enough to earn a professional contract. He trains every day for the French youth squads, hoping for a call-up to the senior team. He plays sporadically, but never earns a competitive senior minute.

Now picture the same player in a Cabo Verde shirt, starting in a World Cup match against Spain, holding a 0-0 draw in front of a global audience. It’s the same player with the same talent, but a completely different output.

That’s the labor mobility story in its most vivid form, but it isn’t confined to a soccer field. Somewhere out there is a talented, well-trained computer engineer born and raised in Omaha, Nebraska. There are jobs in Omaha, but the labor market is thin. The companies that need her specific skills most are clustered in Silicon Valley or Boston. The moment she moves to where her skills are most valued, output rises: for her, for the company that hires her, and for the colleagues she works alongside.

That mechanism is identical to the defender’s. Talent in the wrong place produces less than talent in the right place. When labor can move, that gap closes.

Final Thoughts

Labor mobility is not a frictionless topic. Brain drain is a legitimate economic concern, and plenty of sports fans have strong opinions about what national identity in football should mean. These tensions are real, and one article isn’t going to resolve them. What the economics does show is the underlying mechanism: when labor can move toward where it’s most valued, allocative efficiency improves and total output rises. What any given society decides to do with that knowledge is its own, separate conversation.

Cabo Verde is a small, unusually visible example of something economists have studied for decades. An island that cannot build the academies or develop the infrastructure that elite football requires is still competing on the world’s biggest sporting stage thanks to a policy that allows talent to flow to where it is most valued.

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Know someone who’s been watching Cabo Verde and doesn’t know why they’re so good? Now you do. Send this their way.

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• 23% of players at this year’s World Cup are playing for nations where they weren’t born [Viz Laurai]

• Eight of the 48 squads are made up of 50% or more foreign-born players [Yahoo! Sport]

• Three Italian-born players are on 2026 World Cup rosters, despite the soccer powerhouse failing to qualify [USA Today]

• As of 2023, Mexico (9,464), Spain (8,560), and England (5,582) produced the most professional male footballers across the world [FIFA]

• More than 130 FIFA member nations have never qualified for the Men’s FIFA World Cup, but the most notable include Venezuela (the highest-ranked CONMEBOL team to never qualify), India (the world’s most populous nation), Finland, and Malaysia [Sporting News]

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

1. North Korea’s economy is apparently booming [Morning Brew]

2. Airline profits are expected to be halved this year due to rising fuel prices [Gizmodo]

3. The twisty economics of amusement parks [The Hustle]

4. In 2021, just five US colleges offered AI majors; now there are at least 74 majors on the subject [University Business]

5. US consumers are expected to spend a record $27.9 billion to celebrate Dad [National Retail Federation]

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International visitors are going viral this summer for their overwhelmed reactions to ordinary American stores and experiences. It turns out a Soviet politician had the exact same reaction to a Houston grocery store in 1989, and what he took away from it helped bring down the USSR. The economics connecting those two moments are more fascinating than you’d expect.

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More than a million international visitors will descend on the United States for the FIFA World Cup this summer. They’re coming for the soccer matches, but a lot of them have already carved out time to get a taste of what the States have to offer off the pitch.

A German fan named Freddy has garnered a following for chronicling his road trip across the South, with stops at Waffle Houses, Bass Pro Shops, and Walmarts. A Swedish visitor named Elsa went viral for her reaction to ranch dressing. A Scottish fan named Shaun couldn’t stop talking about Buc-ee’s.

Fans from across Europe, Asia, and South America are posting content that has left Americans simultaneously proud and a little confused about exactly what is being celebrated.

If there’s one thing that keeps surprising visitors, it’s the sheer variety of choices. Who among us hasn’t also been overwhelmed by the choices available to us in a Coke Freestyle machine? Most of us would be surprised if a restaurant didn’t offer ranch dressing. Wait until our Swedish friend learns that most restaurants make their own version. Perhaps she’ll spark a Nordic trend of her own. After all, the recipe isn’t some uniquely American knowledge.

When asked about her experience being so surprising to everyone on the internet, one of her statements really stood out:

She’s onto something, even if she doesn’t quite have the economics vocabulary for it yet. These visitors aren’t coming from poor countries. Freddy, Elsa, and Shaun all come from market economies with grocery stores and shopping malls. So why does the American experience feel like a different planet?

As it turns out, someone had this exact reaction decades ago. The circumstances couldn’t have been more different, but what he took away from it would change history.

A Visitor From a Very Different Economy

The date was September 16, 1989. Boris Yeltsin was newly elected to the Supreme Soviet of the USSR, and he was in Houston for a tour of NASA’s Johnson Space Center. He had already traveled across ten American cities, making speeches and public appearances along the way. None of it particularly moved him.

But on the way to the airport, Yeltsin made an unusual request. He wanted to stop at a local grocery store to see where the typical American would have shopped. His team called ahead with about 15 minutes notice, and a reporter from the Houston Chronicle tagged along. Otherwise it was just a regular Saturday at a regular grocery store.

Yeltsin roamed the aisles, inspecting the produce and trying free samples of cheese. He talked to employees and customers through an interpreter, asking how much they spent on groceries relative to their salaries. He lingered in the frozen food section.

But what floored him wasn’t the technology or the architecture. It was the fact that this wasn’t a special showcase store in New York City. It was a suburban grocery store, available to anyone. After the visit, on the flight to Miami, Yeltsin went silent for a long time before asking, “What have they done to our people?” In a later biography, he had this to say about his visit:

Within two years, Yeltsin had left the Communist Party, become the leader of the democratic opposition, and won election as Russia’s first president. He would go on to lead the country’s transformation from a one-party communist state toward democratic capitalism. He wasn’t moved by the rockets at NASA or the Statue of Liberty. All it took was a box of pudding pops at a suburban grocery store.

No One Planned the Dr. Pepper Aisle

Boris Yeltsin noticed something that day that our World Cup visitors are still picking up on more than three decades later. And yet, most Americans probably never stop to notice.

No central planner decided how many Dr. Pepper flavors to make.

This may seem incredibly obvious to most people, but it’s something we largely take for granted. We don’t have a politburo in Washington approving a new Dark Berry flavor or a committee telling Kroger and HEB how much shelf space to give Strawberries & Cream. When you walk down the soda aisle, you’re seeing the result of millions of decentralized decisions.

The economist Friedrich Hayek had a name for this: spontaneous order. Complex, functional systems can develop without design, and work incredibly well. They often work well because nobody designed them. The magic of these systems comes from the accumulation of signals. When prices rise, producers make more. When a flavor doesn’t sell well, it quietly disappears. As summer trends emerge, some company steps in to fill it. Nobody coordinates all this. It coordinates itself.

For Yeltsin, the contrast was visceral. The Soviet system had committees deciding what to produce, how much, and where it would go. The result wasn’t just fewer flavors. It was breadlines, empty shelves, and a system that couldn’t respond to what people actually wanted because nobody was allowed to ask the question through price. Yeltsin's reaction was in response to a mechanism that his country had tried to replace with paperwork and failed.

Why Buc-ee’s Could Only Exist in America

But there is something else interesting about our visitors this summer. Freddy is German. Elsa is Swedish. Shaun is Scottish. None of them are coming from centrally planned economies. They come from economies that rely on the same foundation as ours: price signals and competition. So why are they just as gobsmacked as Yeltsin was?

The U.S. has 330 million relatively wealthy consumers inside a single unified market with no internal trade barriers. A gas station concept that captures even a tiny slice of that market can support 70,000-square-foot locations, a wall of beef jerky, and 100 pump fuel stations. The same concept in Scotland, which has a population of 5.5 million, likely doesn’t even break even.

Retail structure adds another layer. Many countries are dominated by a few large companies that hold enormous power over what reaches shelves. American retail is far more fragmented, with regional players all competing intensely for the same customers. That competition creates pressure to give someone a reason to walk through your door instead of the one down the street.

The full picture, then, isn’t just “markets good.” It’s spontaneous order running at an almost incomprehensible scale, inside one of the most competitive retail environments on the planet. Shaun sensed it immediately. He just didn’t have the economics vocabulary to explain why.

Final Thoughts

Yeltsin left that Houston grocery store in 1989 with the beginning of a realization: that a system which lets millions of people make their own decisions produces outcomes no central planner could have designed. That understanding helped set him on a path toward dismantling the very system he’d spent his career inside.

It’s worth noting that even this abundance has its limits. In recent years, record inflation pushed many companies to quietly scale back their product lines, cutting options that couldn’t justify their shelf space. And yet, even a trimmed-down American grocery store or gas station still stops international visitors cold. The floor of American variety, it turns out, is still the ceiling almost everywhere else.

That’s what Freddy was really documenting in front of that Coke machine. It’s what Shaun was capturing at Buc-ee’s. Elsa put it so well when she talked about thinking so big of little things. Their fascination isn’t just about the excess or the novelty. It’s evidence of the same mechanism Yeltsin stumbled onto in a Houston suburb more than 35 years ago.

You probably walked past it the last time you went to the store. You just didn’t think to film it. Next time, stop for a moment to take it all in.

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The World Cup only comes around every four years. The economics lesson it’s teaching? That one’s permanent. Share this story while the moment is still fresh.

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• The #1 Song in the United States on September 16, 1989, was Don’t Wanna Lose You by Gloria Estefan [On This Day]

• Friedrich Hayek was awarded the Nobel Memorial Prize in Economic Sciences in 1974 alongside Gunnar Myrdal [The Nobel Foundation]

• The market size of the Gas Stations in the US is $122.2bn in 2026 [IBIS World]

• There are 9,402 7-Eleven locations spread out across 38 US States & Territories [Scrape Hero]

• The world’s largest convenience store is located in Luling, Texas, and spans 75,593 square feet (about 1.7 acres) [Buc-ee’s]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Final Thoughts

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

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

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

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

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

Now you’ll know what to do with it.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And the survey said…

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

But one section stood out.

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

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

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

What even is money?

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

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

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

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

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

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

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

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

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

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

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

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

Final Thoughts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

You’re not imagining it

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

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

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

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

How we measure the invisible

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

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

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

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

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

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

Platypus Economics

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

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

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2 months ago · 397 likes · 9 comments · Justin Wolfers

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

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

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

The hidden pay cut

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

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

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

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

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

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

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

Final Thoughts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

You’re Free to Go

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

So why haven’t you?

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

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

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

The Price You Don’t See on Your Statement

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

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

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

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

Final Thoughts

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

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

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

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

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

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

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

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

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

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

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

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

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