Today was my first day in economics 108 for the Fall semester as well as my first day in an economics class in my life. I came to class with an open mind to learning what economics is all about. The class started with Professor Rizzo posing a question to the class about why orange juice left spilled on a desk was bad for economics. He also posed many questions to the class to get them to trigger a EWOT (economic way of thinking). A few of the questions that he posed were, "why is it embarrassing to say your not worth it or, my wife will kill me if I spend this." These are both statements that a person will say multiple times in their life, but the person never thinks of why they have to think like that and how those decisions affect the economy. After a few questions Professor Rizzo started the class off with an experimental exercise of placing various money amounts throughout the room and seeing how the class responded to each amount. At first he threw pocket change around the room and no one made the slightest effort to get the change until at least a quarter was thrown out. At this point no one jumped out of their chairs but the one kid just reached out effortlessly and picked it up while staying in his seat. When the bills started to be thrown around is when people started to react. A kid got out of his seat to pick up a dollar bill, but once the money had grow to 5 and 10 dollars, people were racing out of their seats to pick up the money before it even left Professor Rizzo's hand. The lesson that was taught by doing this was that people respond to incentives and profit opportunities motivate people. This could be proved if Professor Rizzo did the same exercise everyday. Students would start changing where they sit so that they could have the best opportunity to get to the money before any one else in the class.
Next Professor Rizzo talked about unintended consequences and how many economic decisions have unintended consequences that are attached to them in the future. He defined economics as the way people behave and the ways people react to those behaviors. he also said that beliefs and ethical principles are guides to economics. Though it seems like economics may be as simple as common sense and reasoning skills, it's a lot more complicated than it seems. Ben Stein's father was once quoted saying "economists know very little, and non economists know even less." This means that though some people can be better than others in coming up with ideas to help the economy, no one knows how the decisions will pan out in the future and if unintended consequences will come along with the changes that economists make.
Professor Rizzo later talked about how he is nervous about teaching Economics 108 because he doesn't want to change the way that we as students think since it could change decisions we make for the rest of our lives, He just wants to present concepts to us so that we can make more intelligent decisions. Though it was only the first day of class, I enjoyed it very much and am looking forward to the rest of the year in Econ 108.
We were assigned to read the first chapter of the hazlitt book and Hayek's introduction to Bastiat's Selected Essays. Hazlitt talked mostly about how fallacies affect government, and how not looking at long term affects of decisions hurts the economics of this country. Haykek's introduction to Bastiat's selected essays talks about how Bastiat "treated freedom of choice as a moral principle that must never be sacrificed to considerations of expediency." These are interesting points because many important decision making people in our country base their decisions on fallacies, and it turns out to hurt us. If they thought more about the total affect of their decision in both the present and future rather than just the present. This country could be in a better place economically today than it is now.
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