Business, Politics & Society
Lesson time 11:28 min
For Paul, being an economist requires thinking critically and learning from others. Learn his critical thinking methodology, like how to look for natural experiments, think past your own bias, and use the information at your fingertips.
Topics include: Look for Natural Experiments • Think Globally • Burn the Math • Use the Information at Your Fingertips • Don't Confuse Economics and Politics • See Past Your Own Bias
In terms of ready accessibility of data, we're living in a golden age. And the internet means that solid, reputable data sources are available for free to anybody. They don't cover everything, but most stuff. So the problem is not so much availability of data, as the fact that mostly, that basically never, economic data doesn't come from controlled experiments. You don't get to have one group of subjects who don't receive a fiscal stimulus and another that do receive a fiscal stimulus and you compare the results. So what you get is almost always a lot of things are happening at once. And assigning causation is always going to be a problem. I mean, one very influential set of economic research-- changed my views quite a lot-- involved minimum wages. And the trick there is that we have a national minimum wage, but we also have a lot of state minimum wages that, in many cases, are substantially above the national rate. And states don't change their minimum wages in sync. So you have a lot of cases in which New Jersey raises its minimum wage, but Pennsylvania doesn't. And you can look at what happens to employment, especially, you can look at what happens in adjacent counties, nearby places. So when New Jersey raises its minimum wage, what happens to the number of jobs on this side of the Delaware versus on that side of the Delaware. And that turns out-- so those are natural experiments, almost like a controlled experiment. And they say, pretty clearly, that in the range of minimum wages that we have in the United States, there is no adverse effect on employment. If you asked me 25 years ago, I would have said raising the minimum wage surely has to reduce the number of jobs. It turns out, not in the data. And then we can start to think about what's wrong with the simplistic economic model that led us to think otherwise? [MUSIC PLAYING] I'm a big believer in learning from other countries America is a big country. And we've had lots of things happen. And we have lots of experience. But people are pretty much the same everywhere. And the rules of economics are pretty much the same everywhere. So if you're looking for valid experiences, you want to cast a wider net. We don't get to do very many experiments on economics. We look for natural experiments, which means that a crisis in Brazil, or an economic boom in Vietnam, or the rise of the Bangladeshi clothing industry are all going to be things that are going to contribute to your understanding of how the economy works and can be brought back home. So even if your only ultimate concern is the US economy, which is actually probably itself wrong, but even if your focus is all very local, the world is your laboratory. I feel like countries are the laboratories of economics and it's not just your own country, but everybody's. [MUSIC PLAYING] Doing economics, it's always, ultimately, about people. Alfred Marshall, again, the great Victorian economist, had some rules. He said, u...
For Nobel Prize-winner Paul Krugman, economics is not a set of answers—it’s a way of understanding the world. In his economics MasterClass, Paul teaches you the principles that shape political and social issues, including access to health care, the tax debate, globalization, and political polarization. Heighten your ability to read between the lines and decipher the underlying economics at play.
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Nobel Prize-winning economist Paul Krugman teaches you the economic theories that drive history, policy, and help explain the world around you.Explore the Class
Excellent way to refresh my understanding of Economics!
This made me more interested in 'boring' economics. Thanks!
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i have some fundamental knowledge about the economics. however, some of the principles in economics cannot explain or apply to the daily situations. Paul's class is inspiring and the critical thinking in the "conventional knowledge" is a necessity to ask the questions and then through hard thinking to find out that answer.