To submit requests for assistance, or provide feedback regarding accessibility, please contact support@masterclass.com.

Business, Politics & Society

What Is Economics?

Paul Krugman

Lesson time 9:32 min

Paul believes that at its heart, economics is about people—how they earn a living and how they spend their income.

Play
Paul Krugman
Teaches Economics and Society
Nobel Prize-winning economist Paul Krugman teaches you the economic theories that drive history, policy, and help explain the world around you.
Get Started

Preview

Economics is, it's about people. I mean, that's the most important thing that economists often forget, and certainly, other people do. It's not about money. Money may come into it. It's not about corporations. It's about people. It's about what people do. But it's about a fairly limited set of things that people do. So economics is not about love. It's not about the meaning of life. It's about the prosaic stuff. The great Victorian economist, Alfred Marshall, said it's about the ordinary business of life. It's about buying and spending and making a living. And you restrict the domain a bit. You focus on these relatively prosaic things, because those are the areas where you think that some relatively simple motivations, simple stories can get you a long way. And it always ends up being about what people do. So we have a kind of a running joke among some of my friends in economics. With graduate students, particularly from some institutions, can we get them to actually say the word people? They'll have this elaborate mathematical model. And they'll be talking about what agents do. And can you get them to actually say, so what are the people in your model? And then he'll say, well, the agents are. If you can't bring yourself to say people, then you're not doing it. It's always a story about what people do. [MUSIC PLAYING] If you're thinking about economics, it sometimes looks as if you're treating human beings as if they were mechanisms. You're talking about, you know, there's a supply curve, whatever and reducing the behavior of people to math. And at one level you say, but, you know, I am not a number. I am a free man. This is true, that people make choices that you can't predict. And yet, we wouldn't be able to have the economy as we do if people weren't at least on average reasonably predictable. There's actually a passage in Adam Smith, where he talks about the fact that everyday, people in London count on being able to buy the food they need. Now, who's making sure that enough food was delivered to London, already a city of, or close to a million people? Who was making sure that the food was available? And the answer is nobody. It was all the invisible hand of the marketplace, which said that basically, you were able to count on people's self-interest to sell enough food. People were predictable enough that nobody even gave it a second thought, that there would in fact be a continuous supply. And this is true all the time, that we count upon people being be predictable enough. I don't necessarily mean that you or this guy is going to. I know what this person's going to do next minute, but if we're asking what a million people are going to do, then on average, they're going to be predictable enough that we can build our lives on that predictability. [MUSIC PLAYING] Economy most of the time is this miracle of success, of provision. We have a world in which-- and any ordinary object, you know, the jacket that I'm w...


Think like an economist

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.



Reviews

4.7
Students give MasterClass an average rating of 4.7 out of 5 stars.

I understand the economics of globalism better. The basic tenet that every item sold is also an item purchased is important and frequently overlooked, especially in times of recession like we are experiencing with COVID-19. Sadly, the series almost seems dated because it was produced before these changed times. I would love to see an class update from Krugman to address the current recession.

I can't get enough of Paul Krugman and his theories. I hope there will be a new class with him.

Great class to learn some economics. Would have liked if classes can be more audience targeted i.e For Beginners, Intermediate, Advanced

The class gives a jargon free helicopter view of economics (and PPE), neatly mixing stories of economic history with fact, and dismissing fallacies. It's maybe a bit long, but very interesting. Thank you.


Comments

George L.

Good intro. But is seems that economics is solely concerned with exchanges between agents - persons, companies, political entities . . .. If my neighbor and I clean eah others houses for a fee this counts as economic activity. If we each clean our own houses it does not. The same for child care, home vegetable gardens . . . . Probably a significant issue in places where people are fairly self-sufficient.

Mai D.

Interesting to be back to the basic meaning, of course it's different from when I started to learn 30 years ago

Athena

Mr. Krugman explains things in a very clear and concise way that's easy for me to understand. I really love his lectures and I'm learning a lot.

A fellow student

I laughed when Paul referenced Patrick McGowan's "Prisoner" show "I am not a number I am a Free Man"

Kristina

I took Economics as part of my business degree and failed because I just didn't get it. I didn't understand what the study of economics was and why it was important. I wish I tried harder in that class because it would help me to understand the world better and so I have been doing my own studying in my spare time. In this one class, Paul has made me excited about economics and really understand what it's all about.

Wesley G.

I am a senior undergraduate student who is currently majoring in Managerial Economics at UC Davis. I am glad that I purchased this class because Paul has enlightened me on how to think like an economist instead of solving the economic or financial model.

Catherine C.

I liked his teaching approach using headers and visuals as well as a cozy study environment. Very listenable.

Tapan P.

A good lesson- interesting to see a negativity-based default. My question there would be, if that is deep rooted in human biology, why not come up with an economic system that is better coordinated with it?

A fellow student

I think this lesson, as well as all the lessons of this course, are well delivered and timely, providing some history along with current information. I've read Paul K's New York Times articles for quite a while. Good stuff.

A fellow student

I enjoyed it, especially by reading a lot of the recommended material. Thanks for including material that does not necessarily reflect only one particular point of view, but many. I reacquainted myself with those old truths...and those "that are not so evident today ones" of A Smith; felt an eerie sensation with Malthus's premonition...( Professor, how can we be sure that he was wrong?...shouldn't we wait a little longer to see what happens with this world getting to 10, 15 billion people, and most of its food sources depleted?, isn't current California, with its duality of billionaires and homeless people a dire warning sign?). Which brings me also to another point. I would recommend to read the basics of Marx's theories alongside those of A Smith. Smith's writing seems antiquated, Marx's ideas ARE antiquated and fictitious, mainly in its base, basing the value of the economy on labour alone... I liked a lot your quote that loosely translates into "Economics is not what we want it to be, but what it really is"... I may not agree with all the points of view expressed here, but I am certainly enjoying this gift my son gave me!