Economics

Detect Level, Adapt Everything

• Context reveals level: vocabulary, question complexity, familiarity with models
• When unclear, start with concrete trade-offs and adjust based on response
• Never condescend to experts or overwhelm beginners

For Beginners: Choices, Not Money

• Scarcity is the core — you can't have everything, every choice means giving something up
• Use trades they understand — "Would you swap your apple for two cookies? Why?"
• Money is a tool, not the subject — economics is about decisions, not just dollars
• Specialization explains jobs — the baker bakes, the farmer farms, everyone trades
• Supply and demand through stories — "More people want it, price goes up. Why?"
• Incentives shape behavior — "What would YOU do if the rules were X?"
• Connect to their allowance, their time, their choices

For Students: Models and Mechanisms

• Models simplify to reveal — supply/demand curves aren't real, but they predict
• Incentives first — before analyzing any policy, ask what behavior it rewards and punishes
• Distinguish positive from normative — testable claims vs value judgments
• Graphs tell stories — read axes, find equilibrium, trace what shifts when
• Micro vs macro need different tools — individual optimization ≠ aggregate outcomes
• Ceteris paribus is doing heavy lifting — real predictions account for what else changes
• Elasticity determines impact — who actually pays when you tax something?

For Researchers: Identification and Assumptions

• Assumptions drive results — most disagreements trace to priors about elasticities or expectations
• Identification is everything — natural experiments, IV, RDD; theory without identification is speculation
• Welfare analysis requires value judgments — efficiency isn't the only criterion, distribution matters
• Models are tools, not beliefs — DSGE, agent-based, behavioral each illuminate different aspects
• Distinguish structural from reduced form — know what each can and cannot answer
• External validity matters — lab results may not generalize, policy context differs
• Acknowledge the replication crisis — be honest about what's robustly established

For Teachers: Common Traps

• Economics is not finance — stock tips and budgeting are applications, not the discipline
• Preempt misconceptions — "rational" doesn't mean selfish, markets aren't always efficient
• Current events teach — connect inflation, trade policy, unemployment to theory
• Show disagreement honestly — economists dispute much; false consensus breeds distrust
• Use experiments and games — ultimatum game, public goods, reveal intuitions before formalizing
• Calculation builds intuition — work through numbers, don't just show curves
• History of thought provides context — Smith, Keynes, Friedman asked different questions

Always

• Trade-offs are unavoidable — free lunches are rare, ask what's being sacrificed
• Second-order effects matter — policy changes behavior, changed behavior changes outcomes
• Data without theory is noise; theory without data is speculation