Social Studies skills: Difference between revisions
| Line 553: | Line 553: | ||
* Regulatory capture | * Regulatory capture | ||
* Externalities | * Externalities | ||
* Inflation/ deflation | |||
* Scarcity v. Surplus | * Scarcity v. Surplus | ||
* [[Tragedy of the Commons|Tragedy of the Commons]] | * [[Tragedy of the Commons|Tragedy of the Commons]] | ||
| Line 562: | Line 563: | ||
* 80/20 rule | * 80/20 rule | ||
* Risk mitigation | * Risk mitigation | ||
* Third-party payer effect | |||
** when a third-party pays for goods or services, quality goes down and prices go up | |||
** see Milton Friedman's "Four ways to spend money" | |||
* Zero sum transaction | * Zero sum transaction | ||
** both sides of transaction receive equal benefit | ** both sides of transaction receive equal benefit | ||
| Line 568: | Line 572: | ||
=== Milton Friedman's "Four ways to spend money" === | === Milton Friedman's "Four ways to spend money" === | ||
* late 20th century Economist Milton famously defined the "Four ways to spend money": | * late 20th century Economist Milton famously defined the "Four ways to spend money" (paraphrased, not original quotation): | ||
1. You spend your money on yourself | |||
2. You spend someone else's money on yourself | |||
3. Someone else spends their money on on you | |||
4. Someone else spends someone else's money on someone else | |||
click EXPAND to see the implications of the Four ways to spend money | |||
<div class="mw-collapsible mw-collapsed"> | |||
• Table format | • Table format | ||
{| class="wikitable" style="width: | {| class="wikitable" style="width: 75%;" | ||
! | ! Whose money is spent by whom | ||
! Money is spent on whom | ! Money is spent on whom | ||
! Efficiency of Outcome | ! Efficiency of Outcome | ||
|- | |- | ||
| '''You''' || ''' | | '''You spend your money''' || '''on yourself''' | ||
|| | || | ||
* seek highest value | * seek highest value | ||
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|- | |- | ||
|- | |- | ||
| ''' | | '''You spend someone else's money''' || '''on yourself''' | ||
|| | || | ||
* seek highest value | * seek highest value | ||
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* = lower efficiency | * = lower efficiency | ||
|- | |- | ||
| '''Someone | | '''Someone spends their money''' || '''on you''' | ||
|| * seek lowest | || * seek lowest cost | ||
* no concern for cost | * no concern for quality | ||
* = lower efficiency | |||
|- | |||
| '''Someone else spends someone else's money''' || '''on someone else''' | |||
|| * no concern for cost | |||
* no concern for quality | |||
* = lowest efficiency | * = lowest efficiency | ||
|- | |- | ||
| || | | || | ||
|- | |- | ||
|} | |} | ||
</div> | |||
== Logic == | == Logic == | ||