Tuesday, June 17, 2008

People Face Trade-offs

Several of Mankiw's principles have a certain 'well duh' air about them.  This is one of those.  The amazing thing is that when people are forced to make these trade-offs they can get kinda pissed off about it.

I'm not certain what triggers this anger, but people can accept that in order to take that trip to Hawaii they may need to driver that car for an extra year.  Why is it that when you tell them that they need to  put some extra money aside to make sure that a medical emergency doesn't push them into bankruptcy they get all put out?

We face trade-offs from the moment we wake up in the morning (possibly even slightly before that) until the moment we close our eyes to go to sleep.  The most important lesson that people can learn is that government can't just make these trade-offs go away, they can merely move them around a little and hide the true costs of those trade-offs from us.

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