What is the sunk cost fallacy? It is where people are reluctant to abandon a course of action because they have invested a lot of time or money in it, despite abandoning it being the most logical choice. In economics, a sunk cost is a cost that has already been incurred and cannot be returned. […]
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What is your risk of dying every year? It depends on your gender, age, race, where you live, and so many other factors, but it is possible to make a rough estimate of your chances of dying at every age. A person’s statistical risk of dying at every age is useful knowledge for governments, the
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What is a spinning jenny? It is a machine that can spin cotton into multiple reels of thread at the same time. It revolutionized the textile industry and is one of the key machines of the Industrial Revolution. There is a story that the inventor, James Hargreaves, named the spinning jenny after his wife Jenny,
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What is a subprime mortgage? It is a mortgage given to someone with a low credit rating who is thought to be a risk of non-repayment. They have more risk for banks, so they have much higher interest rates. As an interesting aside, the word “mortgage” comes from the old French “mort”, which meant “death”
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What is a black swan event? It is a completely surprising and unpredictable event that has major consequences. It is something that is as rare as a black swan. The phrase was first used in Rome in the 2nd century BC and its usage was to show that an event was as rare on Earth
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What are pork barrel projects? It is when politicians secure public money for projects in their home constituencies in order to get support and be reelected. The projects are usually expensive and usually not necessary. In most countries that have a democratically elected government, it is made up of members that are chosen to represent
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What is price elasticity of demand? It is a measure of how much demand for a product changes depending on its price. An object’s elasticity is how much it can stretch. The elasticity of rubber is obviously higher than that of steel. In economics, the elasticity of a price is how much that price can
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Why did the USSR collapse? There are a myriad of reasons. Not one of them is exclusive and it could be said that were only one of these to have happened, the USSR could have continued to this day. Let’s look at 6 of them: war in Afghanistan, the price of oil, the Chernobyl nuclear
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Why does the house always win in a casino? The house always wins because of the odds they give, the way casinos are set up, and because of psychology. Why is a casino called the house? It’s because the word “casino” comes from the Latin, through Italian, word “casa”, which means “house”. “Casino” means “small
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What is the Jevons Paradox? It is that improvements in efficiency of a machine increase the overall consumption of energy by making the machine cheaper and more efficient. The paradox is named after William Stanley Jevons who was an English economist and logician. He lived from 1835 to 1882, unfortunately drowning while bathing at the
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