· Markets often don’t work well
o “Lack of existence”
§ Goal of economic policy: that outcomes in markets are efficient
· What people want
· At the lowest “possible” cost
§ The more urbanized we get, the harder it will be
o Institutions
§ Failures
· Methodology
o The study of methods
o Helps us think about what we know
o Economics is not a really hard science because it has a more malleable structure
§ Q rating: In sports, how the fan base supports the player
§ Lebron’s
· Q-rating before decision: equal in whites and blacks
· Q-rating after decision: dropped by almost 100% in whites, but only marginally with blacks
· Led to idea that white people are racist
§ Sample selection bias: must check for bias in populace in a survey (backgrounds, mindset, culture, etc.)
o Larry Summers
§ Fired from Harvard for saying men were generally better engineering students
§ Created graph based on huge study:
· Average man and women are equal
· However, highest and lowest scores were usually men, while women gravitated toward the middle (men had a lower standard deviation than women)
§ Larry Summers said it was ok that 75% of PHD students (usually the highest 10% of students) were male because they were higher deviations from the mean.
§ Therefore, quota system in which there must be a certain numbers of male and female students in a program because the best possible students should be taken
· Applies to people of all races, countries, etc.
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