Things AP Econ Students Should Know

Three Ways to Think About ‘Is It Worth It?’

In life, there are certain nonnegotiables we simply must have. Think food, water and shelter for starters. Nobody will ask, “Is it worth it to eat?” It’s just something you do to stay alive.<p>But deciding what to eat? That’s a different question.<p>Will I eat the bologna or prosciutto? Drink tap water …

How Economists Would Wage the War on Drugs

The monstrous cartels that run the narcotics business face the same dilemmas as ordinary firms—and have the same weaknesses

How Stanford Took On the Giants of Economics

The center of gravity for economic thought in the United States has long been found along the two miles in Cambridge, Mass., that run between Harvard University and M.I.T. But there is new competition for that title, and it is quite a bit farther west.<p>Stanford University has lured an all-star …

China Turned to Risky Devaluation as Export Machine Stalled

HONG KONG — When Prime Minister Li Keqiang convened the Chinese cabinet last month, the troubled economy was the main topic on the agenda.<p>The stock market had stumbled after a yearlong boom. Money was flooding out of the country. Most ominously, China’s export machine had stalled, prompting labor …

Raising Floor for Minimum Wage Pushes Economy Into the Unknown

WASHINGTON — The fight for a $15 minimum wage has gained momentum in New York, California and other places around the country in recent months. But as a national strategy to raise incomes at the bottom of the pay scale, it faces major obstacles, both political and economic.<p>In many states, …

Europe’s Impossible Dream

There’s a bit of a lull in the news from Europe, but the underlying situation is as terrible as ever. Greece is experiencing a slump worse than the Great Depression, and nothing happening now offers hope of recovery. Spain has been hailed as a success story, because its economy is finally growing — …

The hidden economic rules behind Tinder, marriage, kidneys, and college admissions — Quartz

Stanford University’s Alvin Roth is a very rare thing: An economist who saves lives.<p>The co-recipient of the 2012 economics Nobel got his prize, in part, for helping to fix a long-standing problem with the market for kidney donations. Often family and friends were willing donors for someone who …

Greg Ip: Three Economic Puzzles Are Now Less Puzzling

After a perplexing start to the year, the economy is starting to make sense. That’s good news for workers and the Federal Reserve, but bad news for investors who are going to have to get used to some wrenching moves in the financial markets.<p>Data out in the last week has begun to help solve three …

Global Oil Demand Rising, IEA Says

Growing demand may not be enough to catch up with increasing supplies<p>ENLARGE<p>Low oil prices and economic growth have helped drive up consumer demand for energy across the world in 2015, the International Energy Agency said Thursday, a phenomenon seen from U.S. gasoline stations to Chinese auto …

China Struggles to Shake Up Salt Monopoly

Titans of table salt and other industries resist Beijing’s reform measures<p>ENLARGE<p>JINZHOU, China— Han Tianpei and his wife dozed in their truck one early morning, waiting for a denim factory to open to deliver 10 tons of industrial salt. They awoke with a tap at the window, surrounded by a dozen …

In Greek Debt Puzzle, the Game Theorists Have It

That Yanis Varoufakis, the rakish Greek finance minister, would meet with senior European officials wearing a leather motorcycle jacket and open-collar shirt would probably have fascinated John F. Nash Jr., the Nobel prize -winning mathematician, game theorist and Princeton professor who was thrown …

Fed study: Tennessee has most regressive tax system

State taxes and inequality<p>States that boost income inequality the most: <b><br>1. Tennessee,</b> offsets 32.7 percent of the progressiveness of the federal tax …

John F. Nash Jr., Math Genius Defined by a ‘Beautiful Mind,’ Dies at 86

John F. Nash Jr., a mathematician who shared a Nobel in 1994 for work that greatly extended the reach and power of modern economic theory and whose long descent into severe mental illness and eventual recovery were the subject of a book and a film, both titled “A Beautiful Mind,” was killed, along …

How Much Should a Currency Be Worth? No One Really Knows

As debate over Pacific trade deal intensifies, U.S. lawmakers find themselves entangled in calculus that even IMF and WTO haven’t been able to pin down<p>Legislation that targets currency manipulation might make or break U.S. President Barack Obama’s signature Pacific trade deal. But calling out …

Senate Democrats vote to block Obama on trade

President Obama collided with his own party Tuesday when Senate Democrats stalled consideration of a trade measure that would give the administration greater authority to negotiate more freely with other countries.<p>The Senate vote was a sharp blow to the president’s efforts to win approval for a new …

Chicago Fed Says Natural Jobless Rate At Or Under 5%, Will Fall Further Over Time

NEW YORK—Economists at the Chicago Fed argue in a new paper the U.S. economy remains even farther from a truly hot labor market than many central bankers think.<p>The economy’s so-called natural unemployment rate likely lies at or below 5%, and it will go even lower over time, the analysts say in a …

Unless You Are Spock, Irrelevant Things Matter in Economic Behavior

Early in my teaching career I managed to get most of the students in my class mad at me. A midterm exam caused the problem.<p>I wanted the exam to sort out the stars, the average Joes and the duds, so it had to be hard and have a wide dispersion of scores. I succeeded in writing such an exam, but when …

Russia’s Beloved Borscht Reveals Reality of Inflation

Retired Siberian journalist tracks ingredients to document the country’s soaring food prices<p>ENLARGE<p>MOSCOW—Every other month, retired teacher Natalya Atuchina cooks up a special pot of borscht in her home city of Omsk. A year ago, she bought the ingredients at local markets for 165 rubles ($3.20). …

A Veteran of the Financial Crisis Tells China to Be Wary

About 340 pages into Henry M. Paulson’s new book on China, a sentence comes almost out of nowhere that stops readers in their tracks.<p>“Frankly, it’s not a question of if, but when, China’s financial system,” he writes, “will face a reckoning and have to contend with a wave of credit losses and debt …

Debt Piles Up in Asia, Threatening Growth

Countries borrowed a lot during the crisis, and kept doing so afterward<p>SEOUL—Asian countries borrowed heavily to maintain growth during the financial crisis, but couldn’t break the habit even as the global economy healed. Now they are feeling the hangover.<p>Growth is slowing fast across the continent …

Tumbling Interest Rates in Europe Leave Some Banks Owing Money on Loans to Borrowers

Subzero rates have put some lenders in an inconceivable position<p>Tumbling interest rates in Europe have put some banks in an inconceivable position: owing money on loans to borrowers.<p>At least one Spanish bank, Bankinter SA, the country’s seventh-largest lender by market value, has been paying some …

The Real Reason Californians Can't Water Their Lawns

In response to the ongoing drought, California Governor Jerry Brown has set limits on urban water use—ordering cuts of as much as 25 percent. Cities …

Do Federal Taxes Reduce Income Inequality?

Ben Bernanke: The Fed Is ‘Groping’ to Find the Full Employment Rate

Former Federal Reserve Chairman Ben Bernanke said he doesn’t know where the so-called full-employment level is now, saying the Fed “is in some sense groping” to determine it.<p>Full employment is the point at which joblessness has fallen as low as it can go without fueling inflation pressures. It’s a …

The Real Cost of Coal

CONGRESS long ago established a basic principle governing the extraction of coal from public lands by private companies: American taxpayers should be paid fair value for it. They own the coal, after all.<p>Lawmakers set a royalty payment of 12.5 percent of the sale price of the coal in 1976. Forty …

U.S. Car-Making Boom? Not for Auto-Industry Workers

U.S. auto-industry wages have declined despite rise in output due to competition from foreign parts makers<p>THREE RIVERS, Mich.—U.S. auto production is nearing all-time highs on the back of strong domestic demand and steady export increases. But American-made cars and trucks are increasingly loaded …

How a Rising Dollar Is Creating Trouble for Emerging Economies

In India, it is a leading electric utility, Jaiprakash Power Ventures, selling off facilities and negotiating with lenders to avoid a default, having increasing its debts thirtyfold in six years.<p>In China, it is one of the country’s largest real estate developers, the Kaisa Group, threatening to pay …

Early Retirement in the N.F.L. and at Google, and the Paradox of Success

The news in business and sports has been filled with surprising early retirements this week. Four men stepping away from lucrative careers while in their prime show a curious paradox of success.<p>Patrick Pichette, the 52-year-old chief financial officer of Google, will step down once a replacement is …

Walmart’s Visible Hand

A few days ago Walmart, America’s largest employer, announced that it will raise wages for half a million workers. For many of those workers the gains will be small, but the announcement is nonetheless a very big deal, for two reasons. First, there will be spillovers: Walmart is so big that its …