mankiw–chapter1.tenprinciplesofeconomics,3-18.docVIP

Mankiw – Chapter 1. “Ten Principles of Economics,” 3-18. A number of economists have their preferred lists of ‘key’, principles, or big ideas in economics. Mankiw outlines his ‘top ten’ in Chapter 1 (3-18) of his text, Principles of Macroeconomics. Gwartney and Stroup lay-out their ‘ten key elements of economics’ in the first section of their book, What Everyone Should Know About Economics and Prosperity (1-29). In a recent Investor’s Business Daily editorial, Paul Craig Roberts presented ‘seven big economic ideas’ and three related issues. Finally, in an editorial written by Walter E. Williams, entitled “Economics 101’, he identified the ‘key characteristic of economics’. In order to set the tone for this chapter in Mankiw and all future chapters, I can think of no better place to begin than in Williams’ editorial, “Economics 101”: More than anything else, economics is a way of thinking. At the heart of economics are several simple and easily observable characteristics of humans and the world in which we live. The first is that people prefer more of those things that give them satisfaction and fewer of those things that give them dissatisfaction. Second, when the cost of some- thing goes down, people tend to take or do more of it, and when the cost of something increases, people tend to take or do less of it. Finally, having more of one thing requires less of something else. Or, as my colleague Professor Milton Friedman puts it, “There’s no free lunch.” [“Economics 101,” available at: /columnists/ walterwilliams/ww000607, emphasis added] It would be wise to read Williams’ entire editorial to discover how he applies these basic principles to ‘public policy issues’. For more about Milton Friedman go to and ‘click’ on ‘Publications and Resources’ (top banner); then to ‘E’ (extreme upper right); and then on ‘Economic Insights’. Now, page down to “Milton Friedman – Economist as Public Intellectual,” Economic Insights, Vol. 7, No. 2; or you may simply go