I provided some pessimistic views on transformative breakthroughs. But every now and then I notice the power of steady, incremental progress. For example:
You can read more about David Reynold’s model here and here. In 2013 Barry King tried to beat Reynold’s record by constructing a model of Salisbury Cathedral (which is a popular tourist destination for KGB agents). You can read more here.
Steve Job’s famous advice was to not listen to your customers. This is similar to Tyler Cowen’s “law of interesting content” – which is that interviewers should have the conversation that they want, not what they think their listeners want.
Here’s an example of how Starbucks creates value for me:
This concept is closely related to “Jobs to be done”, but here’s my review of ‘Competing Against Luck‘. Here’s my bleaker application of value to Apple’s iPhone innovation:
For a more traditional, textbook treatment for demand curves, see here:
A great application of consumer surplus is here:
Can you think of something that delivers a lot of consumer surplus for you? What’s the most consumer surplus you’ve ever received?
Finally, here’s a quick quiz on understanding value.
Learning Objectives: Link a thorough concept of value with implications for competition and innovation. Derive demand curves.
Cutting edge theory: Jobs to be done
Focus on diversity: Economists typically take preferences as given, but we can provide a theory of demand reflecting “the individual’s commitment to an intelligible universe” (p.52), where goods are considered to be a visible reflection of culture. Mary Douglas (1921-2007) was one of the world’s most admired social anthropologists, and her 1979 book, ‘The World of Goods’, provided a rich and compelling illumination of consumption patterns.
The training scene from Rocky IV demonstrates the difference between the USSR (technologically sophisticated but lacking in heart) and the US (backward but free).
What should Widodo do? Indonesia is a large, populous middle-income country. It faces no major near-term security threats. It has a small manufacturing base and no major non-commodity export sectors. What is the best non-bureaucratic 10 page economic development briefing document and set of prescriptions that one could write for Indonesia’s president?
Here’s my analysis of Belarus, using many complementary concepts.
Case: Blustein, P., 2005, “And the Money Kept Rolling In” Public Affairs (pp.39-60)
Discussion question: As of July 1998 should the IMF suspend their program in Argentina, or continue their support?
Although I use Chapter 3 as the pre reading for this class, I highly recommend the full book: “And the Money Kept Rolling In”. Here’s The Economist’s summary.
Learning Objectives: Understand the causes of a sovereign debt crisis. Understand the role international agencies play in managing a debt crisis.
Focus on diversity: The highly influential paper on sovereign debt tipping points was co authored by Carmen Reinhart, a Cuban-born economist who became Chief Economist of the World Bank in 2020.
