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Book: Armchair Economics by Steven E Landsburg
Subtitle: Economics and Everyday Life
Here’s the scoop:
This is a great way to make learning the concepts of economics more tolerable. Economics is a fascinating school of thought that is based on a lot of sociological hypotheticals. Creating good situational analysis, and asking important questions are fundamental to the discipline and this book does an excellent job with both. I got to read this on my trip to Florida, and during the commute on a recent fishing trip.
Economics applies to everyday life. The principles set forth by this relatively new school of thought are the foundation of more than just financial livelihood…they help to define the underpinnings of philosophy, poltical views, and lifestyle. It is not always easy to find the situational remedies that create “win/win” outcomes, but it is a goal worth striving for.
Quotes from dogeared pages:
The indifference principle ensures that all gains are either transferred to a fixed-resoure owner or effectively discarded. Economists tend to feel that it is better for someone to reap the benefits of a resource than for no one to reap them, and therefore tend to think that the institution of property is a good thing
There are many moral philosophies to choose among, and I believe that economic reasoning is the most powerful tool we have for evaluating their merits.
In principle, every person with an interest in the outcome should be allowed to cast a number of votes proportional to his willingness to pay for the outcome he desires. The efficient decision is the one that gets the most votes.
Along with its modern formulation, the Invisible Hand Theorum has acquired a modern name. It is now called the First Fundamental Theorem of Welfare Economics, and it can be stated succinctly: Competitive markets allocate resources efficiently.
There is also a Second Fundamental Theorem of Welfare Economics, which deals with the fact that there are many different ways to allocate resources efficiently. The Second Fundamental Theorem says this: No matter which of the many efficient allocations you want to achieve, you can always achieve it by first redistributing income in an appropriate way, and then letting competitive markets function freely.
I thought this quote extremely interesting in regards to search marketing conferences, and the smaller invite only SEO gatherings that have popped up in the last few years. The “SEO marketplace” would probably be a fascinating one for an economist to study due to it’s dynamic and rapid nature for change and dependance on information for financial gain.
In fact, there is something very like a market, with a going price to be paid for violating unspoken rules. Even without any formal organization, markets tend to develop, precisely because they are such powerful tools for improving everyone’s welfare
There are always plenty of people around to observe a crowd. There is nobody around to observe a vacuum.
Enhanced competition, enforceable contracts, appropriate incentives, attention to consistency, and market forces generally serve us well, and I believe we should be ever on the lookout for new settings where we can employ them.
Economics is the science of competing preferences. Environmentalism goes beyond science when it elevates matters of preference to matters of morality.
Economics in the narrowest sense is a science free of values. But economics is also a way of thinking, with an influence on its practitioners that transcends the demands of formal logic. With the diversity of human interests as its subject matter, the discipline of economics is fertile ground for the growth of values like tolerance and pluralism.
The author writes a letter at the end of the book to describe to his daughter’s teacher why he would not engage in a debate with her on their opposing views on environmentalism. The letter illustrates with a respectfully stern confidence demonstrates a human tolerance that would make the world a better place if shared by all humans. This letter (and the book in general) demonstrates very well the science of economic thinking and how powerful its’ logic is to visualize highly probable outcomes in a situation.
Other favorite portions:
-The computer game of life: learning what it’s all about
-Why Taxes are bad: The logic of efficiency
-How statistics lie: Unemployment can be good for you
-Why popcorn costs more at the movies and why the obvious answer is wrong
-Was Einstein credible: The economics of scientific method
Application to SEO:
This book has many applications to SEO. Economics in general is a fascinating field in my mind that gives its’ students unique perspective on the stories of life. A strong understanding of market theory, efficiency, labor, and other key economics principles are critical to not only success in the SEO marketplace, but success in any business environment. Understanding economics helps to forecast how different changes may change the ultimate outcome of situations. Creating mental models with the use of economics can help determine with better success the probablity of these situational outcomes.
My next post will include the application of economics to developing your SEM niche (which was also a presentation done at SES Chicago). This will include some of my thinking from reading this book recently mixed with the ideas that took place prior to that were used for the presentation.
This is also a reminder that the SEO marketplace will get increasingly more competitive. The strong financial compensation currently available is bring a flood of people into SEO as an occupation. The drive to compete will increase which will create saturation in some areas, and new demands in others.