 Hi, Professor Friedman back again. We've already spoken about production possibilities frontiers, remember? They are lines relating how much output you can get of one thing, the other thing, or some combination in between. So you could grow poppies, or you could grow roses. You could have all your land on roses, and you'll have a certain number of roses. Or you'll land on poppies, you have a certain amount of poppies. Or allocate your land in between, and you'll get different combinations. The production possibility frontier can be a useful concept. You could imagine at night, you could have nine hours sleeping, get a lot of sleep, or you could spend nine hours having sex, if you're lucky enough to be in that situation. And you could have a combination of sex with sleep, nine hours of sex, nine hours of sleep, eight hours of sex, one hour of sleep, some combination that adds up to nine hours. Now this production possibility frontier can be drawn on a graph on the assumption that you are using your time efficiently, and you only have a certain amount of time. So you cannot have 10 hours of sleep and six hours of sex, because you don't have 16 hours, you have only nine. So you cannot be beyond the frontier. You can only go as far as the frontier. Second, we assume, or not me, some economists assume, that you will be at your frontier. You will not spend two hours sleeping and 20 minutes having sex. That would be inefficient. And economists assume, some economists assume, that you won't waste your time. This is a story about a faculty member walking down the street with a graduate student. Graduate student sees a $50 bill lying on the sidewalk and reaches down to pick it up. The faculty member rebukes her and says, don't bother. And she says, why is there $50 there? Faculty member says, if there was really $50 there, somebody else would have picked it up already. That's the logic behind the assumption that you will never be inefficient and within your production possibility frontier. You'll always be at the frontier, because why would you waste time? Why wouldn't somebody else have already picked up the $50 bill? OK, so you have the downward-sloping production possibility frontier. You can do one thing or the other. You'll never be beyond it, and you'll never be within it. Sex and sleep are substitutes to one or the other. They're not compliments where one thing helps you with the other. People are always on the frontier. Both of these assumptions are wrong for most social activities. And most of what we care about in the economy is social. Consider, first of all, the production possibility frontier for sex and sleep. Will you always be on the frontier? If you buy yourself, well, yeah. What else is there to do but be efficient? But once you're involved with other people, think about it. Are you always optimizing, maximizing your well-being when you're with your friends? Would you sometimes waste time quarreling, not expressing your needs fully, not expressing them in a way that others can hear and understand, waiting for somebody else to do what you wish they would do but never telling them? People make mistakes in their social actions all the time. That's why we have a field called psychology. They have a building over there and a bigger faculty than the economics department with a much larger budget because they deal with people being within the frontier. Is the line downward sloping? What do you feel after you've had a really good social interaction with the partner of your choice? You might feel really good. You might sleep better. The sex-sleep production possibility frontier may be upward-sloping. Indeed, there are a whole range of social actions including many social production processes where people are more productive in everything if they work together. This production possibility frontier for sex and sleep and many other things may be upward-sloping. These are compliments. Work together, learn to do it better, and it's as if your line is upward-sloping and you're better off all the time. Have a good nap. Thank you.