 I'm Tony Currilli, Professor of Economics and the Director of the Center for Study of Political Economy at Hampton Sydney College. And today I'll be talking to you about the economic way of thinking. The economic way of thinking is a very powerful tool for understanding the world that starts with a very simple premise. And that simple premise is that all social phenomena emerge from the actions and interactions of individuals who make choices after weighing costs and benefits to themselves. So that way of thinking means that when we look out on the world, the things that we see are not random happenings. The things that we see that are social in the world are part of a decision-making process or the outcome of a decision-making process. So if we think about and unpack that phrase, we have actions, interactions and choices. Those are all three very important things. Actions for a person, we assume that in the economic way of thinking that people act or that they choose. And what it means to act is to apply means to ends according to ideas. They have ideas about the way they can achieve goals that they would like to achieve. We call those goals ends. To be able to achieve ends, they need means, and means are the methods by which they achieve those ends. So if I'm hungry, for example, I could eat a hot dog, I could eat a hamburger, I could get some sushi, there's lots of different means for me to achieve those ends. So if I don't know that sushi is good or edible or I can eat it, then it's not a means toward my end. I have to choose because while my ends might be unlimited, I could have lots of different ends that I like. The means I can use to attain those ends are limited. So the core problem of choice or action is scarcity. If means weren't scarce, we wouldn't need to choose. And in the real world, means are scarce, so we need to choose. So if we want to understand real choice about real people, we have to understand scarcity. The second aspect is one of interactions. And interactions means if I'm in a social world, the decisions I make bump up against the decisions other people make. When we talk about interaction, the main problem of interaction is that there's a multiplicity of goals. Your goals and my goals are different, and sometimes they might even be incompatible, which means we have to have some way to coordinate our activities. We have to have a way to coordinate our plans. So economics is a way to look at the way we coordinate with each other. When we say that social phenomena emerge from actions of individuals and interactions, those social phenomena are unintended consequences of individuals choosing. So for economists, we believe that choice exists, also that only individuals choose. So when we talk about choice, we don't mean that collective choice or that a group can choose, but only that an individual can choose. So the order we see in the world, if you watch people walk down the street or walk into the subway or drive their cars or sit down in a movie theater, those are all orders. And those orders are spontaneous in the sense that nobody intended for those orders to exist. They end up existing as the consequence of the choices that individuals make. When we look at the world, the language we speak was not an intended consequence of anyone. The money that we use was not an intended consequence of anyone. The idea that price, for example, the price of gasoline when I left home was $3.39 around the corner from where I live. That price wasn't anybody's intention, it was an outcome, it was an unintended consequence. On a broader scale, all the things that we see that are social phenomena emerge from these choices and weren't intended by anyone. So that means we don't need politicians, we don't need dictators, we don't need other people telling us what those things ought to be. So what economics does if we take lots of other things like culture and rules of the game, the laws we find ourselves in, things like that, it's an incredibly powerful tool to understand the way the world works. A recent example might be to understand that is after Vancouver lost the Stanley Cup there was a riot in Vancouver and lots of people are trying to understand mob violence. Well, from an economics perspective it's relatively simple. Individuals were making choices in an environment that had changed, the rules of the game if you will it changed. So what happened was it's cheaper now for me to light a cop car on fire because I'm less likely to be caught because I'm in the middle of a group. So the mob riot isn't this mob mentality, it's about choices that our individuals are making. And I can say the same thing about traffic as we watch the way traffic moves around and lots of other things that are in an environment. So if we take those ideas about choice and all that, understand that things like property rights and rules of the game are important, we can make sense of the social world. And economics is an incredibly powerful tool for understanding the world around us.