Q: What is economics, anyway?

Explained in Gen Y terms, economics is simply the study of how one confronts FOMO (“fear of missing out” for you non-millennials). Young professionals, armed with idealism and Sheryl Sandberg’s Lean In, want it all—careers, love, family, friends, parties, vacations, spiritual enlightenment…but alas, physics is real and time waits for no one. Unlimited desires are constrained by limited time, money and our slowing metabolisms. As the three-dimensional body gradually acknowledges its impermanence in the space-time continuum, it gazes up at the universe of infinite opportunities and….freaks out. And thus economics steps in—how can we make the best choices? How can we make the most of our youth? Or, according to the self-help book my mom once bought me, how can I know if someone is worth pursuing in two dates or less??

Q: Sounds useful. But how does economics relate to dating?

Ah, it comes down to scarcity, scarcity, and scarcity. Scarcity is the root of all economic problems. Take this scenario at some swanky bar in Lan Kwai Fong, for example: 

Girl: Hm…there aren’t enough cute guys here above 180cm who are well-educated and have a good job, are funny and ambitious and loyal and kind and SINGLE.

Guy: There aren’t enough cute girls here who are not overly aggressive and ambitious and slutty and psycho. Man, I just want a sweet girl to take home and show my parents.

Because of the scarcity of resources, choices must be made. Expectations must be adjusted. Trade-offs must be considered. And this brings us to the next fundamental principle of economics—opportunity costs. In making a choice, we essentially give up the benefits of pursuing the next best alternative. If a guy spends $1000 on a nice watch, the opportunity cost would be $1000 worth of Michelin-starred meals he could’ve had to impress his date. If a girl spends her Friday night watching Disney movies with her best girlfriends, the opportunity cost would be a Friday night she could’ve spent going on Tinder dates and possibly meeting her real-life Prince Charming. Of course, these opportunity costs are relatively trivial, but as young professionals we do have to consider the significant opportunity costs of going to graduate school, committing to a stable relationship, having a successful career, pursuing a low-paying dream job, moving somewhere new, even getting married. 

Q: TLDR. I heard economists love charts. Where are the charts? I want to see some charts.

Okay, okay. Let’s talk about the production possibility frontier (PPF). The PPF shows the maximum possible output combinations of two goods/services an economy can achieve given fixed resources. Here’s an example of a PPF curve in the context of your life:

Moving along the PPF curve from B to D, we see that the more hours we spend on sleeping, the less hours we have for socializing, and vice versa. Points B and D illustrate “specialization”—a person at point B would be an expert socializer, one of those people with 7000 Facebook friends and is the life of every party, but tradeoffs incurred include severe sleep deprivation, dark eye-circles, and high risk of liver disease. On the other hand, a person at point D would reap all the physical and emotional benefits of an 8-hour-daily beauty sleep routine, but would celebrate these benefits alone in his room.  Point C would be an appropriate compromise, a path that most people take—give up some sleep and some socializing so that we can have an adequate amount of both. Point A shows an inefficient allocation of resources—this person is under-utilizing his time and doing too little of both! (ex: playing Candy Crush, reading celebrity gossip, watching Netflix, etc.) It seems that basic economic theory seems to agree with the “YOLO” principle—you only live once, so please live at full capacity and make the most efficient use of your time and money! Lastly, Point E is outside the PPF and is thus unattainable—there are only 24 hours a day after all. This could change with technological progress or if you get your hands on Hermione Granger’s Time-Turner.  

To illustrate the prevalence of opportunity costs in our daily lives, here are some extra PPF graphs explaining some common tradeoffs we make:

 That's all, folks! Tune in for Part 2 at some point in the future--we still have lots more to cover!