We asked 188 economists. And the survey says...
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This is planet money from npr. Every fall, professor bult to mail starts assembling his teaching materials, the topics, examples, even what he's going to say.

And when are you actually have a policy that in every class, which is one hour and fifteen minutes, I crack at least two jokes?

It's very methodical system to joke minimum.

one around twenty years minute mark and one around forty five.

five minute mark. Why do you have IT scheduled in your class?

Because I already have their attention high in the first twenty minutes anyway. So twenty minutes is the when it's fading away, and forty five minutes, definitely they need to boost. That's why sometimes .

the jokes are short, sometimes long, sometimes topical, sometimes a reverent as .

to whether there are any good.

Yeah, you guys can be the judge of that.

Why you got create economists. Why to make weather forecasters look respectable?

Apparently that one kills with economists. Anyway, we teaches economics at the university of texas at sentence ono. And while he finds economics very entertaining, he knows his students do not always agree. Tense, all the jokes.

And the reason we're talking to him is because of something funny that happened to one of his classes that he did not plan for. IT was about a term he used that his students understood in a different way.

This little aneugh reference is something sexual. So if you're listening with kids and want to skip this part of the story, skipper had one minute and forty five seconds.

Yeah, really come down before we start the story. Give you a second to skip. Five, four, three, two, one skip.

okay. Bolt says the incident happened a few years ago in one of his intro to e con classes.

Picture, one of those big auditorium filled with hundreds of students belong to starts lecturing on the topic of the day, trade barriers.

So there are a number of trade barriers, which are the policies that government sometimes employ to restrict foreign trade into their country.

right? A government might restrict trade by putting in place peifer or maybe quotas on stuff coming from abroad.

Ballot explains to the entire class that there is another way for a government to impact trade through their currency. Some of the country will tie their currency to other countries, you know, peg their currency.

Government saying that from this point on, my money will be worth this much to this particular currency for the foreseeable future. So that's what pegging is.

And that is when the students started smoking, I immediately noticed .

their facial expressions change, and they kind of do what you're doing. No, actually is sometimes, yes.

yeah, I have my hand of your mouth and I am a giggling no, I am not going to explain the other usage of the word pegging here. IT involves straps and sex. Google your own risk.

Anyway, blunt is standing there in front of all of these giggling students and unlike when he tells his carefully planned out jokes this time, he has no clue why the thing he'd said was funny.

And I um tell my wife that night what happened and then he told me what IT is from that point on a more careful teach that that segment of the class.

Hello, welcome to play that money. I'm a man der iran chic.

Then i'm luxe horis goi. Welcome back to those who took a little pause that worry you have not missed anything super important.

Economics is filled with terms that will just say IT don't always make sense to be average person terms that sometimes, yes, mean what you think they mean, but sometimes not at all.

not even close. So we surveyed one hundred and eight, eight economist, and we ask them which are the most misunderstood terms in the field of .

economics today. On the show, we are going to hear their answers, stories about near recessions, a problem with insurance and econ at your local movie theater brings up upward.

You mean like smuggle popcorn into a theater smugly .

and could be cheaper than if you about IT.

There 应该 谁啊？

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So we put together survey and asked one hundred and eighty eight experts these three questions, what term and economics is misunderstood? Why do you think people find that term confusing? And can you tell us like a little story about IT?

We got lots of responses.

My word is public good. This is dolly remuda choose a professor at city university of new york. It's confusing because those are two ordinary english words.

And together, people think public good means something that good for the public and economics, a public good, yes, does refer to something that is good for the public, like a public park of street lights. But there is a more technical definition. IT means that one person enjoying the park doesn't take away from other people enjoying IT too. The other criteria, IT, is extremely hard to prevent others from enjoying the park there for everyone. This definition can help governments decide what public goods to pay for when private markets fail to fund them.

Another misunderstood term we heard comes from Joseph gladstone, a professor at washington state university.

The economic term I find people see as a problem is capitalist. Most people find capitalist as selfish, greedy people. And that's not exactly yet.

Joseph says a capitalist is essentially to someone who has capital.

But we also found a lot of responses about terms that have a double meaning, like this one from damon Jones at the university of chicago. The term that came to mind was welfare. Welfare can be defined as a measure of people's well being, how well off they are. But IT can also refer to a government income support program for low income families. Two pretty different things, which is confusing.

The thing with a lot of these terms is that they are everyday words. You know them well, probably been using them for years, but economists have given them some other sometimes mystifying meeting, so annoying.

For our next term, we went looking for economists out in the wilds of new york city.

Allison trigger, how are you? And well, what are you doing here? The movie? There's.

well, you know, like a lot of economists out on the very demanding schedule. So I figured tuesday afternoon.

great time to see a elson is an economist that the so we are here.

the theater, not for a mattea, but because this is the perfect place to talk about alison's term Prices discrimination, which is basically setting different Prices for individual consumers based on what each of those consumers is willing to pay.

But when people hear Price discrimination, they often focus on the discrimination part. They think this is a bad thing.

So alan wanted to come to the movies today to make the case for Price discrimination.

And let's go in the theater, see if we can talk to anybody about Price discrimination and not get kicked out OK here are going in.

It's a tuesday afternoon, and there aren't a lot of people here. But we catch a woman waiting for her friend before a movie .

course is just a, did you buy ticket to a movie?

Uh, yes.

I did. What you're going to go see things. okay. What is that about a good.

But prisoners at since then who are part of an acting company, and it's sort of the power of theater to change lives, can ask you how much you pay for your ticket. Tough Price on tuesday. And I have the APP. And also I got the senior ticket, so about nine dollars.

So will the Williams here got a senior discount, and she's also a members. So he got a half of tuesday. Our ticket cost only eight seventy five. That's like civil war era ticket pricing.

Next also might do a bit of a stakeout near the ticket machine. So where we're watching gellman at the ticket believe these buying of a ticket we catch look .

binder before he heads to his theater. He's also seeing saying.

I ask you how much you spent on your ticket. I spent fifty dollars on my ticket. yeah.

So they are both going to see the exact same movie singing about the power of theater to change lives. A SHE paid eight, seventy five. And look who in his twin, he paid fifty dollars. Now, look, told us he didn't feel there was anything wrong with wilda getting a discount, but he did pay more than double. What will the paid?

Allison tells us. This is Price discrimination in action.

Cause IT just means that people pay what they value things, and that means that people who don't have a lot of money often can now participate the market. They won't like if you are a pensioner and you can't afford to feel fair, but they, according to this membership program, give you half off on tuesday. That means you can still see movies.

You just have to go on tuesdays unless people are in the movie theatre. And that's Better for the movie data, and that's Better for you. And now more people .

get to partaken a good. Now this is the basic version of Price discrimination, discounts for seniors, discounts for students. These are pretty accepted, but there are some versions of Price discrimination that people seem to hate, like algorithmic pricing.

And that just means that they're using data AI maybe to figure out how much you want a good and are willing to pay for IT and charge you accordingly.

Allison says that the economics, there's a concept called perfect Price discrimination that means that the Price of, you know, like a plane ticket is set exactly at the max each customers willing to pay. Now in this scenario, a travel website might use online data like your location, how many flights to take a year, how many times you google light to a ruba to figure out exactly what Price to offer you. Some economists .

like perfect Price discrimination because IT brings more people to a market than if there .

was just one fixed Price. But most people hate Price discrimination. Alson, I was standing at the street entrance of the theater, which he talked about the recent up all over Price discrimination.

There was a big scant of recently, because when dies was going to charge a different Price, depending on when you came. And everyone was very upset because everyone was paying different Prices, but maybe you can't afford when these during prime time. So now you can maybe get a one at three in the afternoon if you just wait a couple hours. And people hate IT IT, people hate IT IT. But they should love IT because it's like one now give .

a cheaper some people should love IT because if they can wait till three o'clock, they will get a cheaper burger. There will be some winners with Price discrimination.

So whether we are talking about making some cheeseburgers cheaper or making tuesday afternoon madam is affordable for seniors, maybe what we've really learned here is about the power of Price discrimination to change lives.

Our next misunderstood term appears in the news all the time, like here is treasury secretary Janet yelling, saying IT at a recent event, IT really has been amazing to be able to get inflation down as meaningful lures we have. And I think this is what most people would call the soft landing.

The term for this segment is soft landing.

okay. Speaking of soft landing, you fill in our survey and you said, you know what people don't really understand is soft landing?

No, they don't.

Are you shooting now? I hear self learning. I'm like I feel like I get IT. Do I not get IT?

Well, you know, the the thing that people don't get is that just means you've avoided a for blown recession.

okay. So this is dim swank, chief economist at K P M G U S, part of one of the biggest accounting firms in the world. And nyan says the economy might not be in a recession. This might actually be a soft landing, but that can still entail a lot of economic pain.

You can have an increase in unemployment, which we've already had. actually. You can have certain sectors ago under recession like we saw on the housing market.

And so IT sounds nice and cushy, but in reality, the reality is that is a little bumper and a little more turbulent than I think people think. You know, the idea that soft landing are like pillows and feathers, no pain anywhere. I think that it's lost .

in translation. Dan, here's this confusion all the time from our clients, from our colleagues when they're told that the economy is doing well, that we dodged a recession. They still can't help but wonder, like my industry is struggling.

We had to lay off a bunch of people. This is a soft landing. Why doesn't IT feel soft? So if you could come up with a different term and replace soft landing, what would you replace that with?

I don't know that I have a replacement for IT know I guess soft landing is a little bit too benee.

so i've got a couple suggestions. Maybe mini bus, I bus, bus. Okay, try one more qui recession?

Oh no. You know they come in in europa n because the economy .

has actually slipped .

into negative territory even though it's not a full blown recession in the labor market, which is kind of an interesting way to think about IT as well. But when you hear technical recession people go.

what is that? IT makes a sound like technically, we are in a recession, which is not the case, so IT makes .

even less sense. So for this one, we are taking suggestions, write to us and suggest a Better term than soft landing. For this economic moment that we're in can be too hard, can be too soft, like a soft boiled landing, a soft boil landing would be great.

the little guy. After the break, we revealed the single term that came up more than any other in our survey of one hundred nadia economies, which involves a battle between good, evil and insurance.

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So we sent out this survey to one hundred and idio economists. And when we got the responses, there was one term that came up more than any other moral hazard. So we called the Vivian home, who teaches at rice university. Well.

I actually asked my students about what terms that they found were most confusing. And I I asked three of my favorite students I had, and two of them came back and said, moral hazard.

moral hazards, is a concept that's very much a part of Vivians work, because is a health economist.

So, so tell me the correct, what is the correct definition .

for moral hazard? So moral hazard occurs whenever there is an an individual who takes an action for which they don't bear the full economic consequences of that decision.

So Vivian says he might be easier to understand world hazard through an example, the fall now. So that means changing leaves, pumpkin space and the flu. So let's say there's a new flu going around and that there is a vaccine available for free if .

you have health insurance. And they say there's a new vaccine now you say, um I have health insurance so if I get sick, you know I really should go get this this vaccine but I don't have time so i'm just not going to do IT that would be an example moral hazard.

right? People think I don't need to bother getting a new vaccine. There's a chance I won't even get the flu. And if I do, I can always go get treated for free, basically.

So the problem here is that people take on additional risk by not getting the vaccine because, hey, they're not the ones paying forward if they get sick. And if the flu explodes, more people need treatment and health care costs go up.

Another version of moral hazard is that people with health insurance might go to the doctor more than they need to, since they are not the ones paying for moral hazard, can have this distorting effect.

That's why in in health insurance, we have copies and deduct tables. It's meant to address this moral hazard. So you want to give coverage protection against great financial loss to patients, but maybe you have them, have some skin in the game. And so that will reduce the amount of moral hazard that occurs.

Vivian says that moral hazards shows up in all sorts of places, not just in healthcare, with banks that are too big to fail. If a bank is just going to be bailed out when he runs into a problem, maybe the bank doesn't worry too much about giving out those risky .

loans or say, a CEO has a large sets package lined up so they don't worry too much about making bold but risky business decisions or take the case of paid six days.

the moral hazard is, if you know that it's all being paid for, you might call len sick on some days when you're really not.

What people call in sick on days when they're not. I would never would.

You are not going answer that question.

Now the problem with the term moral hazard is, again, those are two words we understand, but the meaning doesn't. Totally lineup.

I asked my students, well, if you weren't quite sure what he meant, what did you think I meant before I start a lecturer on the topic? And then one of my students responded. I thought moral hazard was everything they told you not to do in church, like sex and drugs and gambling.

I mean, it's kind of what that sounds .

like exactly Vivians.

Three favorite students weren't entirely wrong. We looked into IT a little bit, and the origins of the term do have something to do with morality. The vian suggested we reach out to mark Polly, amErica professor, of how the economics that warned to find out bit more.

It's kind like the duke of moral hazard.

So the term actually was originated in the insurance literature. They defined IT as a any deviation from correct human behavior that causes problems for insures. Martin countered .

the term when he was writing his P. H. D. He says, back in the midd one hundred and sixty, he says, moral hazard is a very old term. IT appears in old insurance literature from the eighteen hundred and one thousand th century. IT was a huge issue for insurance back then.

Let us share some of these insurance literally kind of amazing. And it's definitely super judges like take this eight hundred and sixty seven guide to fire insurance. There are a lot of fires back then, so ensures we're like, who can we trust, alex? Y, would you would you do the honner's?

My pleasure of. What is the general character born by this applicant? Or his habits good?

Is in old resident or a stranger in an have threats been utd against him? Is he peaceable or corrosion m popular or disliked? Basically.

insurance companies were asking, is this person a moral upright citizen, or is he going to be negligent and accidentally said his business on fire?

But when mark was writing his this is, he thought this is the wrong question to ask, because once people were insured, he didn't think they ended up using more insurance because they were good or bad people.

And I said, well, that just looks like movement down a demand curve. That's what we teach an econ one that when Prices low, people will use a lot of something. And when Price rises, they're use less than less of us. And that seems to be what happens with with health insurance.

mark argued. This wasn't about whether a person is peaceful or coral. Some, it's not a moral hazard. He just thought this is what people might do when they have health insurance.

That didn't seem to me to be a matter of morality. That just seem to me to be a matter of basic economics.

And largely, mark convinced the field these days when economies talk about moral hazard, they are talking about what incentivizes certain behavior. They're not judging people's morality.

Now, we figured if he was, the guy who changed the meaning, took the moral judgment out of the term moral hazard, he must have a replacement in mind.

Do you have another term that you've been sitting on that you think could replace the term moral hazard?

Well, yes, but I would say insurance instance of responsiveness. And then, you know, people would fall asleep when I got to the third, so able.

So the moral of the moral hazards story is that the term itself is probably here to stay.

So there you have IT a whole bunch of economic terms, along with some hopefully clarifying definitions. Special thanks to everyone who filled in our survey. We obviously could not make this episode without you.

Today's isole was produced by sam yellow horse castle with help from shan sel Donna. He was edited by jejune, engineered by voluntary o or giger sanchez and fact checked sera. What is alexa markets are executive producer.

I'm alex y here. It's gazi. I'm a man eron chic. This is mp r. Thanks for listening.

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