Tuesday, September 15, 2009

The Baby-Sitting Co-Op Economics Article

Heard about the baby sitting article yet?

Like the book reviews, I will sometimes include thought pieces here that give you context, meaning, and fodder for your imagination.

So today's food-for-thought piece is a famous academic journal article about a group of young families in need of a babysitter. They made coupons that could be redeemed for one night of baby sitting, and....then something unexpected happened.

Nobody wanted to go out (because they wanted to save up the scarce coupons) and therefore people weren't earning coupons for spending. Without coupons, they couldn't go out. What's the solution? In other words, this problem is about demand, money supply, and deflation. Sound familiar?

And this is what people are talking about when they mention "the baby-sitting article."

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