Let’s talk about some economics stuff today. Honestly, if you can apply these ideas to real life, you’ll find they’re like a cold yet super-useful GPS—you can use them to make decisions at the key moments.
First, quick question—would you rather work your heart out to earn a million a year, or use half the effort to make six hundred thousand? Hold that question for now. When you get to the fourth point, you’ll understand.
First, opportunity cost. Basically, when you choose this, you have to give up that best alternative. For example, you’re doing video editing now, but you could have been an artist. The possibility of being an artist is the opportunity cost of doing editing. Since the cost is so high, shouldn’t you make the work in your hands really pay off? Not only do you need to earn back the time cost, you also have to earn back the value you abandoned—that’s what it means to break even. I chose to make long-form videos, and the logic behind it is this: short videos make money faster, but the sense of meaning isn’t strong enough to compensate for my opportunity cost. If you truly treat opportunity cost seriously, the drive you put into the work will be different.
The second one is sunk cost. Don’t let money, time, or feelings that have already been spent—money you can’t get back, time you can’t reclaim, emotion you can’t undo—affect your next decisions. Lots of people know this, but they can’t do it. When you realize the other person has lost interest and you still want to win them back, what you’re really trying to save is the version of yourself who invested a lot—not the person who changed. Remember this: sunk costs shouldn’t factor into major decisions.
The third one is diminishing marginal returns. The first apple is the most enjoyable. The second is still okay. By the tenth apple, you don’t even want to see apples tomorrow. The intensity of what you like fades more and more, but love doesn’t. So when choosing an industry or a partner, you should look for what you love—not just what you like. “Like” follows human nature, so it gets boring. “Love” can withstand the wear of time. It’s like raising a child: at birth there’s no real feeling, but after ten years, the bond deepens more and more—that’s love. Love breaks diminishing returns.
The fourth one is marginal cost. This thing is a U-shaped curve: it falls first, then rises. You open a milk tea shop—one day you might be able to produce 100 cups. If you increase from 10 cups to 99 cups, the cost per extra cup keeps dropping. But when you hit 101 cups, you need to hire people, and the costs jump up instantly. So when should you stop? When marginal benefit equals marginal cost—that is, if putting in two more cents of effort only gets you one cent of return, then it isn’t worth it. Back to the original question: working like crazy to earn 1.2 million versus putting in half the effort to earn 600,000—which is more worthwhile? Do the math yourself.
The fifth one is comparative advantage. Under the same costs, whoever can produce more should do that job. Put it into a family: whoever has stronger earning ability goes out to work, and the other manages at home—regardless of gender. If Korea isn’t suitable for growing watermelons, don’t force it. Just import them. For product work, why build and run your own sales team? Find an advertising agency—it's more efficient. Don’t let pride control you; rational cooperation is the answer.
The sixth one is value vs. price. These two aren’t aligned—the gap is information asymmetry. When you should raise financing, it’s not because the company is about to run out of money; it’s because that’s when you’re doing best. Valuations are high then, and everyone is eager to invest. People are the same: when you’re on top, make more friends and build stronger bonds—share your “equity.” Then one day, when you fall on hard times, these people all have sunk costs; even if they don’t rescue you, they still lose too. So they won’t just walk away.
The seventh one is the paradox of choice. The more options there are, the harder it is to choose—and even after you choose, you’re not satisfied. With two suitors, you can tell at a glance who you prefer. With ten suitors, you get overwhelmed and in the end you might end up with none of them. Don’t be too greedy with options—leave yourself too many choices is like having no choice at all.
The eighth one is path dependence. Why is this keyboard layout so against human logic, yet no one changes it? Because everyone learned it, and once learned, you can’t change. Your first job after graduation basically determines where you’ll be ten years later, because your knowledge, connections, and experience are all embedded in that industry. Want to jump out? It’s hard. But if you realize it, then you have to proactively lay down a few more paths for yourself—don’t be pushed along by inertia.
The ninth one is price signals. A high price means demand is strong and supply is scarce. Whichever industries make more money, smart people will flock there—so barriers naturally become higher. You should be glad this situation is hard. If it weren’t hard, someone would have snapped it up already, and prices would have dropped.
The tenth one is the prisoner’s dilemma. Two criminals are interrogated separately. Everyone stays silent and each gets one year. If one betrays the other, the betrayer is fine while the betrayed gets ten years. If both betray each other, each gets five years. What’s the best solution? Betrayal—because you don’t know whether the other person will sell you. Business is the same. Once trust is gone, everyone protects themselves against you. Franklin said honesty isn’t a virtue; it’s the optimal strategy. If you’ve always been reliable, people won’t play the prisoner’s dilemma game with you.
The eleventh one is transaction costs. Buying things isn’t just about spending money—you also spend time to gather information and compare. Those are all costs. So either improve your judgment and make decisions quickly, or reduce the number of transactions. Why do large companies get messy as they grow? Because there are too many people and things to manage—your brain can’t keep up. Sun Tzu said managing ten thousand people is the same as managing ten people—just manage those ten generals. Keep transaction costs within a reasonable range.
The twelfth one is the endowment effect. Once something is yours, its value in your hands automatically increases by a notch. That’s why e-commerce lets you “try before you buy.” A lot of couples’ feelings actually improve after marriage—why? Because “you’re mine” itself adds points. It’s not that the person is inherently so great, but that since they belong to me, it feels even better.
Look at life through an economist’s eyes. So many things have patterns, and these theories have been tested for you with real money by the market. Trust them—it's easier and saves effort.
That’s it for today.
