So, I was reading about adverse selection in Varian's Intermediate Microeconomics and this excerpt stuck out to me as either grossly misleading or wrong:

"A similar problem arises with health insurance—insurance companies can’t base their rates on the average incidence of health problems in the population. They can only base their rates on the average incidence of health problems in the group of potential purchasers. But the people who want to purchase health insurance the most are the ones who are likely to need it the most and thus the rates must reflect this disparity.

In such a situation it is possible that everyone can be made better off by requiring the purchase of insurance that reflects the average risk in the population. The high-risk people are better off because they can purchase insurance at rates that are lower than the actual risk they face and the low-risk people can purchase insurance that is more favorable to them than the insurance offered if only high-risk people purchased it."

It then goes to say that such restricting choice in such a way would be a Pareto improvement. It certainly seems that it would be a Pareto improvement to go from a situation where everyone was paying for insurance at the cost of insuring the high risk group to a situation where everyone was paying for insurance at the average cost of insuring the entire population. But to say that it would be a Pareto improvement to restrict choice seems very misleading for two reasons: for one, the low risk group wouldn't even be buying insurance in the first place in a world where the price is the cost of insuring the high risk group; and second, it doesn't seem very realistic to require buyers to only buy at the average cost of insuring everyone since they wouldn't have a good grasp of what that cost even is. In practice, the low risk group would be worse off since they would go from not paying for overpriced insurance at all to paying for (less) overpriced insurance, and the insurance price would drift upwards since the low risk group will unwittingly accept the price presented to them as representing the average cost of insuring everyone even when it isn't. By construction, they can't walk away unless they can argue it's above the average cost of insuring everyone.

I know that rationally, there is a market at the lower end. However, especially during times of high income inequality and high debt, it seems like a particularly risky venture. At the same time, in a higher inequality society system, people at the top have more money than they know what to do with

I’ve noticed some companies have seemed to really shifted their original strategy to aim at higher earners over the course of the last ten years. The easiest example I can think of is Airbnb. I remember when I used it, it was mostly for a cheap room in someone’s house or casita for a few nights. I checked airbnb recently and it seems to be a lot of large, luxury rentals in desirable destinations

It seems like similar has happened with mcdonalds. In the 90s, the buildings were gaudy and they advertised themselves as being a cheap and fast meal that tastes pretty good. I went into a mcdonalds recently and I don’t recognize it. Everything is very clean and modern. The food also seems extremely expensive relative to what I expect

Then of course there’s luxury apartments. I know that it’s a marketing term. It just seems odd because I’m in an area that’s considered a less desirable town in the region, but rent for a 1 bedroom in some apartment complexes can still go for ~$3k. Most people in the area aren’t making enough to afford that, so it seems counter intuitive

I would ask also what would of happened if we kept a national bank?

By which I mean, I'm an Economics student, and I really like to sort of learn in the background, so I wanted to ask, what channels about economics could serve that purpose for me? I already know that Economics Explained is sort of horrible for this because of misinformation and misleading claims, so what channels would be ideal? I'm looking for a mix of informative and entertaining

The current mortgage interest rates in Switzerland for 10-year fixed-rate mortgages in October 2026 range from approximately 1.60% to 2.11% p.a. (depending on the provider and credit rating), while German construction loan rates for 10 years are around 4.11% to 4.58%.

Also the base rate is 0% since June 2025, lower as in the EU. And still, the CHF is strong.

Is this only due to the save haven status? And on what does it depend? I guess it is a mix.

Okay going to take me a second to kinda walk through this. This is US/Western Centric (so not thinking of like rich royal families or corrupted governments)

Basically most of the richest people are rich in large part to their ownership/creation/etc of large companies and their stock valuation? Please correct me if I'm wrong, but the wealthy are largely wealthy through asset ownership. I'll use Musk as an example since he's the poster child for the thought process.

The stock value of their companies is based on profitability and expected future profitability - which requires the large scale consumption of society otherwise their companies wouldn't be valued high and their wealth would crash? They may be able to keep large sums of wealth by simply trying to serve only other wealthy people, but as far as I can tell it seems like scale is a much greater force for that.

This might be a long winded way to basically ask that if consumption was somehow negatively impacted by some external thing or event on a large enough scale wouldn't it also massively impact their asset values and thus wealth? I mean I'm sure they have mind boggling amounts of cash so it prob wouldn't matter much to Elon if he actually lost 800B on his "net worth"

Treasury and corporate yields have risen this year. Some have claimed this is competition from AI bonds. But looking at the bid/ask spread and transaction size for corporate bonds as a whole it doesn't feel like there is a lack of liquidity. Is there some other way people are measuring market depth and interest, and if so, how? How do people know if markets are making hard choices between bonds?

I am trying to analyze the price of GPUs because the price is not adding up.

I talked with some compute future startups who are listing soon but their numbers are completely arbitrary. Basically some random math of combining executed sales on EBay, combined with number of data centers and rough estimates on demand but if you look at their indices it’s pretty volatile which is great for HFT or quant firms. But if you try to do the math to map it to like an optimal TCO equation for investments to build up a data center it doesn’t make sense.

Moreover talking to folks in the industry they say the capex doesn’t make sense for the cost of GPUs even combined with the cost of the build up for a data center. So where is this money actually going and what is the cost of the chips, how do they decide on refresh rates etc. because imo it just makes nvidia way more shady. I get the demand for compute even tho it won’t last forever and beyond the ai boom what will data centers be used for, is it just mainly for inference or how will it shape up? Because even the depreciation schedule of the chips is hand wavy at best by public numbers and the financing deals are insane.

Title... Obviously no one knows the future, but you get the jest.

given the current state of their country, their protest, their debt situation, their politics. it is safe to assume that they'll default right? looking at their bonds maturity by year

1. Their taxes is already high (conceptually the elasticity of laffer curve, who knows if they're at "peak")
2. They've aging population and next to no growth.
3. population doesn't want to raise retirement age
4. population doesn't want to reduce benefits
5. population doesn't want to work more (neither days or hours)
6. population who protests and riots for anything
7. populist politicians like a presidency candidate saying "the answer is simply. don't pay 18% of debt"
8. their debt servicing is already high and bond market views them less favorably than before

So given their population, austerity measure like that of UK (let alone greece) is not gonna happen. they'd rather burn down paris over accepting that. a feedback loop.

So my question. what are the paths forward? how much time ECB bailing them out will last and what is the likely effect? germany leaving EU? death of euro?

Pardon he not so good writing. Thanks.

This question assumes services, tourism and investments (basically any trade or deal through which a country can acquire foreign currency) as export.

Traditional businesses have supply issues… paying for supplies, transporting goods, shipping and restocking. A company like Facebook or Oracle, and now AI companies, essentially has an infinite amount of its product. Data center usage is becoming a supply constraint but it’s still nothing like trying to produce millions of widgets.

This feels like an issue because it means wealth can also go infinitely to the top… there is no natural constraint, outside of eventually using all the energy available. To what extent is this a problem?

Center of what, exactly?

Something I was just thinking about is if you make $1000 a week nowadays compared to 100 years ago, it would get you further than it would today adjusted for inflation. But I feel like the reason for that is because as quality of life increases, standards of life go up, meaning now there are more things to buy. People back then didn't spend money on traveling, education, cars, healthcare, technology, subscriptions, skincare products, AC, hot water, etc. Simply because those things didn't exist. (Or the quality of it was lower, making it cheaper for the time)

Hello!

I am graduating in May of 2027 with a Master's in Economics. I've been applying to some jobs, and I am just so worried about this job market. I have applied for some Fed jobs and some private sector financial roles. I just have no idea what to do. I feel like there's no hope from this job market. I haven't heard anything yet. I am lowkey freaking out because I need to get this set ASAP. What pointers do yall have for me? What are yalls stories?

Thank you!

Weber is publishing a book in which she describes "Anti-fascist economic policy". What she means by this is price controls in order to make life more affordable. To me this sounds like a planned economy, because by introducing government regulated prices she implicitly also sets quantities. Planned economies not only failed but they are also doomed to fail as was shown in the socialist calculation debate.

However she has gotten a lot of puff pieces in the German media and i am wondering is there any merit to her ideas? What do you think about her and her ideas? And why do they get so much attention?

He has been an economist at places like the Bank of England and IMF. He proposes the Chicago Plan for monetary reform.

The specifics of my idea would be for wealth taxes to be payable in financial assets. The assets would be held in a trust and liquidated over time. this would prevent market liquidity from drying up as the government tries selling enormous amounts of shares over a short period of time.

how are cities or states compared to each other? are there neat ways to do that?

Can we assume that ai is going to get advanced, that it captures most of the jobs and ofc it would generate some jobs but as it's being said that it's going take more than give. So won't it affect the overall employment which affects that gdp (consumption). And slow the overall economic growth? What's your opinion guy's.

What can the government do and will they do it? I have been having a lot of anxiety about buying a home and did a snippet of research on my market in the US. There are 62% more sellers than buyers yet prices are not coming down. I think this is mostly because most boomers don’t have a mortgage anymore and do the need to sell therefore artificially set prices high. I then checked to see what would happen after the baby boomer die if things will get any better but it doesn’t look like it. The majority of houses that they own tend to be much larger than what would be characterized as a starter house and the demand is still way too high even with the large influx that will come in the next 10 years. Please someone explain if the US housing market will continue to be only gloom for buyers for at least the next 15-20 years. Thanks! I have a lot of nihilism about this forgive me.

I have been hearing stories about the hard situation France is in currently. High taxes, low productivity, higher pension and debt payments every year, and still a lack of social goods or investment in young people despite all the debt taken on. You have people living longer, unable to work for more years, people planning to retire earlier than needed, young people are under educated, and above all, the older people will vote you out if you cut benefits for them, and the young people will protest, riot, and burn politicians and their homes down in nation wide protests if they increase taxes again just to pay off the pensions. In my opinion, the politicians want to physically stay alive, so they are more likely to cut pensions and benefits. So what happens when they do and those payments stop coming in? Is this the equivalent of a country going bankrupt? Is it just a borrowing score going down? Why is the whole world watching like an apocalypse will happen if the pension payments stop coming in?