Trillion Dollar Economists

Chapter 13Economic Ideas in Waiting: Business Applications

Economic ideas can find their ways into business applications through multiple channels: because a founder or an executive is exposed to them in college or in reading the professional literature (or from mainstream articles that summarize that literature); because a company learns of or expands on an idea from an economist whom they have hired as a consultant; or because the originator of the idea, whether or not a formally trained economist, implements it by launching a new business.

As New York Yankee Yogi Berra famously once said, “It’s tough to make predictions, especially about the future.” This aphorism couldn’t be more apt than when attempting to project which of the many possible economic ideas already out there will generate new business opportunities. But I’m going to try in this chapter by focusing on three areas where much thinking already has been done and related ideas are waiting to be commercialized. What I won’t do is attempt to predict what economic ideas not yet thought up might also have important business implications. If I could do that, I would not have spent so much time writing this book.

Prediction Markets

One of the tenets that most economists strongly hold is that markets—where people or firms are actually spending their own money—are better than opinion polls or focus groups in gauging the level of interest in any particular product or idea. For example, one can ask a lot of people what ...