As an economics professor, one concern I have long had is that I don’t want to limit how I train students to manipulate mathematical expressions which are typically unknowable to real world decision-makers (such as what the future demand curve for a firm’s product will be once production is completed, at the time they are making their price and production plans). I believe it is at least as important for students to become adept at street-­corner economics, the ability to understand their day-to-day environment through the application of economic principles.

The power and usefulness of street-corner economics was powerfully driven home to me years ago, when I taught a year in my university’s London programme. In such a foreign experience, where many of life’s details that are understood through familiarity ‘back home’ are suddenly different, one is constantly exposed to new and different circumstances. Such experiences are an opportunity to use economic tools in the real world. Even the most basic concepts have many applications. Consider just a few of them illustrated by that overseas experience.

Among the first things a careful observer notices in a foreign country is that relative scarcities are different than where one is from, which would, in the economic way of thinking, imply different efficient responses. Recognising that protects us from being ugly American tourists, who criticise the way ‘they’ do things as less efficient (although different, more insulting words are often used) than how ‘we’ do them ‘back home’, when in fact, they are typically efficient responses to the different circumstances they face.

When my family arrived in London, two things we quickly discovered to be substantially scarcer were living space and electricity. One result was far smaller refrigerators (many had only what we would call dorm or apartment refrigerators). This, in turn, was why we couldn’t find milk in any size bigger than a half-gallon, much less two-gallon packs (which I overheard fellow expatriates complain about multiple times). Refrigerator space was too scarce, and hence valuable, for multiple gallons of milk. And given how frequently even smallish apartments were multi-storied, refrigerators often had to be fit underneath a staircase.

Another consequence of more limited, and therefore more costly, refrigerator space was far greater use of non-refrigerated products in aseptic containers. Many products Americans were used to being kept cold, including a substantial percentage of the available milk, were instead kept at room temperature, both in stores and at home, then only cooled before use (after my kid’s first response of “Yuck,” they couldn’t tell any difference).