Friday, November 02, 2012

Don't Forget That Tomorrow Is Day Of The Deadweight Loss

On this day, economists mourn all the social welfare that has been lost in the last year. That social welfare is lost and we will never get it back. 

Deadweight loss is the loss of social welfare caused by that dreaded demon, inefficiency. Examples are monopoly and externalities. To learn more, go the following link:


One good way to commemorate this day would be to cut out the deadweight loss triangle from a monopoly graph (like the one shown below) and burn it, to symbolize all of the lost social welfare. Doing so is both a life-changing and life-affirming ritual.

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