Experienced economist and not so experienced economist are walking down the road. They get across shit lying on the asphalt.
Experienced economist: “If you eat it I’ll give you $20,000!”
Not so experienced economist runs his optimization problem and figures out he’s better off eating it so he does and collects rupees. Continuing along the same road they almost step into yet another shit.
Not so experienced economist: “Now, if YOU eat this shit I’ll give YOU $20,000.” After evaluating the proposal experienced economist eats shit getting the rupees, they go on.
Not so experienced economist starts thinking: “Listen, we both have the same amount of rupees we had before, but we both ate shit. I don’t see us being better off.”
Experienced economist: “Well, that’s true, but you over looked the fact that we’ve been just involved in $40,000 of trade.”
