I’d love your help with a new routine I’m working on called “When life gives you lemons…” The idea is to use this popular phrase to explain different branches of economics, in the same way that a different popular phrase was used in my not-safe-for-work “S*** Happens” video.
For an example, consider the difference between getting an MBA and going to econ grad school:
- MBA: When life gives you lemons, go corner the market for lemons.
- Econ grad school: When life gives you lemons, go read “The Market for Lemons”.
- Undergraduate microeconomics: Consider a world with only two goods: lemons and “everything else”. Show how life giving you lemons shifts your budget constraint and allows you to reach a higher indifference curve. (What assumption are we making about lemons?)
- Undergraduate macroeconomics: When life gives you lemons, show the impacts using an IS-LM model. Bonus points for clever terminology that allows you to call it an “IS-LMn” model.
- Graduate school macroeconomics: When life gives you lemons, show the impact on interest rates in a Lucas tree model. (Carroll  writes that “Lucas  considers an economy populated by a large number of identical individual consumers in which the only assets are a set of identical infinitely-lived trees. Aggregate output equals the fruit of the trees, and cannot be stored.”)
- Natural resource economics: When life gives you lemons, do the same maximization problem as the graduate-school macroeconomists, but then mock them because they’re supposed to be learning deep lessons about macroeconomics and as far as you can tell you’re all just studying lemons.
- Environmental economics: When life gives you lemons, examine the resulting positive and/or negative externalities. Estimate the optimal rate for a Pigovian tax or subsidy.
- Development economics: When life gives you lemons, find 50 similar villages in Kenya and randomly divide them into two groups. Give lemons to one group, wait 6 months, them write a paper for JDE.
- Behavioral economics: When life gives you lemons, explain why you might value them less than if you’d had to work for those lemons. (But: What about the endowment effect?)
- Game theory: Consider a game where p is the probability of nature giving you lemons. Find the Bayesian Nash equilibrium.
- Economic history: Use the theory of innovation and diffusion to explain why, despite the lemon experiments of James Lind and others going back to the 1740s, the citrus cure for scurvy was “repeatedly rediscovered and forgotten into the early 20th century.”
Additional suggestions are welcome in the comments… excellent entries will be incorporated into my comedy routine and rewarded with signed copies of my Cartoon Economics books!
PS. Inspiration came from the song “Lemonade” by Fly Moon Royalty (here’s the more time-wasting music video), which includes the line “When live gives you lemons, you can go and build a lemonade stand.” Additional inspiration comes from this article (“When Life Hands You Lemons, Race Them”) about the 24 Hours of LeMons race, and various Lemonade Stand games I confess I haven’t played, including this and this.
Economists in Finance (When life gives you lemons):
You buy limes to hedge
You short the lemonade market because everyone else will just be making lemonade
You ask “why isn’t this just cash settled?”
You sell them forward
You strip the peel from the flesh and sell each separately
You put them in an SIV to get them off you balance sheet
Misc (when life gives you lemons)
You appreciate that life has specialized in lemon giving
You blame Friedman for increasing the lemon supply
You blame the republicans
You think something bad has happened to the wealthy and these are “trickle down lemons
You consider the opportunity costs before turning them into lemonade
Your Production Possibilities Frontier shifts to the right
When life gives you lemons,
look to natural resources available (sugar cane, glass sand quarry. Only by using natural resources wisely can one optomize the benefit from a windfall. History: New York is on bedrock able to support tall buildings. History: trade centers are build on transportation hubs. When life gives you iron ore, use available coal and lake for transport.
From Craig Fratrik:
I’m a big Scott Sumner fan:
Scott Sumner or Market Monetarists: The Fed need only target nominal lemon income to achieve its dual mandate of stable lemon prices and full lemon employment.
Austrians: Today’s lemons grew from the seeds of overinvestment in lemon seeds in prior years.
From Stefan Napel: As a game theorist, I’d say “If life gives you lemons, minimax them!”
Reinhardt and Rogoff: When life gives you lemons, inadvertently misplace lemons and make Kool-Aid.
Paul Krugman: When life gives your straw man lemons, make lemonade and sell it to invisible bond vigilantes.
Ricardo: When life gives you lemons, make lemonade only if you have a comparative advantage.
Ron Paul: When life gives you lemons, blame the Fed.
Supply-siders: When life gives you lemon, make lemonade, and it will trickle down to the poor.
The ECB: When life gives you lemons, ask the Germans what to do.
The Bank of Japan: When life gives you lemons, make lemonade, but attempt to avoid the acidity trap.
Marxism: When life gives the bourgeoisie lemons, put lemonade production in the hands of the proletariat. When things go wrong, find a scapegoat rather than admit systemic problems.
Maoism: If there is to be lemonade, there must be a revolutionary lemon. Without a revolutionary lemon, it is impossible to lead the thirsty class and the broad masses in defeating imperialism and its running dogs.
Keynes: When life gives you lemons, borrow more lemons to make lemonade.
When life gives you lemonary expectations wages and prices will adjust.
nominal lemons minus the inflation rate will give you real-lemons
sorry, I’m not funny but I wanted to play along
Production: When life gives you lemons, your PPF for lemonade shifts out increasing the opportunity cost of producing the vodka needed to go with it but also allowing you to produce more of both. (This makes me better off during finals week!)
General Economics: When life gives you lemons, question the opportunity cost of the lemons. There’s no such thing as a free lemon!
Friedman: When life gives you lemons, do not make more lemonade unless you expect the increase in lemon income to be permanent.
Phillips Curve: When life gives you lemons, value of lemons declines causing unemployment in the lemon industry.
Coase: When life gives you lemons, you are able to enjoy more lemonade but society as a whole has just as much lemonade as if your neighbor had gotten the lemons.
I am also not funny but hope these will help spark your funny synapses!
When life gives you lemons it reveals life’s valuation of lemons at 0, because I’m quite sure life doesn’t care about *your* welfare.
When life gives you lemons, invoke the assumption of free disposal.
When life gives you lemons… Wait… life can’t give you lemons. there’s no such thing as a free lemon.
When life gives you lemons, sell them to the Fed.
Financial economics: life cannot give you lemons, or anything else. If it did, the market would be inefficient.
When life gives you lemons…eat them for lunch.
When life gives you lemons, making lemonade will expose you to both a tax on the gift and a tax on the income.
When life gives you lemons, the return to the other inputs for making lemonade will increase.
Behavioral Economics: When life gives you lemons, you will demand more in exchange for them than you would have been willing to pay for them.
When life gives you lemons …. well, for heaven’s sake! The saying implies from the beginning that “lemon” is a “bad” and “lemonade” is a “good”; “advising” someone to exchange something that’s bad for something that’s better is pointless since a rational decision-maker would do that anyway.
(Lame, but I too wanted to participate)
One of the more controversial theories today is the Efficient Lemon Hypothesis. Controversial means that it won the Nobel Prize for both being proved and disproved. That says something about Economics right there.
Simply put, the Efficient Lemon Hypothesis says if Life was giving out lemons, someone else would have taken them all before you got there.
This is divided into three versions: weak, semi-strong and strong
The weak version says that the amount of lemonade you have depends on the lemons you had in the past.
The semi-strong version is that the amount of lemonade you have instantaneously increases when new lemons appear.
The Strong version needs a lot of sugar to swallow.
Robert Shiller, the other Nobelist, disproved the hypothesis when he pointed out:
The aren’t lemons, Eugene, they are kumquats*.
(* Any sentence with Eugene is funnier than without, and any sentence with both Eugene and kumquats in it has to be funny.)
We should also mention the Laffer curve of Lemons: you can get the same amount of juice by squeezing very softly or squeezing it hard.
Remember the recent “lululemon” (SP?) brouhaha in which a CEO stepped down or was fired because the yoga pants maker was turning out see through pants? Classic case of corporate brains glued-inside-box thinking. Sell these lemons to strippers at triple the normal price.
Department chair: When life gives you lemons, deny them tenure.
Hyman Minksy version: When life gives you lemons, and you get used to it, small changes in the flow of lemons can destabilize you.
One more longer one…
Taylor: When life gives you lemons, find a correlation between the amount of lemons you receive and macroeconomic indicators. Use these correlations to develop a rule for the number of lemons you should receive for a given level of unemployment and inflation. Blame any economic problem on deviation from your lemon gifting rule.
When life gives you lemons, repackage them with more desirable citruses then sell it for the price of a pineapple.
Wall Street Economics:
When life gives you lemons, securitize them and blow them out through retail
When life gives you lemons, ship them to L.A. (I read a supposedly true story in the 70’s or 80’s about a marketing executive who repeatedly received kudos and promotions for getting rid of dog products. It turned out that his secret was the above mantra).
When life gives you lemons…..make sure life pays the gift tax or you’ll be liable.
When life gives you lemons….you must wonder who life took them from. Are lemons a zero-sum game?
When life has a lemon oversupply, look to sell on foreign unlife markets, but only deal in US currency in Hell, as it has endemic hyperinflation.
When life gives you sarcastic middle schoolers, be prepared for Lemony Snickers.
1. When life gives you lemons, determine the cross elasticity of demand for limes.
2. When life gives you lemons…
-Life will have less lemons
-Life will then have an increase in demand for lemons
-This means lemons will be worth more
-Sell lemons back to life for a profit
3. When life gives you lemons, tell life that there is no such thing as a free lemon.
On the quaaludes from The Wolf of Wall Street:
When life gives you Lemons, Don’t get through half a bottle!
This is not original, its from a T-Shirt.
When Life gives you lemons, take them.
Because, hey, free lemons!
Health Economists: When life gives you lemons, assess the impact on quality of life and then calculate the cost-effectiveness of treatments to remove the lemons.
Epidemiologists: When life gives you lemons, evaluate the health risks of lemons using spatial statistical methods.
Doctors: When life gives you lemons, tell everyone else not to eat the lemons, but consume them yourselves anyway.
Gordon Ramsey: When life gives you lemons, turn it into a very successful television show and give one of them a restaurant to run.
Oprah: When life gives you lemons, turn it into another successful television show, sharing your lemons with others. But don’t eat the lemon! DON’T EAT THE LEMON!
Development Economics: Auction them off to foreign multinationals.
Ayn Rand economics: Give them back. Altruism creates inefficiency.
Keynesian economics: Bury them underground and recommend that the government pay workers to dig them back out.
Robert Lucas: Do not take the lemons as evidence of life giving you future lemons.
Peter Shiller: Warn of the existence of a lemon bubble and a possible crash in the near future.
Recreation Economics: Model the value of differences in lemon quality using data from dichotomous choice experiments and observed behavior.
Akerlof: When life gives you lemons, bundle a full refund non-citrus warranty with your cherries.
Lemonbug: The advantage of lemons is not that they are yellow and citric and squishy, but that life cannot manipulate the lemon supply. (Inspired by http://mises.org/daily/2030)
Satoshi Nakamoto: when life gives you lemons, invent citcoin.
George Akerlof: When life gives you lemons, sell them in the used car market for the expected value of buying a cherry. Laugh at how you have made an economic profit and forced buyers to revise down their expectations.
When life give you lemons, he was probably forced to… that’s just transfer of wealth.
You have two cows. Life gives you lemons. You make curds and find a market for them.
When life just gives you onions, it’s probably the result of someone cornering a futures market. Let life pay you to get rid of them.
When life gives you a lemon bubble, find a greater fool before they spoil.