"Begin a lesson with a humorous illustration." So says the Talmud, reports Leo Rosten in The Joys of Yiddish (p. 395), first published in 1968. The Joys of Yiddish provides a wonderful intersection of insight, storytelling, and humor.
And economics. Rosten himself studied at the London School of Economics during the 1930s, attending a class by Friedrich A. Hayek. Years later he conducted a lengthy interview with Hayek (Rosten n.d.), and he was a friend and admirer of Milton and Rose Friedman. (1)
In The Joys of Yiddish, Rosten's method is to introduce each Yiddish term, define it, and provide a story to illustrate it. Many of the stories occur in a setting of work and trade, and many illustrate economic ideas. Besides illustrating ideas of textbook economics, they often illustrate the rich vitality of economic life beyond the textbook.
Rosten quotes The Merchant of Venice: "in converting Jews to Chrisdans you raise the price of pork" (p. 131). Several of Rosten's stories involve prices. Here's one showing the role of price in consumer choice and in the formation of one's sense of self:
Mrs. Kaminsky telephoned a well-known psychiatrist. "Are you the crazy-doctor?"
"Well--I'm a psychiatrist."
"I want to come see you. I think maybe I have a psychological krenk. But first, how much do you charge?"
"Thirty dollars an hour."
"Thirty dollars an hour?" gasped Mrs. Kaminsky. "Goodbye. That crazy, I'm not." (P. 198)
Many textbook models posit price as singular and mysteriously given to market participants. But, of course, real life isn't always that way. Rosten tells of a situation of bilateral bargaining:
Pronounced LONTS-mow, to rhyme with "nonce don."
Someone who comes from the same home town--i.e., in Europe.
"My friend," said the owner of the men's clothing shop, "you are my landsman-- and to a landsman I offer special bargain prices! Here is the best suit in the house. Will I ask you the one hundred dollars which, as you can see, is clearly marked on the label? No! A hundred I ask an ordinary customer, not a landsman. I also don't ask you ninety dollars. I don't even ask eighty! I ask seventy-five dollars, and not a penny more!"
"Ah," said the customer, "why should you lose money on me, just because we happen to come from the same place? You are my landsman no less than I yours. So what should I offer for this suit? Thirty dollars? Never. Thirty I would offer a stranger, not a landsman. Forty? That would be an insult. To you, my landsman, I offer fifty dollars, and not a cent less!"
"It's a deal."
Prices are essential in calculating profit and loss, which are essential to the workings of the market...