3 Reasons For Specialization (Importance Increasing) + Stat + David Ricardo

Statisitcs are indispensable for economists. It is very easy to mislead with statistics. Be careful when assessing statistics

Outliers, correlation does not equal causation

1. When workers specialize,

they don’t waste time moving from task to task

2. When workers specialize,

they become more skilled

3. Mechanization

it is more likely that a machine or non human process will be invented to do taht tasks. When man and machine are joined, output goes way up

• Mechanization releases workers to do other things

• Whan a task becomes more narrow, it becomes more likley for someone to find out a way to automate it

David Ricardo (1772 - 1823) 1817

“On The Principles of Political Economy and Taxation” (second important book)

• In chapter 7 he identifies “the principle of comparative advantage” (foundational principle that Adam smith couldn’t figure out)