The 10 principles of economics provide a framework for understanding economics and explaining human behavior. Harvard economist, Gregory Mankiw, and others outline the principles, which synthesize economic thought into a series of statements that help understand how people behave, how they interact in society and how economies work. Instructors can help illustrate the explanatory value of these principles by assigning essays that require students to apply some or all of the principles.

How People Behave

The first four of Mankiw’s 10 principles of economics outline how people behave and make decisions: people face tradeoffs; they think at the margins; people respond to incentives; and to acquire something, people must give up something else. An essay assignment could require students to explain human actions by applying these principles. Because the principles are broad and do not pertain solely to money-related activities, the actions or behaviors explored do not have to be strictly economic in nature. A student could explore economic decisions such as whether to buy a house, work in a particular industry or start a business. A student could also apply these principles to other human actions and behaviors, such as whether to get more education or start a family. Regardless of the topic chosen, essays should illustrate how these principles explain the decisions people make in these and other areas of life.

How People Interact

Three of Mankiw’s 10 principles summarize how individuals interact: a society’s standard of living depends on its production of goods and services; inflation occurs when governments print too much money; and society can face short-term tradeoffs between inflation and unemployment. An economics essay could require students to apply these principles to explain how people interact as buyers and sellers in the world marketplace, and how these interactions affect society as a whole. For example, the essay could explore when and how these interactions can trigger inflation or change the level of unemployment.

How the Economy Works

Another three of the 10 principles describe how economies work: trade benefits everyone; markets provide the best means for organizing economic activity; and governments can improve market outcomes. Combined with the other principles, students can describe consumer behavior and how the market economy organizes the actions of consumers, businesses and governments. A basic essay assignment could require students to use all or some of the 10 principles to illustrate how the national economy works. Many economics textbooks include a diagram that depicts the economy as a circular flow in which goods and services flow among consumers, businesses and the government. The essays should discuss each of these components and apply the principles to illustrate the roles these components play in the economy.

Economics and Public Issues

Four of Mankiw’s principles pertain to government and society as a whole: governments can improve market outcomes; a society’s standard of living depends on its ability to produce goods and services; inflation occurs when governments print too much money; and society can face short-term tradeoffs between inflation and unemployment. The 10 principles apply not only to issues of money and finance, but illustrate issues of scarcity and choice, and how they drive individual and societal decisions. Student essays can apply these principles of economics to explore a variety of public policy issues, including government taxes and spending, the environment, health care and education.

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