Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

Rephrase the Problem

Written by johnleemk on 11:56:07 am Jul 8, 2007.

One interesting definition of economics I have heard goes something like this: the consistent application of common sense. Now, to be able to consistently apply common sense, you have to look at a problem from as many perspectives as possible.

When we are handed the definition of a problem, it is often tempting to use that definition while pondering the solution. But often, rephrasing that definition will allow us to examine the problem from a new angle — "think out of the box", as some might say.

Sometimes, rephrasing the problem makes what was not so obvious damningly apparent. Economists are fond of whimsically rephrasing the description of a situation to examine it in a different light, and from experience, this often makes analysing the problem a lot easier.

For example, there are some convincing arguments for a minimum wage at first glance, but these arguments often evaporate once you consider that this is in effect a subsidy on labour paid out of employers' pockets — and we all know how problematic subsidies are when it comes to addressing poverty.

But rephrasing a problem is not just helpful in looking at macro policy questions. Sometimes, just rephrasing a simple everyday question can make the answer readily apparent.

For example, my father was wondering how to choose between an open round-trip air ticket usable for one year, or two single-way tickets.

I rephrased the problem as whether we should bet on the price of an air ticket rising or falling over the next year. Considering that from past experience, airlines rarely lower the prices of their tickets, the answer was obvious.

(A more economic perspective would take into account the excess demand for new aeroplanes, indicating that airlines cannot meet existing demand for air transport — meaning that the prices of tickets are likely to rise in the near future.

A real economist would also point out that the question is better phrased as betting on whether the net air fare increase will be outweighed by the return on investment we would gain by investing the same money spent for that ticket.)

It's a bit of a cliche to assert that asking the right question often reveals the right answer. But from the experience I have had, both in looking at abstract theoretical issues and in looking at concrete real life problems, this is one cliche that seems to be correct.

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Infernal Ramblings is a Malaysian website focusing on current events and sociopolitical issues. Its articles run the gamut from economics to society to education.

Infernal Ramblings is run by John Lee. For more, see the About section. If you have any questions or comments, do drop him a line.

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