Here is my gripe list:

1. Unemployment Numbers

The jobs report comes out today at 8:30 AM. Market expectations are for a gain of 59,000 new jobs. As you might recall, we lost 92,000 jobs last month.

Jerome Powell recently said:

“Effectively, there’s zero net job creation in the private sector,” after accounting for revisions over the past six months.
“But actually, that looks like that’s about what the economy needs, in terms of dealing with very, very low—nonexistent, really—growth in the labor force, which of course we’ve never had in our history.”

Earlier this week, ADP jobs came in stronger than forecasted. According to private data, 62,000 new jobs were created in March.

Most of the gains are coming from education/health services, as well as construction. Trade and transportation continue to shed jobs, followed by manufacturing.

2. Gas Prices

My commute to work is 7 miles. I fill up my gas tank once a month. My demand for gas is relatively inelastic.

That said, gas prices are affecting me. They are in the back of my mind.

According to AAA, the average gas price in Kentucky is about $3.87 per gallon. I have yet to see it hit $4, but market expectations are that it will soon reach that level as the U.S. war against Iran continues.

While gas prices are the direct concern, I am more worried about the impact on inflation. Increases in gas prices are passed on to other products and services.

With declining labor market outcomes and increasing inflation, stagflation becomes a real concern. My economics training and history tell me that stagflation is a bad place for the economy and for people.

3. Stock Market

My finance friends have told me that the economy is strong because stock market returns have been great.

The market has been bullish despite everything thrown at it. It has been resilient—maybe too resilient, from my perspective. Well, the cracks are starting to show.

It is no secret that I check my portfolio daily. This year has been a volatile experience and has tested my willingness to stay informed. Sometimes it is easier to ignore the news to avoid the emotions. A case of Ostrich Effect Bias.

The S&P 500, my preferred index to follow, is down 4.02% year-to-date.

As my portfolio value falls, I am becoming more cautious with my spending and rethinking big purchases, travel, and discretionary expenses. I expect many of you might be feeling the same way.

4. Private Credit Fears Grow

Private credit, where non-banks lend money to riskier companies, has been a booming business for the past five years.

Blue Owl, a leading private credit company, has seen its market value drop 40% as investors have started withdrawing their money.

Their tech-focused fund experienced redemption requests equal to 41% of its $6 billion portfolio, up from 15% in the previous quarter. Blue Owl cannot meet these requests and is capping payouts at 5%.

Bottom Line

I can’t be sure whether my apprehension about the U.S. economy is valid or if I’m just being a grumpy economist. The data will tell, and time will show.

For now, I keep looking for cracks—and they are starting to show.

SpaceX filed paperwork to go public as early as June. If it happens, the company could debut at a valuation of $1.75 trillion, making it one of the six largest companies in the world. It would be ranked alongside Nvidia, Apple, Microsoft, Amazon, and Alphanet.

SpaceX is looking to raise $75 billion dollars, which would be a record. The current record holder is Saudi Aramco, which raised $29 billion back in 2019. According to Morning Brew

A significant portion of the valuation is due to Starlink, SpaceX’s satellite internet business, which is rapidly expanding global connectivity. On top of that, SpaceX recently merged with Elon Musk’s AI company, xAI, which increases its perceived value.

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What is an IPO and Why Does it Matter

An IPO (Initial Public Offering) is the first time a private company sells its shares to the public on a stock exchange. The company moves from being privately owned by founders, employees, and private investors to being publicly owned through stock purchase. Early investors are who are often the people who contributed to the company in its start-up and early phases. Going public helps them recoup their investment.

For companies, IPOs provide an opportunity to

• Raise capital to fund new growth

• Provide liquidity to allow early investors to sell their shares and cash in some of their returns

• Increase visibility and credibility of being a publicly traded firm

The Bottom Line

Companies go to market (IPO) when the stock market is strong, investor sentiment is high, valuations are favorable, and if private capital dries up. We are seeing these conditions apply right now. The IPO market has been quiet for the past several years. This move might signal to the private firms that it’s time to go public.

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We’re seeing this play out in the rise of “ghost ski resorts” across Europe.

In France alone, there are 113 abandoned ski lifts stretching nearly 40 miles across mountain terrain, almost three-quarters of them in protected areas. The Mountain Wilderness Association estimates that over 3,000 abandoned structures are scattered across the Alps: old cables, fencing, machinery, and remnants of past economic activity slowly fading into the landscape.

And the number is growing. More than 186 ski resorts have permanently closed, raising a deeper question: what happens when an industry no longer makes economic sense?

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The Economics Behind the Decision

Consider the Céüze ski resort in the southern French Alps. Each season, it costs roughly €450,000 ($516,000) to operate. To break even, the resort calculated that it needed to stay open for at least three months.

Due to warming temperatures and shorter winters, Céüze’s final season in 2018 lasted just six weeks. At that point, the math becomes unavoidable.

Revenue no longer covers operating costs. Each additional day of operation didn’t reduce losses; it increased them. And when that happens, the shutdown rule is clear:

Once losses become consistent and firms do not see relief, it is time to close up shop and move on for good. Keeping the resort open would not save it. It would only accelerate financial decline and deepen the burden on the local authority.

And that is how they made the difficult, yet economically rational decision to close.

ICEE Season is Upon Us

This isn’t just about skiing. It’s about how markets respond to changing conditions and demand fluctuations.

Firms don’t fail because they make bad decisions. Sometimes they fail because the environment changes faster than they adapt. Markets change, and business owners need to be aware of these shifts. And when that happens, it’s easy to ask Can you survive? But the right question may be Should you continue?

As spring arrives and temperatures rise, we see the mirror image of this decision. Ice cream shops, Italian ice stands, and frozen custard spots emerge from hibernation because the math changes. Warmer weather increases demand, allowing revenue to cover variable costs and then some, turning reopening from a risk into an opportunity for profits.

The same shutdown rule that closes ski resorts for the warmer seasons is what brings ice cream shops back to life: when prices rise above the cost of operating, firms re-enter the market; when they fall below, they shut down. Different industries, different seasons, but the same economic logic.

But not all shutdowns are temporary. When markets show no path to recovery, a seasonal break becomes a permanent exit. That’s the sad story behind ghost ski resorts.

So consider this your call to action: go support your local ice cream or Italian ice shop. Today’s demand is what keeps seasonal businesses coming back tomorrow.

Resource: https://www.theguardian.com/environment/2025/dec/27/alps-france-skiing-snow-warming-resorts-closing-ceuze-landscape

One of the biggest sources of that anxiety is retirement:

This anxiety is driven by several factors:

1. The shift from pensions to 401(k)s has placed a major responsibility on individuals, a role previously handled by employers or professionals. See video below.

2. There is a growing fear that Social Security is financially unstable and may not fully support future generations.

3. And most critically, people are told to save as much as they can, as fast as they can, in order to retire.

Item 3 is the most frustrating to me. Everyone is rushing towards a goal that they have not defined.

It’s vague. It lacks a clear target. And it creates the feeling that if you’re not aggressively saving at all times, you’re failing.

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An Unidentified Target

If you are starting your career, or revisiting your financial plan, ask yourself:

There are several ways to estimate your retirement savings goal (and yes—standard disclaimer—this is not financial advice. It is strictly educational).

A simple framework:

1. Calculate your annual spending.
   This is why tracking spending and budgeting matters (as I’ve discussed before).

2. Multiply that number by 25.
   Why 25? This is based on the idea that you can withdraw about 4% annually in retirement (adjusted for inflation) and live comfortably.

An Example

Let’s say you spend $80,000 per year.

To maintain that lifestyle in retirement:

$80,000 × 25 = $2,000,000

That’s your number. This estimate assumes no Social Security support (see point #2 above). Your goal is to get to $2,000,000. Do not move the goal post!

Now What?

Your goal is to reach $2,000,000 by the time you retire.

How you get there is a choice.

It’s fundamentally a tradeoff between current consumption and future consumption:

• You can save aggressively now, sacrificing current consumption for more freedom later.

• Or you can save less, enjoy more today, and potentially work longer.

Neither is wrong. It’s a matter of preference, and this is what we do not talk about enough.

But the way personal finance is often taught makes it seem like there is only one “correct” choice: be aggressive, or you’re failing. That’s not true.

What Actually Helps You Reach Your Goal

1. Time
   The longer your money is invested, the more compounding works in your favor.

2. Returns
   Higher returns accelerate growth—but typically come with higher risk.

3. Diversification
   Managing risk through diversification helps reduce volatility over time.

4. Contribution Rate
   How much you consistently invest matters more than people think.

5. Reducing Your Expenses

   A lower burn rate means you need a smaller retirement number, making your goal more achievable. Do not fall for lifestyle creep, but thats a discussion for another time.

How Much to Save

I love Nerdwallet’s compound interest calculator. In this example, I used the following information.

Here’s an example using simple assumptions:

• You start with $1 saved (it doesn’t allow you to start with 0!)

• You invest for 40 years (e.g., from age 22 to 62)

• You earn an average return of 8% annually (based on historical averages)

• Returns are compounded once per year (a conservative assumption)

Under these conditions, consistent investing over time can grow your savings to around $2 million.

The exact monthly contribution needed depends on your starting point—but the takeaway is what matters: There is a path to reaching your number. In this example is $621 monthly.

For tax considerations and proper diversification, it’s worth speaking with a professional to design the right strategy for you.

This isn’t about chasing a vague goal. It’s about understanding that, with time, consistency, and compounding, your goal is achievable.

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Ever wonder what happened to pensions? In this video, I cover the decline of the pension system and how 401 (k) accounts became so popular. Most importantly, we discuss the pros and cons of the 401K retirement system. The shift from Defined Benefit to Defined Contribution has both advantages and disadvantages.

I spent Thursday and Friday of last week organizing the Econ Games with my good friend, Dr. Darshak Patel, at the University of Kentucky. What an amazing experience. We had 29 universities, 40 faculty members, and 240 students participate this year, and I am incredibly impressed by what our students accomplished. Let me share a few highlights.

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The Prompt

Bank of America was the naming partner this year, while Equibase served as the data partner—both were fantastic to work with. Equibase challenged our students to use their proprietary data to identify new market segments for growth. It’s a great economics prompt: identify new markets and build future demand for Equibase and its data.

The Challenge

Students had 24 hours to understand the prompt, analyze the data, identify new product opportunities, create a presentation, and pitch their ideas to Equibase.

They had to leverage their understanding of economics, industry analysis, data analysis, teamwork, communication, critical thinking, and storytelling—all while working under pressure.

The Preliminary Round

The data was released on Thursday at 1 PM during the “Data Drop.” Students then had 25 hours to prepare before presenting at 2 PM on Friday.

The first round of judging took place in breakout rooms, with six teams in each of five rooms. Judges evaluated each presentation and selected one winner from each room.

The Finals

We all gathered in a large auditorium to watch the final presentations. Each room winner was announced, presented, and then we moved on to the next.

The finalists were:

1. Virginia Tech

2. University of Cincinnati

3. Denison University

4. Berea College

5. Saginaw Valley State University

After the final presentations, the judges deliberated and announced the winners. It was a fantastic event. I’ll share the winners once the press release and photos become available.

Decode Econ at The Econ Games

Decode Econ is the official economics newsletter of the Econ Games. This year, we introduced the Student of the Year award. The award went to Dylan Fogt from Northern Kentucky University for being the first student to compete in four Econ Games. He joined as a first-year student and returned every year.

My Reflection

The Econ Games conference has grown tremendously over the past eight iterations. What started as a student project has evolved into something much bigger through the work Darshak and I have invested over the years.

Darshak and I built this program to help students apply their economics training to real industry opportunities, while also increasing industry awareness of the value economics students bring to the labor market.

I’m proud of what we’ve built, and even more excited about where it’s going. If you’re interested in participating next year, be sure to complete our 2027 interest form.

If you want to support students and the program, please reach out to me.

Some More Pictures

One of our longtime readers, and easily one of the most engaged voices here, has started his own Substack to share his thoughts.

Earlier this week, I wrote about the game theory behind the U.S. attack on Iran. Lary picked it up and pushed the conversation further on his platform.

Take a look, he explains how to model regret from an economics perspective. I think you’ll enjoy it. And if you do, be sure to subscribe to his newsletter.

Lary Doe

Let's math out regret...

From a Economics function, we boil it down to something really basic. Regret is the payoff you could have had minus the payoff you actually received…

Read more

11 days ago · 1 like · 2 comments · Lary Doe

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Numbers Don’t Lie

Let me be precise about what I mean. Telling stories with data is real, and it matters. Numbers carry weight. The number of lives saved by a vaccine, the percentage of children lifted out of poverty, and the change in wages over time help make abstract experiences visible. Used well, data is one of the most powerful tools we have for understanding the world.

But that is not what “data storytelling” has become. In many corporate and analytical settings, data is no longer supporting the story; it is the story. The numbers are not evidence for a claim about human experience; they are treated as the claim itself. And in that shift, the people those numbers represent begin to disappear.

The Economics

Economics has long warned us about this mistake. Goodhart’s Law tells us that when a measure becomes a target, it ceases to be a good measure. Campbell’s Law takes it further: the more we rely on quantitative indicators for decision-making, the more those indicators distort the very systems they are meant to monitor.

What’s changed is not the problem, but how we talk about it. We’ve wrapped this mistake in a more appealing label. “Data storytelling” sounds human. It sounds like progress. But too often, it simply means we’ve become better at presenting metrics while thinking less critically about what those metrics actually capture.

You’ve probably seen this play out. When schools are judged primarily by test scores, they begin teaching to the test. Rather than focus on developing better teachers and students. When hospitals are evaluated based on wait times, they focus on moving patients faster rather than necessarily treating them better. And in retail, where I’ve spent much of my career, inventory decisions can look perfectly efficient on a dashboard while consistently failing certain communities. If a neighborhood’s purchasing patterns don’t fit the model, it gets underserved. The data told a clean, defensible story. It just wasn’t the right one.

When organizations optimize for what is measurable rather than what actually matters, resources are misallocated. Decisions that look rational in a model create outcomes that don’t show up in the data. And because those outcomes are harder to measure, they’re easier to ignore.

The answer is not to reject data. It’s to understand its limits. Data is a tool. It helps us answer specific, well-defined questions. But it cannot tell us which questions are worth asking. It cannot capture every human experience. And it cannot replace judgment. That part still belongs to us.

The real risk isn’t bad data, it’s forgetting what the data represents. Behind every number is a person you will never see in the dashboard. When we lose sight of that—when we start treating the map as the territory—we don’t become more informed. We just become more confident in incomplete answers.

Data storytelling is a great tool to communicate data to your audience, but remember that every data point is a human story.

The Bottom Line

Data should inform your decisions, not define them. Whether you’re running a business, shaping policy, or managing your own finances, the goal is not to optimize a metric; it’s to improve outcomes for real people. The moment you forget that, the numbers may look better, but the decisions will not be

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Today, I am introducing you to Economics Unpacked, a project by Dr. Mallika Pung. Here is a summary of the project in her own words:

I'm launching Economics Unpacked, a new section of gourmeteconomist.com dedicated to translating high-impact academic research in economics for general audiences.

The papers economists publish in journals like the American Economic Review and the Quarterly Journal of Economics contain some of the most rigorous, consequential findings about how the world works. Most people never see them.

I want to change that. My goals for this series:
• Make difficult research digestible
• Get people genuinely excited about what economists study
• Help general audiences understand the forces shaping their lives
• Open the field to people who don't yet know economics is for them
• Give the next generation of economists a reason to stay curious

The first post covers the Opportunity Atlas (Chetty et al., AER 2026), a study of 20.5 million children that maps how the specific neighborhood where a child grows up shapes their adult earnings, incarceration rates, and life outcomes.

Two neighborhoods, 2.3 miles apart in Los Angeles. Same race, same parental income. Vastly different futures.

Read it here:

If you're interested in economics, food, and the occasional travel diary, subscribe at

https://www.gourmeteconomist.com

Sample Slides

Our goal is to partner with Dr. Pung to increase awareness of her work and to make economics more accessible to readers and educators. Here are some sample images from her slides

Visit her website for the full deck!

About Dr. Pung

I’m a labor economist with a Ph.D. from Clemson University and over a decade of experience spanning state and federal government and academia. I currently work at the intersection of labor economics and federal policy. Previously, I served as Chief Economist at the New Mexico Department of Transportation, where I led revenue forecasting, advised on tax policy, and presented analysis to state legislative committees. Earlier in my career, I worked on international trade and development policy in India.

My research focuses on the labor market consequences of career displacement and trade agreements. On the teaching side, I serve as a lecturer and faculty coordinator for the MBA program at Rice University, and teach economics across several other institutions, including the University of Louisville and the University of New Mexico-Valencia.

Connect on Socials

Instagram: https://www.instagram.com/gourmeteconomist/

Facebook: https://www.facebook.com/profile.php?id=61571488922636

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Are you looking for a new job? Well, get ready. Your application process will look different.

A few weeks ago, we talked about how AI may have killed the cover letter. Now, the resume might be the next casualty.

Instead of submitting traditional materials, many applicants are being asked to respond to structured questions through company websites or complete short work trials as part of the hiring process.

According to Amanda Hoover, a senior correspondent at Business Insider, resumes are still used, but their importance is declining. She said on Marketplace:

“They are still around, but their importance and their ability to land you the job you want is definitely decreasing.”

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Why is This Happening?

Because AI has dramatically lowered the cost of producing application materials. When anyone can generate a polished resume or cover letter in seconds, employers struggle to distinguish between genuine candidates and AI-assisted submissions.

In response, companies are introducing frictions into the hiring process. The structured questions, assessments, and trial projects are harder to automate and require the applicant to invest, allowing hiring managers to distinguish applicants willing to put in the effort from those who are mass-applying. This approach does not eliminate the use of AI to respond to prompts, but it slightly increases costs.

Key Components of Modern Hiring

• Structured Questioning: Candidates are asked a set of standardized, job-related, behavioral, or situational questions. These are scored using rubrics to compare candidates objectively, minimizing “gut feeling” decisions.

• Work Trials/Samples: Applicants are asked to perform tasks that mirror actual job responsibilities, such as writing code, completing a customer service simulation, or developing a brief strategy, usually within a short, defined time frame.

• Automated Screenings: Candidates may be asked to record video answers to questions through a job post or a company’s platform, serving as a “mini-interview” for initial assessment.

But as hiring technology changes, one thing is becoming clear: The way we signal our skills to employers is evolving. And the traditional resume may no longer be the primary signal.

The labor market will increase reliance on recruiters who can find the right applicant. Firms expect an increase in recruiting costs, reliance on recruiters, and paid work trials. For job seekers, finding new ways of being found by recruiters will become a new search strategy. That means more LinkedIn posts, activity, and more connections with recruiters.

From Marketplace

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The U.S. conflict with Iran was supposed to be short. It hasn’t been. And if we apply game theory, it becomes clear why this conflict is likely to persist far longer than expected.

Game theory is a framework economists use to understand strategic behavior, how one decision-maker responds to another. We often apply it to strategic behavior between firms: if one company invests, how does its competitor react?

But the same logic applies to war, and it has been used in previous wars to help end them.

In conflict, each side is making decisions while anticipating the other’s response. That’s what makes war a strategic framework where game theory can be applied. So if game theory is so powerful, shouldn’t it have predicted this outcome?

Because the model only works as well as its assumptions, and in this case, those assumptions are breaking down.

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Start Simple: Why Conflict Happens

Let’s begin with a simple model.

Two players:

• United States

• Iran

Each has two choices:

• De-escalate

• Escalate

This creates a classic Prisoner’s Dilemma:

Here’s the problem:

• If the U.S. de-escalates, Iran is better off escalating

• If the U.S. escalates, Iran is still better off escalating

The same logic applies to the U.S. So even though peace is the best outcome, both sides choose escalation. That is the classic Prisoner’s Dilemma outcome.

But This Isn’t a Static Game

That model assumes both sides move at the same time. That’s not how war actually works. The war against Iran is sequential in nature. One side moves. The other responds. And each move is made with expectations about what comes next. In that case, cooperation is possible.

A Sequential Game with Cooperation

Now consider this structure:

1. The U.S. moves first

2. Iran observes and responds

If we assign payoffs carefully, cooperation becomes possible.

• If both cooperate → (4,4)

• If one exploits the other → (1,3) or (3,1)

• If both escalate → (2,2)

When we solve this using backward induction:

• If the U.S. cooperates, Iran prefers to cooperate

• If the U.S. escalates, Iran prefers to escalate

So the U.S. anticipates the best outcome for them is cooperation, and they choose to cooperate.

Equilibrium: Cooperation (4,4)

When Does This Work in the Real World?

For this cooperative outcome to hold, several conditions must be true:

1. Credible Guarantees- Inspections, monitoring, and enforcement reduce the incentive to cheat.

2. Future Matters- If both sides value long-term benefits, trade, stability, and legitimacy, cooperation becomes more attractive.

3. Clear Communication-Misunderstanding can turn cooperation into perceived weakness.

4. High Cost of Escalation- If conflict is extremely costly, escalation becomes less appealing. In war, the "madman strategy" is used to keep the other side off guard and to signal that escalation is costly. The premise of the madman theory is that the appearance of irrationality makes otherwise non-credible threats seem credible.

So Why Has This Conflict Persisted?

Game theory explains cooperation and failure. Here are three things that stand out in this conflict:

1. Mismatched Models- The U.S. initially approached this like a static game. Iran behaved as if it were sequential. That mismatch created early escalation.

2. Incorrect Beliefs- The U.S. assumed Iran would retreat to minimize losses once attacked. This false belief had a lot to do with the recent success the U.S had in Venezuela. Instead, Iran escalated, leveraging tools like the Strait of Hormuz and targeting U.S. positions.

3. Strategic Leverage- Iran’s strategy is not to win conventionally. Iran’s military cannot stand against the U.S., but it can impose economic costs. The Strait of Hormuz becomes central as leverage.

4. The Credibility Problem (The Madman Theory Is Fizzling)

   Iran’s willingness to absorb costs and respond to escalation suggests that U.S. threats are no longer as credible as assumed. In game theory terms, a threat that is not believed is not a threat at all. Unfortunately, this raises the probability of aggressive action to restore credibility.

Where Does This Leave Us?

We are in a strategic stalemate. The U.S. is forced to escalate pressure, and Iran’s only response is to escalate economic disruption. The only way for Iran to win is to cause severe economic disruption and cause Americans to put pressure on the administration to back off, and for Americans, the only way forward is to have the Iranians back off. Both countries need an off-ramp, and I do not see one right now. Negotiators have their work cut out for them.

Neither side has a clear incentive to back down.

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This week, my students and I had a tough conversation. They were not performing to their capabilities. They knew it, and I knew it. But neither of us knew entirely what needed to change.

For an hour, we stepped away from content and focused on process. I asked them how they were studying. What felt uncomfortable? Where were they getting stuck? I shared my expectations for the time and effort required outside of class.

But the turning point came when I asked a different question:

“What can I do better?”

At first, there was silence. They weren’t used to being asked that. I waited.

And then, the answers came.

• Hold us accountable.

• Give us more in-class quizzes so we can see what we don’t understand.

• We have resources, but we don’t know how to use them—show us how to use the textbook, practice problems, and videos.

It reminded me that underperformance is rarely about ability. More often, it’s about structure, feedback, and clarity. Students need to know that their faculty are willing to adjust and make changes, too. More importantly, students feel more connected when they feel heard.

For context, several years ago, we moved the principles of macroeconomics course from the second year to the first year. First-year students aren’t just learning economics; they are learning how to learn in a college environment. This means more class time is needed to build the skills for success in college.

It is a critical role for our students. The transition from high school to college is challenging. When students struggle, I do not see a lack of effort; I see a gap in preparation and expectations.

I personally struggled with the transition to college, so I understand when my students do.

I love teaching economics; that is no secret. But what I love more is helping our students grow as learners and watching them go from uncertainty to confidence and success.

Their feedback and our changes made the class even better this week. To my students reading this, thank you!

Education Resources

For the academics looking for my thoughts on this in journal article form. Read this paper in the Journal of Economics Education. If you want a copy, reach out directly to me.

Al-Bahrani, A. (2022). Classroom management and student interaction interventions: Fostering diversity, inclusion, and belonging in the undergraduate economics classroom. The Journal of Economic Education, 53(3), 259-272.

Leadership and Professional Development Friday

One of our readers recently suggested that our professional development and leadership content should be clearly labeled. The concern is that newcomers might mistakenly assume that this is primarily a professional development newsletter, while our economics audience might find the content confusing.

That is great advice.

Moving forward, professional development and leadership content will be featured on Fridays, as well as in short-form content such as notes and my personal Instagram posts.

But let me be clear about something: I don’t see this as separate from economics.

In fact, this is economics. More specifically, the personal side of it. It is human capital investment, a labor market concern.

When we talk about improving your personal finances, most advice focuses on cutting costs and sticking to a budget. That works, but it’s only half the equation.

The other half? Increasing your income. And the upside there is far greater.

So how do you increase your income? You build skills. You increase your ability to create value. And just as importantly, you learn how to communicate that value so others recognize it.

That’s where today’s topic comes in.

Today, I want to talk about building your personal brand, labor markets, and some social media advice I strongly disagree with.

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Why Build a Personal Brand?

Most of us are trying to increase our market value. Building a personal brand helps you communicate your value clearly and consistently. Over time, it allows you to develop a reputation that others can rely on.

When people need your expertise, they will be familiar with you and know where to find you.

The Economics

In labor market analysis, your wages are a function of your marginal productivity—the additional value you create for an employer with one more unit of your work. Firms pay you based on the economic value of your output. If hiring you adds $50 per hour to the firm's revenue, your wage will tend to move toward that amount. If it only adds $15, that becomes your ceiling. This is the core idea behind the marginal productivity theory of wages: compensation is tied to the value of what you produce at the margin, not the total importance of your role or how essential the job may feel to society.

But what happens when the firm doesn’t fully know how much value you add? That’s where the clean textbook story of wages equaling marginal productivity starts to break down, because in the real world, information is costly and often incomplete. Firms cannot perfectly observe your effort, your true output, or the full impact of your work—especially in roles where value is long-term, team-based, or hard to quantify. As a result, they rely on proxies: your resume, credentials, prior employers, job titles, performance reviews, and even how confidently you communicate. These signals stand in for your true productivity, but they are imperfect.

The Information Gap

This creates a gap between your actual value and your perceived value. And in many cases, your wages are determined more by what the firm believes you contribute than what you actually contribute. Economists would frame this as an information asymmetry problem. You know more about your abilities than the employer does, but unless you can credibly signal that value, the firm will price you based on observable indicators. This is why degrees, certifications, and even brand-name employers carry so much weight; they reduce uncertainty for the firm, even if they are not perfect measures of productivity.

The takeaway is straightforward but often overlooked: increasing your actual productivity is necessary, but it is not sufficient.

You also have to reduce the information gap. You have to make your value visible, measurable, and understandable to others. Because in a world of imperfect information, the market does not reward what you know you contribute—it rewards what you can credibly demonstrate.

And that is why telling your professional story matters; it is a signal, improves information, and reduces the gap between actual and perceived productivity. Helping you earn higher wages.

The Worst Social Media Advice

One of the most common pieces of advice is: “Don’t write for yourself. Write for your audience.”

In my view, this is terrible advice.

Write about what you care about and create what you genuinely believe in, because the right audience will find you—but that also means you have to be willing to lose the wrong audience, and that is where this becomes difficult.

I have struggled with this tension myself, because the moment you begin to build any kind of presence, a new pressure emerges, and you start to think less about what you believe and more about how it will be received. You begin to ask yourself

• whether people will agree

• whether they will judge

• whether they will approve

and that subtle shift is when things start to go off track. Instead of creating from a place of conviction, you start creating from a place of caution, becoming what I would call a “safe player,” someone who writes to avoid criticism and produces content designed to be accepted by everyone.

The result is predictable: you become average, your work loses its edge, and more importantly, you begin to lose your own voice in the process. If you are going to commit to creating, if you are going to show up consistently and build something meaningful, it has to be enjoyable and it has to reflect who you are, because without that authenticity, you will not sustain it over the long run.

The goal is not to be liked by everyone; the goal is to be valuable to the right people, and while that path is more uncomfortable and often slower, it is ultimately the one that leads to something real and lasting.

Lean into who you are and build from there.

Building a Personal Brand Is a Long Road

I have been creating content online for more than 15 years. I was an early adopter of social media platforms and have always found them fascinating. I am fascinated by organizational and social communities.

Some people join a platform and quickly go viral. But viral fame is often temporary.

Building a community that trusts you takes time. Don’t chase clout. Build relationships. Building 1,000 true fans is better than a million marginally attached followers.

Try New Things and Inspire Others

I have always experimented. For an academic, I tend to be quite entrepreneurial. That’s not my description; it’s something others have said after seeing the programs and initiatives I have started and built.

Over the years, it has been incredibly rewarding to see others experiment and build in similar ways. I find it extremely rewarding to see others start to find their own voices.

That experimentation even earned me the nickname “The Economics Vlogfather” from . Make sure to follow and .

Economics Happy Hour

Bringing Economics to the Masses

Matt and Jadrian are joined by Abdullah Al Bahrani, the Executive Director of JET and a Professor of Economics at Northern Kentucky University. This episode was also recorded at JET SET 2024 in Blacksburg. Abdullah shares his journey from classroom educator to public educator. He shares how his social media presence, "Econ with Dr. A," emerged during th…

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2 years ago · 3 likes · Matthew Rousu, Jadrian Wooten, Abdullah Al Bahrani, and Economics Happy Hour

Closing out

I love this subject and can talk about it for days. I will end with this.

Your personal brand isn’t built in a single post. It’s built in years of showing up, sharing what you believe and know, and helping others make sense of the world.

For years, I have argued that financial literacy is a form of applied economic education, not a replacement for economic education. What concerns me now is the direction states are taking. Today, 39 states require personal finance for graduation, while only 22 require economics. In several cases, the introduction of personal finance has encouraged the replacement of economics altogether.

States are teaching personal finance at the expense of economics education.

Interest in Personal Finance

The push for financial education started during the Great Recession. When President Bush established the Advisory Council on Financial Literacy. The goals were:

to expand Americans' access to financial services, increase financial education for youth and adults, and promote research to measure the nation's level of financial literacy.

The premise is that the Great Recession would have been less severe had consumers been better informed. Since the Consumer Financial Protection Bureau was established, many state legislatures have begun the push for financial literacy education at the K-12 level. These initatives are supported through advocacy by organizations like Next Gen Personal Finance with Mission 2030:

By 2030, all U.S. high schoolers will take at least one-semester course in Personal Finance before graduation.

Over the past 15 years, I have watched more states introduce unfunded mandates to teach personal finance. As that list grows, the number of states requiring economic education has decreased. In essence, we have substituted a broader understanding of economics for a more specific, applied version. But there is an even bigger problem with how we teach personal finance.

Personal Finance Matters

Personal finance matters. Students should learn budgeting, credit, saving, investing, taxes, and borrowing. But when we teach only the practical side of finance without emphasizing economic understanding, we create students who can follow rules without understanding the system those rules were built for.

Economics provides that system. It helps students understand how inflation shapes purchasing power, how labor markets affect wages and opportunity, how fiscal and monetary policy influence borrowing and saving, and how behavioral biases affect decision-making. Without that foundation, financial advice becomes a checklist rather than a framework.

And that is my problem with financial education today.

Why Economics is the Foundation for Financial Literacy

When we teach rules without explaining why they exist, we don’t create confident decision-makers; we create financially anxious individuals. People who feel like they are always behind. People who follow advice but don’t feel in control. People who experience the pressure to “do the right things” without understanding how their actions connect to the broader economy or their own long-term success.

That lack of understanding creates a sense of disempowerment. Individuals don’t see how they are participating in the economy; they only see whether they are keeping up with the rules. And when conditions change, as they always do, they are left without the tools to adapt, often feeling helpless.

In my work with students, I try to shift them away from a checklist mindset and toward a deeper way of seeing the world, one where they can anticipate change, interpret economic signals, and make decisions with confidence before problems arise.

I have worked with states to build financial and economic literacy standards, served on the Kentucky Financial Empowerment Commission, and collaborated with central banks in different countries and the Federal Reserve on financial literacy curricula. Across all of that work, I’ve seen the same tension: the push for simplicity in personal finance is strong. I understand why—people are anxious and want clarity.

But following rules without understanding is fragile, and that is the opposite of what we are trying to create. If we truly want to equip people to navigate their financial lives, we cannot stop at telling them what to do. We have to teach them why it works, when it fails, and how to adapt when conditions change. That kind of durable understanding comes from economic thinking. It requires grappling with how markets behave, how policy shapes outcomes, how behavioral biases influence decisions, and how the broader economy evolves.

We should teach personal finance. But we should teach it through economics—not instead of it. April is financial literacy month. Let’s advocate for a more informed consumer who understands their economy and how it influences their own financial journey. Understand the system to understand the rules.

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Here is a Wall Street Journal article that influenced this post What’s Cool in High School? Personal Finance

It turns out I am not alone, and it is costing businesses real money.

Analysts estimate that March Madness costs the U.S. economy up to $20 billion in lost productivity each year. In a survey of 3,000 college basketball fans, 40% admitted to calling in sick just to watch a game. Workers stream games, fill out brackets, and check scores, all on company time.

So today, we are discussing what is actually going on here? And is it as bad as it sounds? and how to join our Bracket Challenge.

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The Economics of Shirking

Economists call this behavior shirking. It happens when an employee puts in less effort or lower-quality work than agreed when they were hired. The result is reduced productivity, economic inefficiency, and increased costs.

Think of it this way. Your employer is paying for eight hours of focused work. If you spend two of those hours watching highlights and texting about your bracket, they are paying for something they are not getting. Multiply that across millions of workers, and you get a $20 billion problem.

One traditional solution is monitoring, and some firms go this route during March. HR Watchdog suggests restricting internet access, reinforcing workplace internet policies, and advising employees not to stream games without authorization.

“To help manage workplace distractions, employers can control employees’ Internet usage time and the ability to stream games to their work systems. They should also reinforce their policies on what’s acceptable and unacceptable for workplace Internet use. Encourage employees to turn off their phones and record their favorite teams’ games and advise them not to watch games live while at work — in office or otherwise — without authorization.”

The Economics of Employee Treatment

But monitoring has costs too. It takes time and resources to enforce. It can create resentment and lower morale. And, as it turns out, morale matters for productivity.

Shared experiences, like filling out a bracket with your coworkers, build social capital. That means stronger relationships, more trust, and better collaboration over time.

A firm that lets employees participate in March Madness and creates a bracket challenge might lose a few hours of output this week. But it could gain months of goodwill in return.

At Decode Econ, we are leaning in. We built a bracket challenge, and we want you to join us. What’s on the line? How about a Decode Econ Mug for the 1st- and 2nd-place winners?

Join our Bracket

Research on March Madness

• Workplace productivity and managerial support issues associated with March Madness. [Link]

• For my Miami University friends, Evidence of bias in the NCAA tournament selection and seeding. [Link]

• Making an NCAA run helps universities improve peer assessments in the US News Ranking. NCAA March Madness and Academic Peer Rankings. [Link]

• Use the NCAA style tournament to teach the History of Economic Thought. The Most Interesting Economist in History Using an NCAA-Style Tournament Assignment to Teach the History of Economic Thought. [Link]

Prime Video subscribers got a notice in March 2026: the ad-free tier they paid for is going away. Starting April 10, it will be replaced by something called Prime Video Ultra. They will now have to pay for this service.

Here is a timeline of what changed at Prime Streaming:

• January 2024- Amazon added ads to Prime Video by default.

• Early 2024- Subscribers could pay $2.99/month to remove ads.

• April 10, 2026- That option disappears.

• New option- Prime Video Ultra: $4.99/month. Includes 4K, Dolby Vision, Dolby Atmos, and ad-free viewing. Annual plan available at $45.99 (23% savings).

The experience that used to come bundled with Prime now costs extra. The service that replaced ads now costs more than the fee that removed them.

From a business perspective, this makes sense. Ads create a new revenue stream. A premium tier lets Amazon earn more from subscribers who want the best experience. But if you zoom out, this starts to look familiar to those of us who grew up with cable. Streaming was supposed to be better, but its pricing structure is starting to look a lot like the old system.

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THE ECONOMICS: WHY COMPANIES LOVE BUNDLES

In economics, bundling means selling multiple products together instead of pricing each one separately. You see it everywhere: cable television packages, software suites, fast-food combo meals, and subscription platforms like Amazon Prime.

Economists study bundling because it helps companies match prices to what different customers are willing to pay. Here is a simple example to show how it works.

• Customer 1- values product A at $10 and product B at $2

• Customer 2- values product B at $2 and product A at $10

If each product is sold separately, pricing becomes difficult. Either you leave money on the table, or you price one customer out entirely. But if the company bundles both products together, both customers will pay $12 for the package. The bundle captures more of the total value without losing either customer.

This strategy works especially well in digital markets, where adding another feature costs the company almost nothing. That is why you see it across streaming services, software platforms, and subscription ecosystems.

Why streaming platforms love bundles:

• Capture more willingness to pay. Some subscribers care about price. Others care about quality. Different tiers reach both groups.

• Sell weaker content alongside stronger content. A major sports package or a hit show can pull other titles along with it.

• Make price comparison harder. Packages make it difficult for consumers to isolate the cost of any single feature.

• Create loyalty through lock-in. The more services bundled together, the harder it is to leave the platform.

Why is Amazon unbundling?

Amazon isn’t really abandoning bundling. In fact, what they are doing is a strategic rebundling and price discrimination strategy. They are separating parts of the bundle so they can charge different customers different prices for the same ecosystem.

Instead of keeping video fully bundled inside Prime, Amazon can now separate the value of video and charge for it more directly.

In this case, when everything is bundled, Amazon leaves money on the table. Using data, they can identify who is willing to pay more and which features they value most. This allows them to price-discriminate and increase their profits.

Some people would happily pay more for:

• Ad-free viewing

• Higher video quality

• Dolby sound

• premium sports or channels

By separating those features, Amazon can capture a higher willingness to pay from heavy users while still keeping the base bundle attractive. Instead, they are moving toward a layered bundle.

Understanding Pricing Strategies

A big part of economics is understanding how firms set prices. Bundling is just one tool in a much larger toolkit. Economists study pricing mechanisms because companies spend enormous resources figuring out exactly how much you are willing to pay, and then designing products to capture as much of that as possible.

Tiered pricing, introductory offers, annual discounts, and feature upgrades are not random decisions. Each one is a carefully designed mechanism that sorts customers by what they value and charges accordingly. When Amazon offers a 23% discount for paying annually, that is not generosity. It is a pricing strategy designed to lock in revenue and reduce the chance you cancel.

When streaming first entered the market, it used a classic strategy economists call penetration pricing: launching at a low price to win customers fast, with plans to raise prices once the market is captured. That low price is what convinced millions of households to cut the cord. Cable never recovered. Uber used the same playbook when it entered new cities, undercutting taxis until riders made the switch permanent.

For everyday consumers, understanding these mechanisms is useful. It will not stop companies from using them, but it does change how you read a pricing announcement. The next time a subscription service rolls out a “new and improved” tier, you will know to ask the question economists always ask first: improved for whom?

As we reset, here is a look at the latest macroeconomic data releases we follow regularly.

What we are covering:

1. Labor market data

2. Inflation

3. GDP

GDP grew at a sluggish 0.7%

The U.S. economy's growth slowed sharply in the final months of 2025. New data shows GDP grew at just a 0.7% annual pace in the fourth quarter, well below the original estimate of 1.4%. The government shutdown last fall was a big reason why.

The downward revision touched every part of the economy. Consumer spending, business investment, government outlays, exports, and imports all came in lower than first reported.

Prices are up!

The Bureau of Economic Analysis also released fourth-quarter inflation figures. The Personal Consumption Expenditure index, the Federal Reserve’s preferred price gauge, came in at 2.9%. That is well above the Fed’s 2% target.

The Bureau of Labor Statistics reported a 2.4% year-over-year inflation rate in the CPI. One important note: gasoline prices fell 5.9% over the past year, but that figure does not capture the recent spike in oil prices tied to the conflict in Iran. Future readings will look different. In the past month, oil has surged from $67 a barrel to $100.

The labor market is showing cracks

The February jobs report pointed to a weakening labor market. The unemployment rate ticked up slightly to 4.4%, but the bigger concern is the loss of 92,000 payroll jobs.

That is a sharp reversal from January, when employers added 140,000 jobs. January now looks like the outlier. The February number fits a broader pattern of softening in the labor market, and that is an important story for you to follow.

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We want to hear from you

How are you preparing for a softening labor market and rising prices? How is your economy doing?

Leave a comment on this post or reply to this email and let us know. Your experience is the economy too, and we read every response.

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Did you miss the podcast?

Healthcare is full of good intentions. It is also full of incentives.

In this episode of the Decode Econ Podcast, we sit down with Beth Munnich, Associate Professor of Economics at the University of Louisville, to discuss her research published in the American Economic Review on physician ownership of outpatient surgery centers.

The question is straightforward:

The answer, as in most markets, comes down to incentives.

Outpatient (ambulatory) surgery centers have expanded rapidly over the past two decades. Advances in medical technology now allow many procedures to be performed safely without overnight hospital stays.

This shift matters for three reasons:

• Cost: Outpatient centers typically operate at lower overhead than hospitals.

• Access: Patients benefit from shorter stays and quicker turnaround.

• Market Structure: Increasingly, physicians are not just providers; they are also the owners.

Ownership changes the economic equation.

We also discuss teaching and advice for students and economists starting their academic journey.

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Key Takeaways

• Physician ownership changes financial incentives in outpatient surgery markets.

• Incentives influence referral patterns and potentially spending.

• Healthcare markets are deeply shaped by ownership structure and insurance design.

• Rigorous empirical research is essential to move beyond speculation.

• Mentorship and persistence are critical in academic careers.

This episode is about how markets respond when incentives change.

And as Beth reminds us, incentives are always the key

Chapters

00:00 Introduction to Decode Econ and Guest Beth Munnich

00:12 Guest introduction and research overview

01:06 Why Beth Munnich was drawn to healthcare economics

01:35 The rise of outpatient surgery and its implications

03:22 The importance of data and research questions

05:18 Incentives and physician ownership in surgery centers

07:44 Potential outcomes of ownership incentives

08:31 Research findings on ownership and healthcare costs

10:40 Doctor behavior and the principal-agent problem

12:06 Insurance and patient financial incentives

12:38 Research process and data collection challenges

15:41 Long-term research journey and data acquisition

20:46 Economic lesson: Always incentives

22:06 Aligning incentives for better patient care

23:22 Beth Munnich’s teaching philosophy and course design

28:33 Target audience and topics of her new course

30:00 Flipping the classroom: Relevance first in economics education

31:35 Favorite subfields: Labor economics and social issues

32:42 Impact of research on teaching and curriculum

33:31 Career advice for students and early professionals

35:44 Path to a PhD and career in economics

38:02 Skills needed in modern economics

39:44 Misconceptions about academic life

41:38 Advice to younger self and career reflections

45:05 Mentorship and networking in academia

45:26 Connecting with Beth Munnich

46:37 Closing remarks and gratitude

resources

Beth Munnich’s website

https://www.bethmunnich.com/

We have been on a great journey together.

Building this platform with you — the Decode Econ Educator Network, our contributors, our research assistants, and readers — has been incredibly rewarding. What began as an idea has grown into a community of people who care deeply about making economics clearer, more relevant, and more useful.

Today marks the last day of classes at NKU before spring break. While the world economy never really pauses, we are going to take a short one.

Following the economy and public policy, especially in today’s political climate, can be heavy. There is a fine balance between staying informed and becoming overwhelmed. Spring break gives us a moment to step back, recharge, and think carefully about how we want to approach the second half of the semester.

Reflection and rest are required for growth

During this time, we will be reflecting on our goals for Decode Econ and the strategy we want to pursue moving forward. But reflection is always better when it includes the people who make the work meaningful, that’s you.

One exercise I do with my students and my team once every semester is a mid-semester evaluation. The purpose is simple: gather honest feedback early enough to actually improve the second half.

So we would love to hear from you.

Three quick questions:

1. What is Decode Econ doing that you appreciate or find valuable? What is working well?

2. What are we doing that you do not find useful or would like to see less of?

3. What is something Decode Econ is not doing that you think we should incorporate?

We have always tried to be transparent with our community, and your feedback has consistently helped shape what Decode Econ becomes.

Thank you for being part of this journey with us. We appreciate your engagement, your ideas, and the role you play in making this platform better.

Please leave a comment with your feedback.

We will see you after the break.

Best,
Dr. A and the Decode Econ team ( , , and )

Rest is Strategy

@figuringout.co

Figuring Out with Raj Shamani on Instagram: "Your Break Is Not …

THE PROBLEM

Every few years, the job market shifts and workers are told they must adapt or risk falling behind. In the 2010s, the message was learn to code. Soon after, it became learn data science. More recently, the advice has shifted again: learn AI, or worse, prepare for AI to eliminate your job altogether. Each wave triggers a scramble as workers try to keep up with the latest technological demand. Today, that scramble is fueling growing anxiety about what artificial intelligence may mean for future job prospects.

My view is that we are entering an uncomfortable transition period. Technological change always creates disruption before it creates clarity. But history shows that people who adapt alongside the market eventually find new opportunities. New industries emerge. New roles are created. Humans do not disappear from the economy; their role changes. The people who adjust fastest tend to benefit the most.

The challenge is that much of the career advice people receive has not fully caught up to this reality. We continue to focus almost exclusively on technical skills, as if mastering the newest tool guarantees long-term success. Technical skills matter, but they will not be sufficient on their own. The people who thrive will bring something more.

Success in tomorrow’s labor market will require the ability to analyze messy problems, adapt when the rules change, and explain complex ideas in plain language. It will require working effectively with other people whose expertise, incentives, and perspectives differ from your own.

These are not “nice-to-have” skills. In a rapidly changing economy, these capabilities determine how far you go. Today, I want to introduce a new framework we have been working on that will reshape how we design our programs. Before I do that, let me tell you why I care so much.

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Why I Think About This So Much

I spend a great deal of time thinking about how the labor market is changing and what that means for students and early-career professionals.

Part of this comes from being an economist who focuses on financial literacy and market outcomes. The other part is because of my research. Much of my work with focuses on workforce readiness and how people develop the skills needed to navigate complex economic environments.

But the question has also become central to my administrative role at . As Associate Dean, I spend a significant amount of time thinking about how we design educational experiences that prepare students for a labor market that is evolving faster than most curricula.

When you sit at the intersection of research, teaching, and program design, you start to see patterns. You see where students struggle. You see which skills employers repeatedly ask for. And you see which graduates seem to navigate change more confidently than others.

Over time, these observations started to point in the same direction. The people who succeed are not simply the ones with the newest technical skill. They are the ones who can think clearly, communicate effectively, adapt quickly, and work well with others.

Those observations eventually led me and my team at Haile College of Business to think about skill development through a different lens.

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The CASE Framework

When we look at workers who consistently perform well across industries, four transferable skills appear again and again. Together, my colleagues and I describe them as the CASE Framework: Critical Thinking, Adaptability, Storytelling, and Emotional Intelligence.

These skills do not replace technical expertise. They make technical expertise useful.

• Critical Thinking

  Modern workplaces are flooded with data, dashboards, and AI-generated analysis. But access to information is not the same as understanding it.

  Critical thinking is the ability to ask the right questions, challenge assumptions, and draw sound conclusions from imperfect information. In a world where answers are increasingly automated, the value lies in knowing which problems actually need solving or which ones aren’t being answered correctly.

• Adaptability

  The half-life of job skills is shrinking. What you learn today may need to be updated in just a few years. Workers who can continuously learn and adjust are far less vulnerable to disruption.

  Adaptability is essentially insurance against the economy changing under your feet. We define it as the combination of resilience and agility, the ability to absorb shocks while still moving forward.

• Storytelling

  Ideas alone rarely move organizations. Communicating ideas and gaining buy-in does.

  You can produce the best analysis in the room, but if you cannot explain it clearly, it rarely influences decisions. Storytelling is how complex thinking becomes actionable. It turns data into understanding and analysis into direction.

• Emotional Intelligence

  Modern work is fundamentally collaborative. Projects require teamwork, and leadership requires trust.

  Emotional intelligence is the ability to read a room, manage conflict, and build relationships that hold under pressure. From an economic perspective, it reduces the friction that slows things down and increases impact and outcomes.

THE BOTTOM LINE

Technical skills are essential. They open doors. But the four CASE skills determine how far you go once you are inside.

Critical Thinking. Adaptability. Storytelling. Emotional Intelligence.

These capabilities allow you to relearn when technology shifts, communicate when the stakes are high, and lead when the situation is uncertain. That combination is rare, and the labor market rewards it.

So yes, learn the new tools. Stay current with the technologies shaping your field. But invest just as seriously in how you think, how you communicate, and how you work with others.

Those skills do not become obsolete.

Enjoyed this issue?

Forward it to someone thinking about their next career move.

And if you are not yet part of the Decode Econ community, subscribe to get clarity on the economy — one story at a time.

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More Reading

A post by

Every January, the world’s most powerful people travel to Davos, Switzerland for the World Economic Forum. This year’s theme was “A Spirit of Dialogue.” The message: let’s cooperate, listen, and build a better global economy together.

But many cultural and indigenous leaders were not invited.

That gap is not a small oversight. It cuts to the heart of stakeholder capitalism, the idea that businesses and institutions should serve employees, communities, and society, not just shareholders. Davos was built to champion that idea. Yet it routinely excludes the very people it claims to center.

The good news is that you do not have to make the same choice. But getting it right requires understanding what inclusion actually looks like.

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From a Swiss Ski Town to the Center of Global Power

To understand what Davos is supposed to be, you must understand the man who built it. Klaus Schwab was born in Germany in 1938. He was trained as an engineer, he eventually earned a doctorate in economics from the University of Fribourg, and he eventually found himself studying at Harvard under Henry Kissinger. The combination of technical precision, economic theory, and realpolitik shaped everything he would go on to build.

In 1971, Schwab founded what he called the European Management Forum. The core idea was simple: companies have an obligation not just to shareholders, but to every stakeholder in their orbit, including employees, suppliers, communities, and society at large. To advance that idea, he needed a platform. He chose Davos, a quiet Alpine town known for its ski slopes, and invited over 400 business and academic leaders to convene.

Nobody was sure anyone would show up.

Over the following decades, the European Management Forum became the World Economic Forum, and Davos became shorthand for global power. Heads of state, central bankers, CEOs of the world’s largest corporations, and Nobel laureates all make the pilgrimage to the Swiss Alps each January. By the time Schwab published Stakeholder Capitalism in 2021, the idea he had championed for fifty years had gone fully mainstream. The U.S. Business Roundtable formally endorsed it in 2019. ESG metrics spread across boardrooms. The language of stakeholder inclusion was everywhere.

And yet here is the central irony: the institution built to champion stakeholder inclusion became one of the most exclusive gatherings on earth. The price of admission, literally and figuratively, filters out the very voices the framework claims to center. Schwab retired from the Forum in 2025, but the tension he never resolved remains. You cannot solve exclusion from within a structure that depends on it.

So What Actually Is Stakeholder Capitalism?

At its core, stakeholder capitalism is a rejection of one simple idea: that a business exists only to make money for its owners. Economist Milton Friedman made that case most famously in 1970, arguing that a company’s sole social responsibility is to increase its profits. For decades, that thinking dominated how corporations made decisions, allocated resources, and measured success.

Stakeholder capitalism pushes back on that idea. It argues that a company sits at the center of a web of relationships, employees, customers, suppliers, communities, and the environment. The health of those relationships determines the long-term health of the business. Ignore your workers, and your talent dries up or their productivity falls. Damage your community, and local support dries up. Strip the environment without restraint, and you eventually destroy the inputs your business depends on. The argument is not purely moral, though the moral case exists. It is also practical.

The model has four key players: governments, civil society, private companies, and the international community. No one operates in isolation. When any one of them serves only their narrow interests, the system begins to suffer. Durable prosperity requires all four working together, with accountability flowing in multiple directions, not just up to a board or down to a quarterly earnings report.

It sounds reasonable. The problem, as Davos illustrates year after year, is the gap between theory and practice.

What Genuine Stakeholder Inclusion Actually Looks Like

If you run a business, lead a team, or have any decision-making authority at all, here are some ways to leverage your stakeholders:

Map your actual stakeholders, not the convenient ones. Most companies list customers and investors and stop there. Go further. Who lives near your facilities? Who supplies your inputs and under what conditions? Which communities bear the cost of your decisions?

Create feedback channels. A survey that goes nowhere is not inclusion. It is theater, and we see a lot of that in the market. Stakeholders need channels that demonstrably influence decisions. That means putting community voices into planning processes before decisions are made, not after.

Pay people fairly and on time. This sounds basic because it is. Your employees are your most immediate stakeholders, and most businesses treat them as cost lines first and people second. No stakeholder framework survives that contradiction.

Be transparent about trade-offs. Stakeholder capitalism does not mean everyone gets everything they want. It means everyone understands the reasoning behind decisions that affect them. Transparency builds trust. Communication is key to building a strong community.

Hire for the communities you claim to serve. If your leadership table doesn't reflect your stakeholders, you aren’t leveraging them. In a world where DEI gets a bad reputation, you should be asking about stakeholder representation. It is a quality-control mechanism that keeps you from making decisions about people without those people in the room.

Measure what matters, not just what is easy. Revenue and margin are necessary metrics. They are not sufficient. Track employee retention, community investment, supplier health, and environmental impact with the same rigor you apply to your bottom line.

Choose to Be Better

Davos did not fail stakeholder capitalism. Davos revealed something about human nature that every organization eventually confronts: it is far easier to adopt the language of inclusion than to bear the cost. Genuine stakeholder capitalism requires giving something up, control, speed, and short-term margin in exchange for durability, trust, and legitimacy. Most institutions are not willing to make that trade.

The businesses that will define the next generation are not the ones that optimized hardest for shareholder return. They are the ones who figured out early that the community, the worker, the supplier, and the environment were never liabilities to be managed. They were the business. Treat them accordingly, and your business will thank you for it.

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Resources

• Davos 2026: World Economic Forum’s 56th Annual Meeting takes place under the theme ‘A Spirit of Dialogue’ | World Economic Forum

• Our Institutional Framework | World Economic Forum

• Stakeholder Capitalism: A Global Economy that Works for Progress, People and Planet: Schwab, Klaus, Vanham, Peter: 9781119756132: Amazon.com: Books