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Taylor Swift has an economics lesson for you

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20.06.2019

What if the music industry could be used as a guide to important principles in business and the economy? It would sure make introductory economics courses more fun.

The idea is not as fanciful as it might sound: As Alan Krueger shows in "Rockonomics," music is a microcosm of the wider business world and provides all sorts of insights into today's economy.

For stars like Taylor Swift, "live concerts pay the bills" these days.Credit:AP

Most fundamentally, music embodies the "paradox of value." We spend a lot of time listening to music - an average of three to four hours a day - and doing so makes us significantly happier.

Krueger and Daniel Kahneman, the Nobel-winning behavioural economist, have found, for example, that adding music to an otherwise miserable commute lifts the experience to the average non-commute happiness level.

In spite of this, we spend very little money on music - an average of 10 cents a day. That's only 2 per cent of overall spending on entertainment and media. Total spending on music globally in 2017 was $US50 billion ($72.4 billion), or about 0.06 per cent of gross domestic product.

That makes music, in Krueger's words, "one of the best bargains human society has ever conceived of - and it is getting better by the day."

[Music is] one of the best bargains human society has ever conceived of - and it is getting better by the day.

So there's lesson number one: The value consumers........

© The Age