Economic Rent

“Hey! You gonna eat that candy bar? I’ll give you five bucks for it” You: “ohh...well, I only paid a dollar for it, but if you want it, sure…”

That’s economic rent at work: when you get more than you bargained for (well, someone does). For what it’s worth, “economic rent” has nothing to do with “rent,” like the kind of rent you pay to your landlord. No. Economic rent is when more money is earned than should have been, and is considered unearned. Working hard for economic rent isn’t possible. It’s one of those things you don’t say anything about...because you’d rather take your unearned dollars and run.

Economic rent happens when markets aren’t working efficiently, usually when something is really scarce with high demand. For instance, people trying to buy a home might put in an offer that’s higher than the market value for the home, just to increase their chances that they get the house. Anytime someone is offered something at a higher price than should’ve been offered in a perfect, efficient economy, we have economic rent. Shhh. Don’t say anything.