5 Economics Lessons You Learn Traveling

Real vs. Nominal Prices

Any trip to the developing world will introduce you to ridiculous nominal prices. I will never forget going out for dinner with friends our first night in Ho Chi Minh City and racking up a bill of 1,000,000 Vietnamese Dong. Traveling out of your country, exchanging money, and interacting with widely different nominal prices is the best way to learn that the amount of zero’s on your paper don’t matter, what matters is the real stuff you can buy with it.

Opportunity Cost

Most long-term travelers are funding their trips with savings. You travel to a new country or continent with a limited amount of money and time, but unlimited options of things to do. At home, with your life running on momentum, it is easy to be unaware of the choices and options that are available to us. When you travel, you are confronted with the reality that what you choose to do today will affect what you can do one month from now. You learn that the cost of any one thing is not just the price, but the other ways you could have spent the money and time.

The Value of The Entrepreneur

The difference between a developed or undeveloped country is a story about entrepreneurs and government regulations. Traveling allows you to see communities that are thriving and communities that are suffering. You get to see first hand that local economies thrive when foreign entrepreneurs can create business and employ locals who may have less skill or training. You also get to see the countries and communities that are suffering because they prevent people from doing business.

Everyone Wins From Trade

For any trade to happen, both parties need to feel they are gaining value. You have to value a burger more than the price to buy it. And the restaurant has to value to money more than the supplies to make it and sell it. When you travel you can see the impact you can have on a business. You can see how eager people are to do business with you. You can experience first hand that buying something cheaply in a different country is not harmful, but massively beneficial.Going to markets in the developing world is one of the best ways to see the win-win nature of trade. People seek you out, eager to make sales, eager to get their product into your hands. The moments where you find something you are eager to buy and a person who is eager to sell it to you, it is stuck in your head that trade is good for both parties.

The Harm of Government Regulation

Traveling quickly from one country to the next is a great way to see how bad laws negatively affect countries.

Crossing a border and seeing the price of goods drop dramatically makes you think “it’s so dumb that it is so expensive to by X in that country.” Experiencing protectionism is a great teacher. Feeling the annoyance about products that you couldn’t find, and the quality of products available at supermarkets across the border is the best way to learn the harm of protectionism. In the same way traveling from Malaysia across the border to Singapore and experiencing the dramatic change in development sparks questions in the traveler’s mind about WHY? How are these two places that are so close and so similar, so different in terms of wealth?

In the same way traveling from Malaysia across the border to Singapore and experiencing the dramatic change in development sparks questions in the traveler’s mind about WHY? How are these two places that are so close and so similar, so different in terms of wealth? You are driven to learn about what makes countries rich and poor.