The core idea of the efficient-markets hypothesis is that if you think you've hit upon a genius money-making scheme, you really ought to stop and ask yourself: "If that worked, wouldn't someone else have done it already?" I'm not always thrilled with the application of this idea and, in particular, think the use of the term efficient to describe the application of this principle to financial markets is misleading. But it is a powerful idea with applications beyond the stock market. Consider, for example, the case of Kasia Rivera, who faces manslaughter charges after killing a man by injecting silicone into his penis in an effort to make it bigger.
Medical professionals say this doesn't work, and Dr. Daniel Elliot of the Mayo Clinic makes the crucial connection to microeconomics:
If there were a legitimate method for penile lengthening, Johnson & Johnson or Pfizer would have bought it up and made billions and billions of dollars worldwide. The fact that they don't means it does not exist.
Makes sense, right? Skeptics continue to ask whether college is worth it, but a little Economics 101 could have saved poor Justin Street's life.