Question: Explain what economic issues Winston Churchill discussed with Lady Astor? What does their conversation imply about the economic idea of how price affects both the supply and the demand for any good or service?
Winston Churchill and Lady Astor:
There are many stories about Nancy Astor, the first woman elected to Britain's Parliament. A vivacious, fearless American woman, she married into the English aristocracy and, during the 1930s and 1940s, became a bright light on the English social and political scenes, which were already quite bright.
One story told about Lady Astor is that she and Winston Churchill, the unorthodox genius who had a long and distinguished political career and who was Britain's prime minister during World War II, were sitting in a pub having a theoretical discussion about morality. Churchill suggested that as a thought experiment Lady Astor ponder the following: If a man were to promise her a huge amount of money - say a million pounds - for the privilege, would she sleep with him? Lady Astor did ponder the question for a while and finally answered yes, she would, if the money were guaranteed. Churchill then asked her if she would sleep with him for five pounds. Her response was sharp: "Of course not. What do you think I am - a prostitute?" Churchill responded, "We have already established that fact; we are now simply negotiating about price."
One moral that economists might draw from this story is that economic incentives, if high enough, can have a powerful influence on behavior. Bt an equally important moral of the story is that noneconomic incentives also can be very strong. Why do most people feel it's wrong to sell sex for money, even if they might be willing to do so if the price were high enough? Keeping this second moral in mind will significantly increase your economic understanding of real-world events.