Dear Undercover Economist: Priceless Advice on Money, Work, Sex, Kids, and Life's Other Challenges - Softcover

Harford, Tim

Softcover

ISBN 10: 0385667434 ISBN 13: 9780385667432

Publisher: Anchor Canada, 2009

Synopsis

A fantastic collection of witty, insightful, and often outrageous Financial Times columns that answer readers’ personal dilemmas using the latest economic theory.

Tim Harford employs his idiosyncratic style to explain economic principles so that anyone can understand them — and reveals how they apply to (and can solve) issues in everyday life. Does money buy happiness? Is “the one” really out there? Can cities be greener than farms? When’s the best time to settle down? Can you really “dress for success”? How can I stop my girlfriend from eating my dessert? Harford provides brilliant, hilarious, and weirdly wise answers to these and other questions. Arranged by topic, easy to read, and hard to put down, Dear Undercover Economist is a provocative, compassionate, and indispensable perspective on anything that may irk or ail you — a book well worth the investment.

About this title

About the Author

Tim Harford is the bestselling author of The Undercover Economist, and a member of the editorial board of the Financial Times, where he also writes the “Dear Economist” column. Harford has been an economist at the World Bank and an economics tutor at Oxford University. He lives in London with his wife and two daughters.

Excerpt. © Reprinted by permission. All rights reserved.

Introduction
Can Economics Make You Happier?

Economists might not be the first people you would think of to give you advice on parenting, the intricacies of etiquette, or the dark arts of seduction. Even at best, the economist can seem a remote figure: infinitely rational, untroubled by indecision or weakness of the will, a Spock-like creature too perfect to be able to relate to mere human concerns. At worst, the economist can look like a social naïf, if not an outright sociopath, a man (or occasionally a woman) who knows the price of everything and the value of nothing.

At least, such is the traditional image of the economist, and who is Dear Economist to disappoint? He is not, it would be fair to say, as sympathetic a counselor as Dear Abby, Miss Manners, or Dr. Ruth. He is blunt. He is rude. He loves jargon. When confronted with a woman who enjoys the dating game but worries that she might leave it too late to settle down, Dear Economist offers not a shoulder to cry on but a frank explanation of optimal experimentation theory. When a dinner party guest wonders how much to spend on a bottle of wine, Dear Economist ignores the Good Wine Guide and reaches for the Journal of Wine Economics.

And yet, his advice can be surprisingly sound. In the six years since the Financial Times entrusted me with the awesome responsibility of answering letters to Dear Economist, I have even–whisper it–been known to take some of his counsel myself.

This shouldn’t be surprising. While Dear Economist’s bedside manner may leave something to be desired, economics itself is remarkably well suited to the agony genre. The economist’s instinct to strip away social niceties and turn messy problems into simple abstractions produces just the kind of no-nonsense counsel we expect from any good advice column. Modern economics is no longer dominated by unworldly mathematical supermen but by streetwise statistical detectives focused on real-life problems. And the current debate between behavioral economists and rational choice theorists is throwing ever more light on what rational economic behavior looks like, and what happens when people behave less like Mr. Spock and more like Homer Simpson.

As a result, modern economists understand much about both how we should behave and how we sometimes fall short. If anyone is going to dispense advice with the supreme confidence of the superrational know-it-all, who better than an economist?
Speed Dating With a Money-Back Guarantee

It is not for nothing that sex, dating, and relationships have traditionally formed the staple of the agony column. Wise words on these subjects are not easy to find. Not many people want to ask their parents for tips about losing their virginity. It is no less embarrassing to seek the opinions of colleagues as one contemplates an extramarital affair. We know that envious friends may not always give us impartial advice when we wonder whether we have, at last, found “the one.” What could be more welcome in such cases, then, than the cool counsel of economic rationality?

Economists, it is true, do not generally enjoy a reputation as lotharios–unsurprisingly, when the economist’s response to the delicate question of faking orgasms is to reach for the analyticalframework of a two-player signaling game. But economists do not dismiss love. On the contrary, we are unorthodox experts in the romantic arts. Economists understand decision-making in the face of uncertainty. We understand the dangerous blandishments of cheap talk and the value of binding commitments.

Above all, economists understand the concept of non-zero-sum games, interactions in which both sides can expect to benefit from the bargain. When it comes to love, you could even say that we economists are optimists.
SEPTEMBER 6, 2003

Dear Economist,
My boyfriend and I have been seeing each other for a while, and last month he moved in with me. It seems sensible for us to put his apartment on the market, but he’s suggesting that we wait awhile in case things don’t work out. What would you advise?
–V.H., via email
Dear V.H.,
Modern living has made it so much more difficult to judge where you stand.

Mothers used to teach their daughters not to believe suitors’ promises that they would still love them in the morning. Then, commitment was made in the form of a marriage proposal. But when courts in the U.S. stopped allowing women to sue for breach of promise, it became traditional to back up those promises with diamonds, a girl’s best friend.

Times have moved on, and it is much more difficult for both men and women to gauge their partners’ seriousness. But if you apply a spot of screening theory to your domestic situation, you will discover exactly where you are. (Screening, the theory of which won enfant terrible Joe Stiglitz a share of the Nobel Prize in 2001, is the art of finding out hidden information by forcing people to act rather than simply murmur sweet nothings.)

If your boyfriend is enjoying the perks of living with you but lacks real commitment to your relationship, then he enjoys a high option value from owning an apartment to which he can return. This is true even if he loves you but doubts the constancy of that love.

If, on the other hand, he is convinced that you will grow old together, the option value of a spare bachelor pad is minimal. The only reason for him to hold on to the apartment is that he thinks it’s a good financial investment. Pundits can argue about the merits of this, but clearly the potential rewards are trivial compared with the loss of his soul mate.

To screen for your boyfriend’s type, you must demand that he sell his apartment at once–claim that the Financial Times has been predicting a fall in prices, if you wish.

The art of successful screening is to impose a demand that one type of person is unwilling to meet. You don’t want to be sharing a house with that type of person, so put your foot down.

Yours credibly,
The Undercover Economist

About this edition

• Publisher: Anchor Canada
• Publication date: 2009
• ISBN 10: 0385667434
• ISBN 13: 9780385667432
• Binding: Paperback
• Number of pages: 240