On the eve of the annual meeting of the American Economic Association, Justin Lahart writes in the Wall Street Journal about how economists are cheapskates.
Economists Are Cheapskates
TAGS: economists
Naked Self-Promotion
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It’s not being cheap, it’s being efficient.
#8- I don’t think the economist is bad at math. I think the writer of the article is understating the cost savings. Have you shopped at Whole Foods Market? The $5 savings is practially per-item! The savings by going to Walmart vs Whole Foods is enormous.
Economists understand the value of nothing but a dollar. Giving a gift is not an economic exchange; it is a social exchange. Economists can tell us the cost of something, but they can’t tell us whether it should be done. Just because something cost money doesn’t mean we shouldn’t do it.
And just because you can always think of something else to spend your money on, doesn’t mean you should never spend your money. To put it another way, not all opportunity costs are recoverable. The estimates of the cost of bringing a drug to market are inflated, in part, by the opportunity cost of spending money researching a drug. That’s not a recoverable opportunity cost, that’s being a pharmaceutical company.
“Do you live the cheapskate principle in your house?” He wants to, but sometimes he fails:
http://freakonomics.com/2008/01/29/a-hannah-montana-concert-as-seen-through-the-eyes-of-an-economist/
The linked article is a mess. It conflates rational self-interest (doing whatever maximizes my happiness) with anhedonia (not taking pleasure in things that others take pleasure in).
Also note the particularly flagrant internal contradiction: at one point the author takes an economist to task for sacrificing time for money (30 minutes for ~$5 savings going to the cheaper grocery store); later he criticizes others for preferring the opposite sacrifice of money for time (paying someone to trim a tree). It’s a no-win situation for economists, apparently.
Teaching, like music or preaching, is not a career but a calling; if you’re doing it right, it’s a public service. As public servants, we tend to prefer donating time over money, when asked for further contributions, even though a substantial proportion of it is already devoted to the public good.