Tim Harford The Undercover Economist

Articles published in December, 2005

I should not have worked on this letter

Dear Economist,
My husband is a successful accountant in his early 40s but his behaviour can only be described as workaholic. He is often at the office until 8pm and always brings work home. How can I convince him to cut back on his workload and spend more time with me and the children?
Margot Hillens, London

Dear Mrs Hillens,

Although you describe your husband as workaholic, that term is ambiguous. (You may wish to consult a paper by Hamermesh and Slemrod on “The Economics of Workaholism” subtitled “We Should Not Have Worked on this Paper”.) The first possibility is that your husband is not addicted to work, he simply prefers working to being at home – or, to be blunt, he prefers accountancy to you. If this is true, the solution is to make home life more attractive: learn to cook, invest in a better haircut and spend some time on an exercise bike.

Alternatively, your husband may be desperately trying to cut down on his work and need your help. He may be wracked with guilt after every late night. If this seems more accurate, you must remove temptations and create strong barriers against relapses. Hide his BlackBerry and take him out to dinner with important guests. A final possibility is that your husband is a “rational addict”. His work is addictive in the sense that the more he does it the more he wants to do it, but his activity is rational in the sense that he has anticipated this and still decides to work. The path away from rational addiction is not to “cut back” but to go cold turkey. That would mean your husband retiring immediately. Be careful what you wish for.

Also published at ft.com.

31st of December, 2005Dear EconomistComments off

Splitting the rent

Dear Economist,
Two friends and I have taken out a lease on a three-bedroom flat. The rooms are all different sizes. How should we decide who gets which room and the share of the rent that they should pay?
Daniel Chin, Haywards Heath, UK

Dear Daniel,

This reminds me of the cake-cutting problem: one person cuts the cake, the other chooses which piece to eat. The person making the cut knows he will get the smallest piece and will try hard to make the pieces the same size.

With two rooms you can do the same thing. The first person decides on the size of the subsidy to the smaller room. For instance, for a Pounds 1,000-a-month flat, she might declare the small room costs Pounds 400 monthly and the large room costs Pounds 600. Her flatmate decides which deal she prefers.

With three rooms in a Pounds 1,000-a-month flat, things are more complicated. The first housemate fixes the rent on one room, say, Pounds 200 for the broom cupboard. The second housemate can take that offer or make the first housemate take it.

The third housemate then decides how the Pounds 800 should be split between the two remaining rooms and whoever did not get the first room decides which one to live in.

This scheme should be fair for the same reason as cake-cutting is fair: anybody who creates an unattractive option will immediately find himself having to take it.

Admittedly, if your housemates have different priorities it is an advantage to be the one making the divisions. For example, if your housemate needs a big room you can make sure it is expensive because you know he has to choose it. More sophisticated schemes can fix this problem but it may be better to make sure your housemates don’t read this reply and simply go first yourself.

Also published at ft.com.

24th of December, 2005Dear EconomistComments off

Why Alan Greenspan should replace that soft fool Santa Claus

I explained my theory on Marketplace this evening, and on Marginal Revolution this morning.

23rd of December, 2005Other WritingComments off

XBox economics, Part II

Last week I wrote that the shortage of Xbox 360 consoles seemed inexplicable, at least to me and my fellow economists. I invited readers to provide better explanations, and you did.A reminder of the puzzle: Xbox 360s are the latest in a long line of Christmas products to suffer spectacular shortages. The shortage of supply isn’t the puzzle; the low price is. Why doesn’t Microsoft raise prices temporarily from the current ed-trio.com floor of $300 for a basic console? Why doesn’t the company auction them all on eBay, where consoles are currently reselling for $700 and up?

If I had a dollar for every e-mail I received on the subject, I’d be able to afford an Xbox myself. Most of the suggestions I received were wrong, but a few got me thinking, and they may get you thinking, too.

Continued at Slate.com

21st of December, 2005Other WritingComments off

Undercover Economist review in the New York Times

On Sunday the New York Times reviewed The Undercover Economist, starting:

A funny thing seems to be happening to economics writing: it’s getting better,

and ending with

For those of you, even now, still stuck in the bookstore cafe, this is a book to savor.

You can read the whole review, including the ‘quibbles’.

21st of December, 2005MarginaliaComments off

I only fancy my girlfriend after a few drinks…

Dear Economist,
After several years, I recently noted that I only really fancy my girlfriend after I’ve had a few drinks. Is this relationship worth pursuing?
David Pigeon, London

Dear David,

I know how you feel: I only fancy chips with mayonnaise. Sadly for my waistline, my relationship with chips has not suffered.

You are saying that like chips and mayonnaise, alcohol and your girlfriend are complementary goods. I am not sure this is a problem.

It might be a problem if your predicament were unusual. It is not. Many people have found that alcohol has aphrodisiac qualities, even if it occasionally dampens the ability to follow through. This Christmas, thousands of couples like you and your girlfriend will rediscover each other with the help of the Yuletide brandy. I’m a September baby myself, as is my father, my sister, her husband and their son. You are not alone!

Of course, it is easy to drink more alcohol than is good for you. Perhaps this is what is concerning you, but there seems to be no need for worry. The Government advises that the average man should aim to drink no more than three to four “units” of alcohol – about two pints of ordinary-strength lager – a day. Since the typical British couple claims to make love every three days or so, you should be able to lubricate yourself appropriately without putting too much strain on your liver. Just steer clear of prodigious feats of love.

It seems to me that there is one cause for concern: your girlfriend must never suspect that you need to don the beer goggles to find her appealing. Drinking is commonplace in our culture, so you shouldn’t find it hard to camouflage the limits of your infatuation. Just don’t do anything stupid, such as discussing it in the pages of a national newspaper.

Also published at ft.com.

17th of December, 2005Dear EconomistComments off

Lunch with the FT: Thomas Schelling and the Game of Life

At first it looked as if I would never get to have lunch with Thomas Schelling, this year’s winner of the Nobel prize for economics. When I first tried to see him, he told me to wait a week or two, so he could “get over the celebrity activity” surrounding the prize. We picked another date but then he had to cancel: “I have to be at the Swedish Embassy and the White House,” he e-mailed. “I knew I should have asked my wife… sorry to confuse you with my confusion.” Learn More

‘Tis the season to be stingy – because Christmas presents don’t have to cost much to have value

The Undercover Economist – FT Magazine, 17 December 2005

Early in the Christmas season, we received an e-mail from some hippy friends. “We have decided to have a ‘gift-free’ Christmas this year,” they began, before warning that they would not be sending out any presents, and would request none in return. Wise, charming and kooky in equal measure, the last thing this e-mail conveyed was emotional impoverishment. Yet when economists take the same attitude towards Christmas, emotional impoverishment is exactly the crime of which they are accused. Learn More

Yes, we have bananas. We just can’t ship them.

Originally published on the New York Times op-ed page, 16 December 2005.

At this week’s ministerial meeting of the World Trade Organization in Hong Kong, negotiators have once again hit an impasse over how and when to open the rich world’s agricultural markets to farmers in the poorest countries. What few people have realized, however, is that poor countries don’t have to wait for the World Trade Organization. There is plenty that they can and should do to help their own farmers to trade.
Imagine a dream scenario in which the trade ministers emerge from their negotiations this weekend holding hands and proclaiming an end to all agricultural protectionism. What then?

For, say, a banana picker in the Central African Republic, not a lot. Learn More

New York Times: Yes, we have bananas. We just can’t ship them.

At this week’s ministerial meeting of the World Trade Organization in Hong Kong, negotiators have once again hit an impasse over how and when to open the rich world’s agricultural markets to farmers in the poorest countries. What few people have realized, however, is that poor countries don’t have to wait for the World Trade Organization. There is plenty that they can and should do to help their own farmers to trade.
Imagine a dream scenario in which the trade ministers emerge from their negotiations this weekend holding hands and proclaiming an end to all agricultural protectionism. What then?
For, say, a banana picker in the Central African Republic, not a lot…

Continued at the New York Times, or on my favourites page.

16th of December, 2005Other WritingComments off
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