Published in The Globe and Mail in Canada, and ABC Unleashed in Australia:
Think of the ideal advice columnist, duty-bound to help correspondents with their problems at home, at work, and in love. What kind of person comes to mind? Caring? Honest? Wise? Whatever your answer, I’m guessing it didn’t involve the phrase “professionally trained economist”. Whatever: here I am, the only economist in the world to run a problem page – “Dear Economist” in the Financial Times – dedicated to making my readers’ personal lives better.
I’ll admit that it is not immediately obvious what an economist might have to say about parenting, the intricacies of etiquette or the dark arts of seduction. Even at our best, we economists seem too perfect, too rational, to understand mere human weaknesses. You might as well consult Mr Spock for dating advice as ask an economist. And at our worst, we appear hopelessly naïve, emotionally tone-deaf, and bordering on the sociopathic.
And let us be honest, at times my advice column persona has lived up to that caricature. When a woman wrote to me confessing that she enjoyed the dating game but was afraid she might leave it too late to settle down, I didn’t offer a sympathetic ear, but a handy explanation of the theory of optimal experiments. When a dinner party guest wondered how much he should spend on wine, I reached straight for the Journal of Wine Economics. Every advice columnist needs a persona, and for “Dear Economist” it was blunt, rude, and rather fond of the latest economic research.
As “Dear Economist”, I was never supposed to offer good advice. The whole thing was a joke, with a predicted shelf-life of about six months. Six years later, my inbox is still full of readers’ queries, and I am still handing out advice. Hopefully it still makes my readers laugh. But – and here’s the strange thing – I am starting to wonder whether some of it is actually pretty good advice, too.
There is something about the cold eye of economics that lends itself, quite unexpectedly, to the advice-column format. Economic theories are ruthlessly reductive, cutting away complexity to reveal some hidden truth. If we’re honest, most advice columns are reductive, too. And economists have an advantage over most advice columnists, because we have access to the most bizarre (and yet carefully peer-reviewed) research, based on the latest data.
Some of it falls under the category of “nice to know”. Imagine: your marriage isn’t working out and you’re seriously considering divorce. What should you do? Well, research from the British economist Andrew Oswald helpfully points out that most people tend to be happier a year or two after their divorce than immediately before it. (This is not true for bereavement, by the way.) So perhaps you should go ahead.
Some of it we can file under “can’t make it up”. The American Association of Wine Economists just published an informative research paper entitled, “Can people distinguish pâté from dog food?”. Sadly, they can: even if puréed to look like chicken-liver pâté and served chilled with a parsley garnish, dog food tastes terrible. A shame, but useful to know if you were thinking of cutting corners at your next dinner party.
And some of it? Well, some of it turns out to be important. One young man wrote to me to ask if he should switch high schools. He provided a long list of good reasons to switch but was still hesitating. I diagnosed “the endowment effect”, a tendency to stick with the devil you know that is well known to economists, and told him to switch. He did, he then got into Cambridge University, and recently wrote to me to thank him for changing his life. (Better yet: he’s studying economics. A bright future awaits him explaining to lonely singletons how to compose attractive internet dating ads, as I have done.)
Nowadays, I don’t mock the life-changing power of economics. I reckon it’s as good as any other source of personal advice, and funnier than most. I’ve even taken economic advice myself: the timing of my (successful) marriage proposal was calculated using an option valuation formula. My poor wife, you might think. But it’s a triumph for economics.
And there’s one more reason to applaud the use of economic theory in personal problem-solving: it’s less dangerous than using it to run banks.