Economists Do It With Models

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Just For Fun: You Might Be An Economist If…

June 14th, 2010 · 72 Comments
Just For Fun

I started today by attempting to write a piece on the game theory involved in deciding whether or not to go to college…and then I got into some analytical tail-chasing (Gizmo has taught me well), so I decided to give you this in the meantime. Some updated “you might be an economist if” lines, via Newmark’s Door: (I’ve added my own explanations/commentary so I don’t feel totally lazy)

You think your salary remained constant even if it’s not keeping up with inflation – because the consumer price index always overstates actual increases in living costs!

Well, it does- why is this funny? =P The Consumer Price Index assumes that people always consume the same bundle of items in every year, even if some of the items in the bundle have gotten very expensive. For example, if the consumer price index includes 10 cups of coffee and 8 cups of tea in 2009, it includes 10 cups of coffee and 8 cups of tea in 2010 even if the price of coffee doubles and the price of tea stays the same. This measure of inflation overstates the actual increase in the cost of living, since most consumers wouldn’t just absorb the price increase but would at least partially switch away from coffee and towards a less expensive beverage.

You think a game is an analytical tool popularised by John Nash.

Please…John Nash didn’t invent the games, just the game theory…unless of course he’s secretly one of the Parker Brothers and no one told me. (Or…”Don’t hate the player, hate the game theory?”)

You see finding a job as just another matchmaking exercise.

This one I am on board with, but maybe that’s just because I hear the “it’s not you, it’s me” line from employers way too often and my bosses never call when they say they are going to…

Your grocery list is seasonally adjusted for relative prices.

Oh please…isn’t everyone’s? I mean, this is why we have Halloween pumpkins rather than Halloween asparagus, is it not?

You try to calculate your kid’s discount factor by promising different amounts of candy after dinner to see how much of it is worth one chocolate bar before dinner.

I don’t have kids, but, given this story, I wouldn’t put this past my parents…though my mom teaches English rather than economics, so she may have tried to teach a 2 year old the difference between “can” and “may” in response to the question “can I put a raisin up my nose?” Yeah, that ended well…

You carpool, but not because of environmental concerns. There are economies of scale involved.

Economies of scale are very important. (And yes, there are two separate links there.)

You think a lemon might go sour just because you don’t know enough about it.

Um, aren’t all lemons sour? Though I’m guessing that this point has more to do with the lemons problem than the fruit. The lemons problem arises when one party in a transaction (usually the seller) has more knowledge about product quality than the other party (“asymmetric information” in economic terms), and it’s called the lemons problem because it often arises in markets for crappy used cars. However, I instead refer to the lemons problem as “why you should never buy a used car from an economist.” (even though we have fun license plates and license plate frames)

You correctly predicted four out of the last two recessions.

I have nothing to say on the subject of macroeconomics. =P

You secretly think that lightbulbs should screw themselves in. (Corollary: Even if you don’t agree with this statement, if you got the joke, you’re still probably an economist.)

Hmmm…I am guessing that this related to one of the following:

Q: How many Chicago School economists does it take to change a light bulb?
A: None. If the light bulb needed changing the market would have already done it.

Q: How many mainstream economists does it take to change a light bulb?
A: Two. One to assume the existence of ladder and one to change the bulb.

Q: How many neo-classical economists does it take to change a light bulb?
A: It depends on the wage rate.

Q: How many conservative economists does it take to change a light bulb?
A: None. The darkness will cause the light bulb to change by itself.

Q: How many B-school doctoral students does it take to change a light bulb?
A: I’m writing my dissertation on that topic; I should have an answer for you in about five years.

Q: How many investors does it take to change a light bulb?
A: None – the market has already discounted the change.

Q: How many Keynesian economists does it takes to change a light bulb?
A: All. Because then you will generate employment, more consumption, dislocating the aggregate demand to the right.

Q: How many marxists does it take to screw in a lightbulb?
A: None – the bulb contains within it the seeds of its own revolution.

Q: How many economists does it take to change a light bulb?
A: Seven plus or minus ten.

Q: How many economists does it take to change a light bulb?
A: Irrelevant – the light bulb’s preferences are to be taken as given.
(That one might be my favorite.)

Given 1000 economists, there will be 10 theoretical economists with different theories on how to change the light bulb and 990 empirical economists laboring to determine which theory is the *correct* one, and everyone will still be in the dark.

Q: How many economists does it take to change a lightbulb?
A: Eight. One to screw it in and seven to hold everything else constant.

You think the .pdf in Acrobat files stands for “probability density function”.

We do not…but I did see the acronym CDF somewhere recently and couldn’t think of anything other than “cumulative distribution function.” *sigh*

The Stand-Up Economist does a similar bit, as seen below…my favorite is “You might be an economist if you go to a Chinese restaurant and open the fortune cookie and add ‘at the margin’ at the end of it.”

Tags: Just For Fun

72 responses so far ↓

  • 1 Steve // Jun 14, 2010 at 7:44 pm

    Those were great; I think I ticked off several. I guess I was right when I chose economics for a career.

  • 2 Howard // Jun 14, 2010 at 11:25 pm

    Jodi,

    What about “How many Behavioral Economists does it take to change a light bulb?”

    Howard

  • 3 Steve // Jun 15, 2010 at 12:39 am

    depends how many have an incentive to have the lights on and/or feel atruistic towards those who do/don’t want the lights on.

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    Great post! I loved all of the “if” jokes, but the fortune cookie one made me laugh out loud.

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