Seriously, Betsey Stevenson and Justin Wolfers are the economics equivalent of Nermal, the world’s cutest kittycat, except for the fact that I don’t feel the overwhelming desire to put them in a box and mail them to Abu Dhabi. People at the New York Times seem to have caught onto this, and they wrote a nice profile on the couple. (Yes, couple. And they study the economics of the family. I warned you that they were adorable.)
What is most interesting to me when I read these sorts of stories is how much economists practice what they preach, since it’s usually pretty clear that economists really incorporate an economic way of thinking into their daily lives. Betsey and Justin are no exception:
But when Ms. Stevenson, 40, and Mr. Wolfers, 39, start talking about say, diapers or nursing, the conversation takes an odd turn. Suddenly, words like “inputs” and “outputs” — the economic kind — creep in. Mention loading the dishwasher and he tosses out “fungibility.” The low cost of two big teddy bears they bought for Matilda gets Ms. Stevenson ruminating on productivity gains.
This is not surprising to me in the least, nor is the fact that the two are not married largely due to tax considerations. (Economics really does trump romance sometimes…I will admit that I’ve pondered the idea of a “wedding” without the legal document, but that’s mainly because I would take basically any excuse to throw a big party.) In general, I find that economists are more willing than most to “go to the market” for services that they could theoretically do themselves (cleaning, child care, etc.) than the average person, and I take this as evidence that economists take the concept of comparative advantage and gains from trade seriously:
(Just as a warning, there is a number typo in the second video that is corrected in the annotations, so make sure that you can see them.)
The basic idea is that it is efficient to outsource a task if you can procure the service for less than the (post-tax) wages (or value of leisure time) you would have to give up to do the task yourself . Now I want you to ponder this concept along with the data point that Betsey and Justin pay their nanny $50,000 per year. 🙂
In addition, Betsey had some very interesting things to say about the general environment of academic economics:
Still, Ms. Stevenson said her self-esteem took a beating at Harvard. “My confidence had been so eroded that I was the one saying, ‘Well, maybe this …’ But you can’t exist in economics that way,” she said. “It’s not a profession that rewards modesty in any way.”
It’s very true, for better or for worse, and it’s also the case that a lack of modesty is usually viewed as less unfavorable in men than in women. (Note, for example, that Betsey’s comment comes directly after a reasonably positive anecdote about Justin being a bit of a brat while in grad school.) I also found it interesting that the couple seemed a bit worried about the effect that their public profile would have on their credibility within academia. I’m tempted to chalk it up to jealousy, but, if this ever turns out to be a valid concern, I have another division of labor to propose. (Hey, Betsey and Justin- call me.)
Also, if Justin (or Betsey- after all, it *is* 2012) ever feels like proposing, here’s a template that would probably go over well:
After all, it’s hard to argue with data.
Update: Matt Yglesias makes a good point about the importance of a “marginal wage” (i.e. not being purely on salary) to the concept of outsourcing. I am now curious as to how many academic economists are in “marginal wage” situations. (Note that understanding marginal wages is important not only for this but for understanding the importance of things like income taxes as well.)