Economists Do It With Models

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Meet The World’s Cutest Economists…

February 20th, 2012 · 10 Comments
Random Links · Uncategorizable

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.)

Tags: Random Links · Uncategorizable

10 responses so far ↓

  • 1 Lucas M. Engelhardt // Feb 20, 2012 at 4:12 pm

    Oh, Drake… assuming that those traits were independent… Even if we assume that gender, age, and speaking English well are independent of the other four traits, it’s still perfectly possible that there’s a very strong correlation between “bringing total joy to my life”, “keeping me laughing”, “being gorgeous inside and out”, and “loving a huge geek, like the one making this”. In fact, if the correlation is strong enough (for example if “bringing total joy to my life” implies the other three traits, which seems reasonable…), then it might be that Drake has 13,400 potential “soulmates”.

    Though, on the other hand, I kind of doubt that Drake has met 4% of the world. I’m pretty sure I’ve not met 280 million people… But, I might just not get out as much as Drake does…

    (Though my line of reasoning reminds me very much of this…

  • 2 econgirl // Feb 20, 2012 at 5:11 pm

    HAHAHAHAHA…I had similar mathematical objections when I first read the infographic. We should start a support group.

  • 3 Mr. Violet (@EuropeanViolet) // Feb 20, 2012 at 5:12 pm

    It seems dress and hairdo changed… have you met some Italian dude?

  • 4 Punditus Maximus // Feb 20, 2012 at 5:12 pm

    I just read your article at HuffPo. How did you possibly write an entire article on Social Security without mentioning . . . insurance?

  • 5 econgirl // Feb 20, 2012 at 5:15 pm

    @ Mr. Violet: Those videos are very old, I just haven’t gotten around to updating them yet. But if you want to introduce me to an Italian dude, that’s cool too.

  • 6 Mr. Violet (@EuropeanViolet) // Feb 20, 2012 at 5:41 pm

    Well, I am not allowed to give direct introductions at present and 6,392 km would be too demanding for European austerity trends, so the best I can do is to advice you to try a violet dress not too much demanding but not too modest either, and… couple it with a pair of amethysts as earrings in order to give light to your face and… (forgive my lame English) also a bit less heavy eye-holes make-up, definitely your face needs light not dark, that’s for making your soul more vibrant and your voice more incisive, a very light tone of lilac-color could be ok, but I would have to check the effect before speaking up for it definitively 🙂
    are you satisfied?

  • 7 Erick // Feb 22, 2012 at 11:27 pm

    Though someone else may have already said this, I’m led to the conclusion that this just means that it’s more practical for him to settle. How unromantic am I?

    Listen to the TAL episode that obviously inspired this creation:

  • 8 vgupta // Mar 3, 2012 at 12:55 pm

    so even if we assume Drake’s numbers are correct and there is independence, that would still mean there are 11.52 English speaking “soulmates” out there for Drake, he just hasn’t met them. Better hope that dating/personality matching algorithm’s don’t get better.

    You also better hope that your partner doesn’t learn chinese, or that number would double to 23., or if translation technology improved, 99 soulmates from across the world.

    Not really the thousands you get from a lack of independence, but still a far way from the idea of “the one”

  • 9 The Economics of Threesomes - Political Forum // Mar 11, 2012 at 10:44 pm

    […] about sex then perhaps you might want to read something else instead….like perhaps this post on the world’s cutest economists. For as long as I can remember I’ve been a huge fan of hypothetical situations. My favorite […]

  • 10 Xerographica // Mar 12, 2012 at 12:01 pm

    Re “Proof That We Are Soulmates”

    Here’s how I considered the numbers back in college. Let’s say you had the opportunity to talk on the phone with 10 random guys. It stands to reason that there would be 1 guy in that group that you would derive greater utility talking to than the other 9. We’ll call him Bob.

    So you eliminated those 9 guys and include Bob in a a sample grouping of 100 completely new random guys. You talk to all those 100 guys on the phone and select the one guy that you derive greater utility talking to than the other 99. Chances are this guy wouldn’t be Bob. We’ll call this new guy Frank.

    So you eliminated 99 guys and include Frank in a sample grouping of 1000 completely new random guys…yadda yadda yadda…you end up with a new guy…Henry.

    If you graphed the utility of Bob, Frank and Henry…what would the curve look like? How much utility would you derive from a one in a 1,000,000 guy? How much utility would you derive from a one in a 100,000,000 guy?

    If you could stop time…then by a process of elimination you could find your “one”. We’ll call him John. Can you imagine how well you’d hit it off with John? The minor detail is that you’ve only talked to him on the phone so you have no idea what he looks like. This is another graph you could create… superficiality vs personality.

    Back in college I remember hitting it off with a girl from Taiwan. One day I discovered that she didn’t shave her armpits. It was a deal breaker. To this day that ranks as my most regrettable deal breaker.

    In any case, people are more likely to win the lottery than find their “one”…so it makes me laugh when so many people say they’ve found their soulmates.

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