Economists Do It With Models

Warning: “graphic” content…

Bookmark and Share
When An Economist Attempts Home Improvements…

May 26th, 2015 · 2 Comments
Decision Making · Econ 101

Dear Econodiary,

I’m very sorry to have failed you- I know economists have a lot of good points to make, but sometimes those points are difficult to implement, usually for reasons having to do with stubbornness and irrationality. But allow me to explain, since I swear things made sense at the time.

I have a property in Harvard Square that I rent out (a far less economically questionable matter than the scenario at hand, I swear), and, in the course of replacing one of the tenants, I had some plumbing work done on one of the bathrooms. My conversation with Mike the plumber (in between songs on his Sarah McLachlan Pandora station, which was hilarious) went something like this:

Plumber: Um, can you come look at something for a second?
Me: That’s never good…what’s up?
Plumber: Were you aware that you have a hole in your shower?
Me: A what now? No, I think I would have mentioned it. Loudly.
Plumber: Here. *points to spot where tile and backing fell into internal shower structure*
Me: *expletives* Of course I would learn this after renting the room to a new tenant and being committed to having the place in working order.
Plumber: Well, you could get plastic sheeting and duct tape and cover the wall until somebody can redo the shower, but the shower’s going to be out of commission for a while once the tile guy comes in.
Me: Yeah….no.

In fairness, I did try to have the work done and had a couple of contractors/tile people in to look at the situation, but most of them either wanted to redo the whole bathroom (Wouldn’t you rather have the sink over here?) or couldn’t schedule the work for two months. As such, I contend that I am a victim of market failure rather than an economic moron. In any case, off to the Internet I went.

Believe me, I do understand the principles of comparative advantage and gains from trade, and I know that I am better off hiring people to do things for me when I can earn a higher wage than I would be paying the worker. (More on this in a second.) Nonetheless, my logic was the following, which I thought was flawless: Since my spring semester had just ended, the opportunity cost of my time was pretty low…and even if I had other work to do, I just just fix the shower in my free time, again when opportunity cost was low.

So how did this go wrong? First, I obviously underestimated how long everything would take and how much everything would suck. How are we in a world where we can send a man to the moon, I can be typing this on m tablet and beaming it to the Internet from a moving train, and somehow the only reliable way for me to establish a shower wall is to nail cement board to wood, use what is essentially mud to affix ceramic to said cement, and then cover the whole thing with sand and wipe it off (and then use something called an impregnator to seal it? Do you seriously expect me to not giggle at that?)? It’s barbaric- and don’t even get me started on acrylic and other pre-mixed, not going to turn into a bucket full of rock before you wall is done products, since they all say that they aren’t appropriate for high-water areas. You know what doesn’t seem appropriate for high-water areas? Mud and Sand. But I digress.

More interestingly, I did in fact get smacked in the face by bad assumptions about comparative advantage and opportunity cost. See, when the shower project took over my life, I did end up missing work and putting off other projects, so the “I’ll just do this in my free time” logic fell apart. Furthermore, economists are good at talking about wages as the opportunity cost of leisure, but we don’t focus as much on the “the value of leisure is the opportunity cost of work” part…and let me tell you, I would have paid a pretty penny to sit on the couch and watch My Cat From Hell rather than fight with the shower for an 11th consecutive hour. As much as we don’t like to admit it to ourselves, work tends to suck more as we do more of it, or, equivalently, the value of leisure increased as leisure becomes more scarce. In terms of comparative advantage, the econ 101 textbooks have it right when they take into account differences in productivity as a starting point for identifying opportunity cost, whereas my dumb self was all like “well, it’d basically cost me 40 hours worth of my wages (or more, after taxes) to have a tile person work on this for 40 hours, so my project makes sense even if I end up not doing 40 hours of work and spending the time on the shower instead.” On this point, I apologize to all of the professional tile installers out there for insulting your skills, since I obviously cannot do what you can do in 40 hours.

In case you’re curious, I do once again have a functional shower (thanks mostly to YouTube), but I now happily acknowledge that it would have made more sense to hire someone to do pretty much what I did (but probably better) and get my other work done rather than think that I can be a superhero and not have 12-hour days of manual labor impact my other work productivity. In the future, I vow to properly acknowledge the value of leisure and properly calculate opportunity cost.


P.S. I tried to put the leisure principle into practice and took a cab to the train station rather than walking because it was hot out…there was ridiculous traffic and I almost missed my train. Thanks, world.

Tags: Decision Making · Econ 101

2 responses so far ↓

  • 1 LB // May 26, 2015 at 11:53 pm

    see also: Sunk Cost and admitting defeat 🙂

  • 2 Andrew // Jun 24, 2015 at 11:17 pm

    Thanks a lot for your guide, it helped me so much 😀

Leave a Comment