Bring Your Questions for the Undercover Economist

DESCRIPTIONPhoto: Fran Monks Tim Harford

If the financial crisis has proven anything, it’s that you should ignore the advice of most economists.

Most economists, that is.

And then there’s Tim Harford, who traffics in an entirely different sort of advice-giving: the old-fashioned, Dear Abby kind, which he dispenses regularly in the Financial Times. In his book-writing, Harford is best known as the Undercover Economist; at the FT, he goes by Dear Economist. His latest book combines the two: Dear Undercover Economist.

He explains why an economist is actually a perfect choice to advise people on their daily travails: “The economist’s instinct to strip away social niceties and turn messy problems into simple abstractions produces just the kind of no-nonsense counsel we expect from any good advice column.”

Here’s one example from the new book:

Dear Economist,

My favorite table at the local pub is getting too crowded. A few of us sit down for a few drinks. Then, as strangers come and join us one by one, there’s hardly any room to bend your elbow. Why does this happen, and what can we do about it?

Your Sincerely,
George Pollitt, Buckinghamshire, UK

Dear Mr. Pollitt,

The solution is simplicity itself — and it is also a tradition that I am surprised you are not upholding. Each new companion should pay an entry fee in compensation to the others — traditionally, one pint per person. This elegant solution ensures that incumbent drinkers are compensated for giving up space. It also ensures that the more crowded the table is, the less tempting it is to join it.

Your round,
The Undercover Economist

And another:

Dear Economist,
I’m looking for “the one.” Is he out there?

Yours,
Ruth, Barcelona, Spain

Dear Ruth,

Marriage offers economies of scale in production. … husband and wife can each specialize in different skills. … I fail to see why you cannot realize these economies of scale with almost anyone. … The real question, then, is whether you can stand the person you marry enough to enjoy these efficiencies. [The economists Michele Belot and Marco Francesconi] examined data from a speed dating company … The more intriguing finding happened when pickings were scarce. Women “ticked” about 10 percent of men as worthy of further investigation, regardless of the quality of a particular crop. My conclusion: even when there is little to be lost from maintaining standards, people are very quick to lower them. My advice: do likewise.

Yours pragmatically,
The Undercover Economist

Harford (who, we should say, is a longtime friend of Freakonomics) has offered to field “Dear Economist” questions from our readers. I suspect you are better-positioned to deluge him with challenging queries than the readers of any other blog in the universe. So have your way with him and we’ll post his answers in short course.

TAGS: ,

COMMENTS: 99

View All Comments »
  1. John says:

    My wife and I started dating when we were 18 and were still young when we made the decision to get married. We’re in our young 30s now. I told my wife that she should feel happy by how fondly I view her, as deciding to get married at a young age means that my opportunity cost of getting married was high, as I had a lot of years ahead of me. She said that’s the second most unromantic thing that I’ve ever said to her. Any suggestions on how I can reword this specific attempt of flattering her?

    Thumb up 0 Thumb down 0
  2. Lenny says:

    I have a mid-life crisis project that I would like to undertake. My estimated price tag of this project is $6k. My wife says that it is too expensive, as she feels that it is quite silly. My response is: “well, it’s cheaper than a convertible car, or a mistress.” Obviously, I haven’t done a good job laying out the true cost/value of spending this $6k on my project. How else can I present this?

    Thumb up 0 Thumb down 0
  3. YodaDude says:

    At what point does a person curse their credit score and simply refuse to pay anything more? Surely there is some sort of science to this?

    Suffice it to say that due to the economy, I can no longer afford my credit card payments (admittedly run up with unwise spending–I’ll blame my wife, if you don’t mind). To try to preserve our good credit score, we tried to settle (half of the cash we had–our IRA!), since we knew that if things continue, we will default. No deal.

    We found that UNLESS we are behind–already hurting our credit score–they won’t even consider settling, apparently. But that raises the question of whether, once you have ruined your credit score by failing to pay, you should then pay for the privilege of doing so by settling the debt.

    My thinking is if they are going to force me to damage my credit before they deal, then I’ll just keep all my money, thank you.

    Surely credit card companies should look at this differently, should they not?

    Thumb up 0 Thumb down 0
  4. Joe D says:

    Dear U.E.,

    I wonder if you can explain the Pledge Week effect (public radio or television). I have suffered through a number of pledge drives where the dollar goal is known in advance and the station assures us pledging will end as soon as the cumulative goal is reached. Yet they not infrequently go into overtime.

    Obviously there are public media supporters who, if they had only pledged at the beginning of the week, could have spared themselves (and the rest of us) *days* of interruptions asking for money. Do they *intend* to pledge each day, but simply forget, or are they really waiting for someone else to take up their slack, hoping the goal can be met without them?

    This has always seemed to me to be an obvious counterexample to the myth of the rational actor in the marketplace. If you’re willing to give the money at all, why aren’t you willing to give earlier to spare yourself some pain?

    Thumb up 0 Thumb down 0
  5. John S. says:

    Dear Tim:

    I enjoy your “More or Less” podcast from the BBC, but it always seem to be on hiatus. Six shows are produced, and then there’s a three-month holiday.

    On the other hand Russ Roberts of George Mason University — who produces Econtalk, my other favorite podcast — has not missed a weekly episode in several years. To my knowledge Russ is not paid to produce these shows.

    What explains the difference?

    Thumb up 0 Thumb down 0
  6. jimmyc says:

    Dear U.E.-

    Should one buy, buy new, or lease a car?
    There are various costs associated with each (buy it a year old, slightly used; buy totally new incurring a loan with interest; lease for a limited time but have little in the way of maintenance). Certainly this varies by type of car, interest rates, particular deals. So how does one figure the opportunity cost for these various deals?

    Thumb up 0 Thumb down 0
  7. Robert Sharpe says:

    Dear Undercover Economist,

    I’ve been having conversations with a financial advisor and he’s given me some intriguing advice in regards to my retirement savings. He contends since I’m so far from retirement (I’m 31) and do not own a home that I should forgo saving for retirement (I presently save at the 10% level) and buy a home sooner rather than later (for the tax benefits). I tend to agree.

    My question for you is what should my ratio of savings be moving forward until I buy property as owning a home is something I want to do? I don’t want to not save any money (his suggestion) for retirement but I do want to make a prudent decision.

    Thanks for your time!
    Robert Sharpe

    Thumb up 0 Thumb down 0
  8. Matt says:

    Dear Economist,

    If a reasonably intelligent young person today is looking to make as big a contribution to society as possible, is he or she better off making a small impact on something very large (like federal policy) or picking one particular problem and spending a lifetime attacking it (like curing a disease or improving public education in a country or even city)?

    Thumb up 0 Thumb down 0