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.

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COMMENTS: 99


  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?

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  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?

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  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?

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  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?

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  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?

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  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?

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  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

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  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)?

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  9. Chris Blalock says:

    jimmyc-

    I read a few years ago that the best bet was to buy a car about 3 years old, and hold onto it for 7. This means that you can take advantage of the massive depreciation that happens when a new car is driven off the lot, and you get rid of the car once the repair bills start to rack up, which for most cars tends to be after about 10 years of life. Sorry I don’t remember the source, but it was reputable XD

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  10. GW in IN says:

    This might be a problem that a market can solve, we just don’t know what kind of market or how…

    One of the big challenges in university departments is allocating desk space for graduate students. We have about 75 PhD students and 150 masters students and we’re short about 25 desks (I’m not sure about the exact numbers, but these are within an order of magnitude) in our department.

    Every graduate student thinks he or she deserves a desk. Every funded student at our university pays an unwaived graduate student appointment fee (as opposed to tuition, which is waived if the student is an RA or TA) that covers all sorts of incidentals (which we grad students believe includes desk space).

    Funding for graduate students in our department comes via TA and RA within the department, TA positions from outside of the department (e.g., an engineering student working for the math department teaching algebra), fellowships, and self funding (a few or no PhD students are self funded).

    With the previous head, the general rule was that students funded on fellowship or by the department (TA or RA) were granted desk space first. (I’m a PhD student funded with a TA position in another department that does not have desk space for their external TAs, but I believe that a PhD student should get desk space regardless of any funding situation.)

    Some professors insist that their students be granted desk space regardless of whether or not they need it. Those students might not want to work in the building or they are in their labs 99% of the time. This is inefficient because we have unused or under-used desks, but the “owners” of those desks will not admit that those desks are effectively available. Some professors have more research funds than others, yet we can’t say that money is a measure of research or student “importance,” like in the real world. As it currently stands, the professors have between 2 and 20 working (either funded or unfunded) graduate students and nearly proportional amounts of desk space. But when head count changes as it does every fall, desk allocation is slow to respond.

    So we have an inefficient allocation of resources. Here’s the problem: how do we get desk space, a commodity, to those who actually need it?

    We can’t use money as a currency since the university system has it so that everyone has the same “tax” and professors can’t dip into their funds to pay for space. The department also doesn’t have funds to pay professors (and their students), as an incentive, to give up space that they currently have. It is possible to have students share a desk, but that should be reserved for those who don’t use a desk often. Besides money and desk space, what other forms of currency could be used as incentives to professors and graduate students?

    I still believe that a market solution will be the most efficient and fair (short of sending the department secretary on a thorough investigation into who’s actually using their desks). How can we do it?

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  11. Jim says:

    I am the finance chair and the previous stewardship chair of my church. It is a constant struggle for us to receive enough offering to cover our operational costs. Our congregation is generous with their time, talents and financial support for specific projects, but my team’s issues involves paying our staff of 5 (all are part time folks except for the minister) along with paying our utilities. The mundane bills just aren’t as “glamorous” to support as the more personal ministries.

    Though we’re a non-profit, we don’t have the fund raising tools that other non-profits may have. For example, we’re internally funded through member offering rather than say a disease/cure based non-profit, which gets much of its funds from outsiders. For doctrine reasons, we change charge membership dues, which college alumni associations do. We also don’t publish how much people give, nor do we have giving levels. So there’s no such thing as “The Preacher’s Club” as a university’s alumni society may have “The President’s Club.”

    We’ve quoted scripture. We’ve made special pleas to cover short falls. I feel like every time I step in front of the congregation, I’m asking them for money, and they grab their wallets when the pass me in the halls.

    Do you have any ideas on how to encourage more generous giving given that we can’t use techniques available to other non-profits?

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  12. Brian says:

    Dear UE,

    Traffic is an oft-used example of an economic situation in which there is a demand for something (road space) and the more people who partake, the more difficult they make it on everyone else (including themselves). It’s obvious why this is true. So my question is this: Where in the model of traffic economics is proof of the ubiquitous notion that everyone else on the road (besides yourself) is an idiot/jerk/terrible driver?

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  13. Nicole says:

    #10 GW–
    A prominent economics department facing the same problem asked students which ones would be willing to desk “share” rather than having a permanent desk space. Students who did not opt to share got permanent desk space, students who did opt to share (the ones who only used their desks 1% of the time) allowed their desks to go in a bank of multiple use desks (generally assigned by office, with the number of students with multiple use desks being greater than the number of desks). I think they ended up settling at a ratio of 2 students per 1 share desk. A fellow student, in charge of the desk process, cajoled (not all behavior is rational– perhaps sociologists have a point) known light uses to share until enough desks were opened up to fill that ratio.

    In our department, we have taken this one step further… no desks are permanent, all of them are open to any student at any time, just like a parking lot or set of library carrols. It’s all first come, first serve.

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  14. Johnny E says:

    >My favorite table at the local pub is getting too crowded.

    Like Yogi Berra’s famous quote: “Nobody goes to that restaurant anymore, it’s too crowded.”

    for comment #10: just use some rules of the Commons. If somebody spends most of their time in a lab they probably keep most of their data there so they don’t get assigned a desk in the grad office. If they’re a TA they probbaly need a permanent place to store class notes and meet with their students so they get a desk. Seniority could play a role since they’ll probably spend more time writing. But how about set aside a bunch of unassigned desks first-come first-served and they need to be cleaned off when somebody goes home for the day. There can be lockers or shelves to store papers and books. Most people probably do most of their work in the library or at home anyway.

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  15. Joe D says:

    YodaDude @3: The CC companies have a vested interest in letting your credit rating drop, because they can then justify charging you higher rates. A moral hazard, indeed!

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  16. kb says:

    I recently moved and I don’t want to sit at home all day. How can I get the cable guy to arrive in a shorter time window?

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  17. brian says:

    This may be a question better asked for the physicists here, but at what point, from a gasoline utilization perspective, is it more prudent for one to actually use air conditioning in a car, versus put the windows down? There has to be a point of diminishing returns due to a drag effect. They offer a similar (though not the same) benefits. So, what MPH? Anybody know? Let’s assume a 2010 Toyota Camry, with four windows and a sunroof, all down.

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  18. JER says:

    Dear UE:

    I have a headache. Should I take two aspirin, or simply cut it off?

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  19. RandFan says:

    I have always found the Freakonomics way of seeing the world as refreshing and illuminating. As a clinical psychologist trained in the Cognitive-Behavioral school, I have always thought that economics had much to offer my discipline. In fact, I am more convinced than ever that most of the best psychologists the world has ever known were economists (and with the advent of “behavioral finance” perhaps the converse is true as well). I think it only natural, then, that we begin to see a melding of our two professions. However, I’m not sure that the title “Clinical Freakonomic Psychologist” will fit on my business card.

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  20. Dave says:

    Here’s a problem I’ve been wondering about:

    I am sharing a 2 bedroom, 2 ba. apartment with a roommate. The rooms are unequal; there is a much larger master bedroom with an attached full bathroom and a second bedroom with a full bathroom in the hall.

    The question concerns room assignment and appropriate splitting of rent. Total rent is fixed (say $1300). I would like to come up with a process to determine who gets which bedroom/bathroom and a split of the rent which is appropriate, meaning that

    1. group utility is maximized AND
    2. rent is split “fairly” (perhaps differences between WTP and actual payment should be equalized? open to other possibilities)

    Thanks!

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  21. Brooks says:

    Dear Undercover Economist,

    I have a bachelors degree in economics, graduated in 2006, am 25, and have a job in finance, but also now am currently back in school to get another bachelors degree in Geo-engineering. My immediate family is very supportive, but I am surprised to see most people almost incredulous that I would I would move “laterally” and not go to business school or law school. I as an economist at heart I look at the utility of the situation and see my decision as a no-brainer even without considering my interests. That is more job openings, 1/4 as much money for tuition, similar incomes, ability to work internationally, etc…

    So then why are so many people still pouring money and time into law schools and business schools when the benefits relative to costs in this economic climate seem marginal at best. This leads to the question of why don’t people look at America’s lack of scientists and engineers with numerous job openings and flock to get the education to fill those openings as is happening in nursing.

    I’m happy for the lack of competition, but why don’t people seem to consider many of the economic benefits and costs when they consider further education.

    Thanks,
    Brooks in SLC

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  22. BA says:

    Hi. I have a lot of stuff. I find it’s really hard to throw things out – I usually feel like I’ll eventually need it. From that statement, you can see I overestimate the probability (‘eventually’) and the utility (‘need’). Over time, the cost grows as I accumulate more things; I require more space (financial cost), more upkeep (time cost) and also things are more cluttered (quality cost). Yet, this simply cost-benefit analysis doesn’t persuade me. Suggestions?

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  23. Brent says:

    GW,
    You forget one historical aspect of economics….stealing. If the desk is effectively empty and the owners are rarely there, simply use the desk until someone says something. If you have locked storage you need and the owner has the key then perhaps you can find alternative storage solutions. That may be a bit of a hassle, but probably better than no desk at all. In this case it seems the benifits of stealing a desk would outweigh the risk of being *caught*

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  24. A3k says:

    Dave,

    You and your roommate should undertake a blind auction. Each of you writes down an amount that the larger room is worth to you and that you will agree to pay if you win the auction. Then open the bids and the higher bid wins.

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  25. Traciatim says:

    @Brian #17 – The Mythbusters did this in an episode. Turns out you should roll up and use air at highway speeds and roll down and turn off the air in the city.

    I can’t remember their exact number, and I’m sure it depends on the vehicle . . . but if you’re on a highway, roll up and air is nice and easy to remember.

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  26. Mickey says:

    Apologies for the awkwardness of asking a personal question. But here goes: how do you invest your discretionary (i.e. non-retirement) money? It appears that the rational person would invest in stocks, as historically it has been the best asset class for the past 100 years, and specifically in equity indexes, as the data show that the clear majority of active managers don’t beat their benchmarks after fees. Does your strategy differ from what appears to be the most rational strategy?

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  27. Betty says:

    I checked with the three credit agencies and found out that—in addition to the two main credit cards which we presently use—-my husband and I over the years have collected dozens of credit cards we no longer use but which have not been closed out. Would it have a more positive impact on our credit rating to 1) close all those inactive accounts and reduce the potential amount of credit for which we have been approved or 2) to keep them open even though we haven’t used most for years and years in order to document a high level of “trust” in our credit worth by all these merchants. Most of the cards are individual stores, for the most part, department stores. I’ve never seen this question addressed anywhere. Thanks for your answer.

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  28. mare says:

    Question: My house, which I bought at the height of the boom + while under duress (read: homelessness) has lost $60k in value. I’ve never liked my home nor my neighborhood, and I’m desperate to move, but if I try to sell now (or even in 6 months?) I’ll lose every single penny I put into it, and then some, when you consider taxes, commissions, etc. My thought is to rent it out, go rent an apartment myself, and then sell the house once things get better. What say you? Keep in mind, I hate everything about where I live. I’ve been miserable for 2.5 years. And I don’t want to lose my shirt. Thanks!

    sign me: I hate Real Estate

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  29. Hollins says:

    It doesn’t seem rational for a young man to give his girlfriend an expensive engagement ring when he proposes. My thought is that the most efficient use of that dollar is to invest it into something that a young couple would value most e.g. a down payment on a first house, etc. The diamond market is a monopoly and diamond prices are manipulated so that prices are always high. Can you construct a concise and logical argument that young men across the world can use to *not* buy diamond rings? After all, you already are offering the most valuable thing that you have (your heart) to your soon to be bride. In this age, why is a token like an overpriced rock still needed?

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  30. Jim E. says:

    Can you discuss your views of the costs and benefits of a dowry system in today’s modern society?

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  31. Wes says:

    It seems like speed dating, where your conversations are capped at approx 7 minutes, is the most efficient use of everyone’s time. Any suggestions on how to make this process more efficient?

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  32. Je couPe says:

    As a former restaurant person, I’ve always known that restaurants have major fixed costs, like rent.
    Since they can increase revenue by “turning” tables more often, the completely natural and understandable impulse is to attempt, let’s say, three seatings per table per evening instead of two.
    Equally as obvious and understandable that diners would like to spend as much time as possible.
    Why not vary the menu/prices?
    Not just “early bird specials,” but later evening discounts as well. And a premium percentage for Saturday nights at eight.
    Now, I realize there’s a custom and behavioral side working against this (similar to the animosity to prepaid movie theater seats).
    But – what if you turn it on it’s head – like premium coffee chains from Seattle?
    So, paying the higher price would be a badge of honor, a bragging point.
    “You ate at ____ at eight? And you stayed four hours?? Wow, you must be doing well!” Or, “He’s taking you to ____ on Saturday? Get ready for the ring, honey!”

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  33. Inky says:

    It takes me five minutes to walk from my office to my dentist. Every time I go to the dentist, I have to wait 15-30 minutes before being seen. If I show up 15 minutes after my scheduled appointment time (so that I minimize *my* wait time), the dental office workers yell at me, even though my hygenist still is not ready for me. They also will refuse to call me at my office with a five minute notice, so that I arrive exactly when I am ready to be seen. I understand that many people aren’t punctual, and that this wastes the dentist’s time. But I am religiously punctual. Assuming that’s true, do you have any suggestions that I can offer my dentist to satisfy my goal of minimizing wait time and their goal of not having hygenists waste time waiting for their patients?

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  34. SV says:

    Every time I go to the gym, I face an uncertain decision before I even enter its walls that has really been bothering me. Regardless of the time of day, I am dissatisfied with my decision-making skills regarding parking. Should I initially try the row closest to the gym or should I start a few rows back where there seems to be potential for spots? In addition, should I start a few rows back and work my way closer if denied or further from the gym?

    Over the long run, what do you think is the best way for me to optimize my outcome with regards to time? (I define “time” here as the amount of time it takes from the second my mind starts thinking about the parking lot until I’ve walked inside the gym)

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  35. Jamie says:

    You cannot get the cable guy to arrive in a shorter time window. This is for three reasons. First, the cable company is essentially a monopoly and have no incentive to provide better service. Second, the cable guy does not work directly for the cable company, but is a contractor, and as such has no personal incentive to perform quality service since he is not directly accountable. Finally, as a result of #1 and #2, you have no way to communicate directly with the cable guy, so you cannot work outside the system to bribe him.

    Or you could just ask them to schedule installation on a day when you can have the first appointment.

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  36. CS says:

    What should I do with my life?

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  37. Milt says:

    Here’s an incentive problem: one could say that politicians care *most* about the short term, specifically whether or not they are re-elected. There is less of an incentive to tackle thorny long term issues that would potentially upset voters and put your re-election goal in jeopardy. For example, why would a US Senator rock the boat by proposing a potentially painful revision to Social Security when that Senator will most likely be retired/out of office when the Social Security program finally goes bankrupt (approx 2025, depending on whose projections you believe)? We’ve all learned that it’s best to tackle thorny problems early rather than later. How can society get our elected leaders to focus on the most important problems now, even though it may put the politician’s individual benefit (re-election) at risk?

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  38. Terry M. says:

    I am a lucky guy, as I have good health and a good family. I am also a minimalist. I don’t like receiving gifts b/c I feel bad about people spending money on me for things that I don’t really like. Registries are good, but impractical in that it seems tacky to point people to registry right around my birthday. And my much older relatives (think grandparents) want nothing to do with ecommerce or online registries or gift receipts. Can you propose a relatively low-effort solution to my problem of me not wanting people to waste money on buying presents that I won’t enjoy a lot? To be clear: I do appreciate the thought of peope caring enough to buy gifts. But I already have all that I need in life (health, family, and love).

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  39. Tripple OG Teach says:

    Dear Undercover Economist,

    I’m a teacher abroad. For the most part, I like the international teaching experience, but my wife misses her family and would very much like to return to US.

    Our school, however, takes care of all our expenses, provides my wife part-time work, and thereby allows tremendous savings potential that we would not have in the US. The school also allows my wife the chance to raise our two small children. When should we return to the United States?

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  40. -stuck in grad school says:

    I’m a doctoral student working on my dissertation. I’ve given up on a faculty position, since jobs are now scarce and so is my list of publications. Had I known this was going to be the case in the beginning I wonder whether I would have even decided to enter into grad school. I get the impression that this is pretty common, so I’m wondering, why aren’t there more fall back career options for PhD candidates who fail to get academic jobs? It seems as though many grad students are very intelligent and competent so they pursue PhD’s but one cannot anticipate what the academic job market will look like or how much publication success one will have until he or she is already ABD (or close to it). At that point, it seems that if the academy isn’t calling one might as well jump ship on completing the program for jobs that are less risky than taking another year (or two) to finish one’s dissertation as a starving grad student hoping for higher pay. Shouldn’t this create a market out there to catch this talent (or to lure them away from the academy)? I don’t see it, am I just missing something?

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  41. Curt says:

    Why aren’t women’s shoes more comfortable? I don’t believe that comfort and fashion are mutually exclusive. (You can’t tell convince me that humans can clone a sheep but can’t make a comfortable and fashionable stilleto.)

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  42. Tommy says:

    How do we stop drivers from texting while driving? I feel that it is unrealistic to expect that police officers will pull someone over when they are texting while driving.

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  43. Danny says:

    There is a trend of “redshirting” kids entering kindergarten. Basically parents are increasingly holding back kids that should be entering kindergarten (at 5 years old) so that when their kids do start kindergarten at 6 years of age, they are more developed academically and athletically. What’s the biggest problem with this? I’m thinking that the range of ages in kindergarten may be as high as 16 months (4yr 10mo through 6yr 2mo) and this makes it even harder for a kindergarten teacher to deal with kids at increasingly different stages in development. Assuming redshirting isn’t beneficial for society as a whole, how do we curb this trend?

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  44. J Greene says:

    With the unemployment rate so high, and consumers cutting back on spending, how is it possible the recession has ended?

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  45. jep says:

    I live in suburban NJ and I am 47. Many of the people I know all talk about moving to a less expensive place for retirement. My parents did this by moving from LI NY to just north of Myrtle Beach in NC. They complained about how much, many things cost in NC that they were surprised about. I am much more interested in living in a dynamic urban environment with a lot of cultural activities then moving to the cheap retirement centers of the US. I hope to work full time until I am 70. My retirement might just include a reduction in work hours if that is possible.

    Assuming Manhattan RE prices will adjust after this brief downturn and again begin the rapid march upwards, am I better off squeezing what I can together and buying something I can afford now and renting it out in the mean time with the associated costs for a management agent and on going maintenance costs or waiting until I retire and selling my house & car in NJ at that time and then buying in Manhattan?

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  46. Aurelius says:

    @ #25 raciatim

    This of course is only the engineering aspect. The economist will also point out that you have to factor in how much less cooling utility you get from having the windows down at city speeds, versus the large amount you get at highway speeds.

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  47. keith says:

    Inky – I have your solution. I always get the first slot in a day (at my dentist, 8 AM), and as I make the next appointment at the end of the current one, the calendar is sufficiently free.

    Milt- It’s already done: the new law carries the Senator’s name until the end of time. To Wit: Roth IRA’s, McCain-Feingold election law, Gramm-Rudman tax reform.

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  48. Dr.Bob says:

    I am vexed by those economists who think they understand human behavior and human society when basically all they have to work with is a science of greed. So my question is, how can we tell which economists are worth listening to?

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  49. new yorker says:

    #20 – Dave,

    No suggestion on how to decide who gets what. But on payment, each roommate should pay rent proportionate to the amount of square footage they have for personal space. Common areas are split equally between the 2. So, if your common area is 300sq, the master suite is 500sf, and the spare bedroom and bathroom are 400sf, and the total rent is $1300, the 1 in the suite pays $705, the other pays $595. If nothing else, this is a good place to start the bargaining. You may want to work in a percentage premium for the added privacy and convenience of an ensuite bathroom, which could vary depending on who places more value on that aspect.

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  50. Mitch says:

    People that scalp tickets to many sporting events appear to make a lot of money. It doesn’t appear rational for a football club to allow scalpers to accumulate what appears to be large profits on top of their own products. In a popular markets where every game is sold out, why wouldn’t all teams charge more for their products than they are now? If not capturing 100% of all revenue, then at least capturing more than they currently are capturing. Why aren’t scalpers squeezed out of the market by the teams themselves? Or do scalpers serve some useful purpose to team owners?

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  51. Carla says:

    Dear Undercover Economist,

    Recently my sisters-in-law and I received an e-mail from my mother-in-law that included an attachment about how to strategize back-up daycare plans. She wasn’t offering to be the back-up for my 3-year-old son, who is in daycare a few days a week, as she works full-time. Complicating this is my father-in-law, who occasionally tells me that the best place for a child is with his mother. I noticed that she did not send the e-mail to any of her sons. I’m irked. What is an appropriate response?

    Thanks much,

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  52. Dutch says:

    Do you floss? How often?

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  53. Todd says:

    In my unsubstantiated view, it appears that higher taxes and changing social norms are forcing people to smoke less here in the US. Basically, on the whole, fewer people should be smoking the more expensive and socially unaccepted it becomes. Do you have any macro or micro-level suggestions of _additional_ ways (beyond what we are doing now) that we can further change behavior to nudge people to stop smoking?

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  54. Ricky says:

    The experience of having my drivers license renewed at my local Registry of Motor Vehicles was horrible. I was not able to renew online, so I had to go in. Rude employees, long wait, boorish behavior of fellow “customers.” The RMV is a government-run monopoly. No competition often equals poor service. As an individual, is there anything that I can do that will have a direct impact on improving the RMV experience?

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  55. Anand says:

    #10 GW,

    A solution is an auction based on points allocated to the students on some agreed-upon basis (For example, number of months into the program, with more points for more months. Different points for different programs, MS vs. Ph.D may also be explored) that would provide the winners of the auction the right to use the desks for a specific period (Say a quarter). This way, you have essentially created a currency and given desk space to those who value it most.

    PS: This is how classes are allocated at the Chicago GSB, my alma mater.

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  56. CG says:

    @Brooks #21 – I’ll trade you: I have a mechanical engineering degree and have been working in aerospace structural analysis (am 30 years old), but want to go back to school and get a finance undergrad. I too agree with your cost-benefit analysis of enrolling in law and business (grad) schools, although that analysis could change substantially in the coming years if the economy spurs forward while you’re finishing the degree(s).

    With respect to why Americans aren’t flocking to engineering careers, well, firstly, an engineering degree is very difficult to attain. At the risk of sounding overly simplistic – but with the purpose of offering an alternative viewpoint – , law and business schools require skills that many of us already have naturally, namely, the ability to write, speak and read, and interact with others in group settings, etc. These are all natural skills that to some level we learn growing up, as opposed to difficult, complex math. Advanced mathematics (and physics, both the basics of engineering) education is a completely different animal; other than basic cashier, etc, transactions, most of us don’t use math (and physics) at the level required to complete an engineering degree. So it is, in a way, viewed as “unnatural” for many aspiring students – and if I may add, doesn’t draw as much respect. Look at the compensation of lawyers and MBA grads, particularly finance: much higher than engineers. (Now I know of course advanced finance, in particular financial engineering, requires its fair share of math, but no physics).

    One more quick point about career choice: people may find engineering to be too isolated of a career. At least in finance (capital markets), what’s going on the world is highly relevant to your work each day, whereas with engineering you go to your cubicle and do your calculations without any impetus/requirement to know what’s going on in the world around you. And with nursing, you are constantly interacting with people. These kinds of dynamic careers are more conducive to the personality of many Americans.

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  57. Dan says:

    Dear Undercover Economist,

    I have dated a girl on and off for three years now (two breakups, got back together both times). I can’t tell if we keep getting back together because she’s the right one for me or if I just feel more comfortable being with her than trying to start from scratch with someone else. Please help me out with this. Thanks

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  58. Jack Straw says:

    I hate the U.S. healthcare system, and in particular, I despise the U.S. health insurance cartels. I’d love to relocate to a country that has single payer. What are the economics of such a move? I have a wife and a young son. I have a JD, but work in the technology field. Does emigration from the U.S. to a European country typically result in an improvement in one’s standard of living, or a decline?

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  59. Jeffrey B. says:

    Bernanke says The Recession is over.
    Buffett says No.
    Credit Card Default Rate – Still Rising.

    I believe I already know the answer.
    Credit Card Default Rate … The Recession, Depression-II, ain’t over.
    I’m going to calmly watch, maybe once weekly, and see if I can catch a fish. No, I don’t fancy myself a “J. Paul Getty”, but I might want to emulate his philosophy —The Sincerest Form of Flattery?

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  60. Michael says:

    Dear Undercover Economist,

    I play on a team-handball team where, despite the fact that I’m not bad, I don’t get to play, because there are two guys before me, who are supposed to be better players than me. The problem is that they may not be as good as they seem, but they have been playing for the team for a long time, and I just joined it. So, because of their history with the team, I think that the couch doesn’t have what it takes to put me in the game instead of them. So can you give me any good advise, besides the ones a psychologist could give me?

    Very much appreciated

    PS: Congratulations for the book, I enjoyed every single page.

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  61. michel destrade says:

    Dear UE,

    I enjoy noticing cultural differences in economic behaviors. What puzzles me the most when I visit the US is that there is a choice of small/medium/large cups (priced accordingly) for the drink fountain in fast-food restaurants, even though refills are free!

    Any European I’ve asked has answered that given the choice, they would of course go for the small cup, since the refills are free. This is confirmed by the observation that in all the European countries I’ve visited, there is only one size of cup when the refills are free (for example, in Ikea).

    In America, people do often choose to go for the medium or large size cups, which are more expensive than the small size cups, even though they can refill them as much as they want! When I asked my American friends why they did this, they said it was because they liked to hold a big cup! or that they wanted to take a big cup home. Come on! Does that make any economic sense? It seems nuts to me, and I presume to you too, since you’re from the old continent.

    Can you explain these behaviors from a economics point of view?

    Thanks.

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  62. a Ph.D. who is not in academia says:

    To the Ph.D. candidate: finish the degree.

    1. If you do finish, you will be elegible for an academic position if one does come up.
    2. if an academic position does not come up, you still will have the satisfaction of reaching your goal — getting a Ph.D.
    3. Plenty of employers other than universities hire Ph.D.s. Try industry, government, high schools, or starting your own business. If you got a Ph.D., dammit, you can very well do any of those things.

    and 4. if you did *not* finish the Ph.D. why should I hire you for *any* job?? You don’t finish things!!

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  63. Anne Ku says:

    Dear Stephen and Steven:
    I read your FREAKONOMICS book on my way to Crete, for an unpaid, creative holiday with other arts professionals. It caused me to ponder over the question of the economics of concert giving, art exhibitions etc. In the commercial world, it would seem very costly and risky to fly 4 hours to a Greek island to create something that’s not guaranteed, for possible exhibition in a gallery in Belgium next year. But we took that risk with an open mind.

    I wonder if you’d like to touch upon this topic: the freakonomics of culture and creativity.

    Incidentally, I write a blog about the adventures of my piano guitar duo in the Netherlands and elsewhere – and only tonight managed to download my thoughts about the economics of free concerts at http://wp.me/ptKTf-7Q

    Kind regards,
    Anne

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  64. KocsenCMS says:

    I am a Junior in High School and I am taking the course: AP Microeconomics. In it we have covered and discussed your book, “The Undercover Economist”. Let me say you have great in sites and it took us a week to talk about all your book. Any how, let me tell you what we have been studying so far and tell me if it is worth taking this course even if I am not prioritizing an economy-based career. We learned economics is all about making rational decisions. How scarcity affects everything along with the 10 principles(i.e. People face tradeoffs, people respond to incentives etc.) Efficiency vs. Moral Equity, Role of assumptions, circular flow model, the PPF, Globalization and currently were covering advantages (i.e. absolute advantage),division of labor and maximizing production efficiency to curve the PPF. I wanted to ask from a professional like you, is this all good things we need to know to be a successful economist so far? What tips do you recommend now that you have reached the top?

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  65. Just Wondering says:

    Is there anything stupider than paying the extra money to get a personalized license plate?

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  66. Dave says:

    #49 (new yorker) and #24 (A3k),

    Thanks for your suggestions. I think a blind auction doesn’t work well because there is a dichotomy between my utility and the price. I may think that a $700-$600 split is reasonable, but actually be willing to pay up to $800 for the master bedroom. But I may not think that an $800/$500 split is a reasonable distribution.

    The objective pricing based on square footage and other amenities also doesn’t work that well, because it doesn’t determine who ultimately ends up with the rooms. And bargaining is something that I want to avoid.

    I’m hoping to learn of an elegant economics solution!

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  67. Oceanesque says:

    @ Hollins

    As a woman, I agree with you.

    My preference: go shopping together for one nice simple ring or pendant – not diamonds or gold, rather silver/lapis lazuli/jade or something similarly priced, split the cost of it 50 / 50 between both parties,

    and use the difference to have a nice holiday together enjoying each others company.

    I don’t even like gold or diamonds: why would I want my partner to waste money on them?

    But I do like the idea of a symbolic token, and the symbolism of splitting the costs (demonstrates that you are equal partners in the relationship.)

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  68. Jack says:

    Dear Tim,

    Why is labor cost in US keep rising to ridiculously new highs all the time? Mechanics, locksmiths, plumbers, electricians, all charge high fees. I understand some of them are unionized, but why there aren’t any black market laborers to take advantage of this situation and drive the price down? I mean charging people who locked themselves out $100 just for unlocking the door is ludicrous don’t you think?

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  69. Panem et Circanses says:

    Dear Undercover Economist,

    I posted the following recently: “There is no a priori reason at all for the number of available jobs to be anywhere near the number of available workers, and the problem of how America, Europe, and other developed countries deal with the upcoming gargantuan imbalance will make today’s issues, except possibly health care, look positively puny by comparison.”

    What do you think?

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  70. Panem et Circanses says:

    Dave #20 and #66,

    One person divides up the rooms and rent in what he thinks is a fair combination, and the other chooses which one he wants. Perfect!

    Danny #43,

    The “social redshirting” thing is fascinating to me, and it’s been happening for a while. I have a niece and nephew who were thusly started late – the outcome was one out of two, as the former didn’t like high school and the year almost entirely at age 18 hung heavily on her, but the latter is an athlete, quite large (especially for his grade level), and well positioned to be a major social – and sports – success, helped significantly by his redshirting. I sure would have liked to have had more maturity in high school than I did – perhaps it’s a good idea? Additionally, how about making the boys at each grade level one year older than the girls?

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  71. Eric says:

    Two amusing things in these questions:

    – Someone who doesn’t want to waste any time but wants cable TV installed.

    Someone who is going to the gym to exercise and is annoyed by walking from a further parking space!

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  72. Ann says:

    I am getting more and more neurotic about:

    1. People who forward emails from me without deleting my contact information, and
    2. People who send me email without using the BCC option.

    To me, it’s just common sense, rather safe than sorry, but, am I right? Am I obsessing over this, or is it reasonably dangerous to have your name and email address floating around the planet for eternity?

    How can I tell if a person does, in fact, forward an email from me without deleting my name and address?

    Last question: it is possible to tell if a sent email has been opened by the recipient. Is there a special software setting or what?

    Many, many thanks for your response.

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  73. MS says:

    #29
    Proposing with an expensive ring signals that the guy has enough resouces to buy something of no practical utility, thus he has enough resources to support his future family. The expensiveness of the ring also signals the seriousness of the proposal.

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  74. after hubris says:

    My question:

    Why do people believe ‘economics’ claim the term is a synonym for ‘common sense’? I can understand the incentives behind economists making outsized claims for their profession. Yet acquiescing reifies the profession in a dangerous way; the same way that has led to manifold problems in the real economy of jobs and livelihoods.

    I, for one, hope that these silly books and authors disappear from airport shelves as a result of the pulling back of the curtain.

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  75. Fregosi says:

    I shop for groceries half the time. My wife shops for groceries othe other half the time i.e. every other week. (Our schedules make this every-other-time shopping arrangement most efficient.) I like a certain type of beer (let’s call it Brand X) and would be happy drinking that all of the time. Even though she knows this, she insists on buying me other types of beer during her shopping weeks, “just to try something new.” I tell her that it took me 20 years to find my favorite beer. My search is over. Yet she still buys me beers that I enjoy less. I don’t think that there’s anything else involved e.g. she’s opposed to buying Brand X for some reason like a boycott b/c of corporate practices, etc. How can I convincer her to stop trying to push new beers on me? I like my Brand X!

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  76. Hollins says:

    #73
    Hi MS, Isn’t buying something of little/low practical utility the exact defintion of extremely wastefulness? In today’s modern world, why do we need to waste money? Can’t we evolve and move away from this and be more efficient with the use of our resources (money)? Or have diamond marketers done such a good job convincing us that we “need” diamond rings that we can’t escape this?

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  77. Mariano says:

    I am the manager of a grocery store. Though the trend of bringing in your own cloth/reusable grocery bag is continuing to grow, the clear majority of people request paper and/or plastic bags that I’m pretty sure they all recycle. We give a five cent per bag refund for every reusable bag you use, but this still isn’t nudging people enough (in my view) away from paper/plastic bags. Beyond financial carrots, what else can we do to increase the use of reusable shopping bags while NOT alienating, antogonizing, etc my valued customers?

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  78. Andrew says:

    Dear Economist,

    I am a recent college graduate who is working in Washington, DC. I am finding out more and more by the day that I really do not want to pursue a career in my current field. My problem is that I am not really qualified for anything else. My question is should I pursue unpaid work in a field that interests me or should I continue down my current path in hopes that I begin to enjoy my work?

    Yours,
    Andrew, Washington, DC

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  79. T says:

    Have you used stickk.com for something else besides doing 20 pushups a day?

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  80. KocsenCMS says:

    This is quite a dilemma that I have related to economics. It pertains to the ever-betraying feeling; Love. Ever since January, a friend of mine has been trying to get involved with this girl. They both instant message until like 2 a.m. and they really like each other. However, in about June, he fell for her but she still just ‘liked him’ Now after 9 months, they have acknowledged that the decision to keep on trying is worth it.
    I wanted to know what you think about this issue.

    Here is what i told him:
    Jaime, you have been trying with this girl for a long time now. My suggestion is as follows. Look at ALL that you have given up for her (oportunity cost) and see if in the end, the retribution that you get (pleasure) is worth it. Also compare yourself to her and see if she is giving up at least an equal amount, in average, of what you are giving up. They “broke up yesterday”

    Dear Undercover Economist, what would you have done?!

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  81. Panem et Circanses says:

    #77 Mariano,

    The answer to the bag problem is right here in Korea! Stores here charge for plastic bags, which are larger and much stronger than the puny US ones, so no double and triple bagging is needed – I have carried them for an hour’s walk and then reused them for garbage many times. The charges for the bags are nominal, usually 50 won (4 cents) or even 20 won (less than 2 cents), but it’s enough to make people think about whether they really need them. Some big-box stores here also have surplus cardboard boxes customers can use instead, right outside the checkout lines and free.

    I would bet the charges cut the number of plastic bags given out in half. Why not in the US? As for customer resistance, do you really think people would balk at paying four cents for a GOOD plastic bag?

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  82. Jack says:

    #75:

    1) Find something that your wife sticks to, and deliberately bring her “new stuff”, esp. those cheapos with low quality that she’s unlikely to enjoy;

    2) Depending on how many different kinds of beers in the grocery store, write down all brands (other than X) she’s brought home. If she brings something you’ve already “tried” in the past, tell her “this ain’t new, I told you I hate it”. Eventually she’ll run out of “new” brands.

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  83. GiulioCMS says:

    Dear Undercover Economist:

    Ever since I have being studying economics, I have learned that creative destruction and the survival of the fittest in the market is one of the defining principles of capitalism.

    However, every time I read/watch the news and learn that the American government has performed another bail-out, I am astounded by the disregard of this principle, which I have been learning since day 1 in economics. The so-called global “Captain Capitalism” (U.S.) is defying the very system it has been been preaching for the most part of its modern history.

    So my question is this, kind sir:

    What future does capitalism as a system if this essential part of its definition is disregarded, and people are allowed to fail?

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  84. DCer says:

    Whenever I take my daily bus commute from my apartment near Maryland (but inside DC), I often encounter traffic with people driving from the suburbs to downtown DC to go to work, even though driving in one’s car hurts the environment with CO2 emissions, you can’t read while you’re driving (as you can in a bus or train) and there is great public transportation available from the suburbs to downtown. Are these people who drive to work irrational and/or uncaring about the world and the impact of their collective decisions? Thanks.

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  85. Ann says:

    TO # 78, Andrew in DC,

    Why not get a graduate degree, Masters, PhD, or even a JD, in something you are interested in while you are still in your job? Or other skill training not in grad school. Doesn’t matter, you don’t want to go through life in a career you hate. Start slow, part-time, to be sure you love the subject, and go from there. Remember what Freud said: the two most important things in life are love and work.

    Yes, its going to take you a few more years to get your degree, but those years are going to go by anyway, whether you are working for your graduate degree or not.

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  86. Will says:

    Dear Undercover Economist:

    I’m currently attending a highly ranked university and I’m majoring in “Electrical Engineering and Computer Science”.

    Should I consider a second major? If so, management or economics assuming I equally prefer both?

    Thank you,
    Will

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  87. Jeff P says:

    re Jim #11, whose church can raise money for special projects more easily than general expenses: I’ve seen this solved. All earmarked revenue was taxed 10%, with the tax going to the general fund.

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  88. frankenduf says:

    should i pick up the penny or not?

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  89. Dan says:

    #72 – You’ve got issues. If you are refering to a work environment, you should gladly have your contact information shared so people who need to speak with you can contact you providing a more efficient work place.

    Also, never use BCC. It’s a trap waiting to happen everytime.

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  90. EPB says:

    Dear Economist,

    The inane chatter of my office cubemates is becoming unbearable. They work in another group, but I feel like I know their health problems, personal drama and children better than I know my own.

    I have tried politely asking them to change their behavior without lasting success. Soon I fear that I will have to resort to artillery, which would be bad since most of the projectiles on my desk contain important statistics. What is the optimal solution to this problem?

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  91. kb says:

    Poster 29.

    The engagement ring. I’m not particularly enamored of wearing rings. However, if I were to get engaged and not have one I know that every girl and some guys I meet will look at me with pity. I need the diamond to be just large enough to avoid the pity look. If it’s too small or nonexistant I will have to endure pity looks and give explanations the rest of my life. If I smile and say I didn’t want one anyway people will think I am weird. This is a very high cost to the woman. How can a woman make a man understand this cost?

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  92. Hollins says:

    reply to #91: I am looking forward to the day when the majority of the people in this world can be confident enough in themselves to not buy engagement rings (or at least not have the impact of others determine whether or not to buy one). This goes for both men and women. Full disclosure: I bought a ring for my wife. Didn’t want to to bown to societal pressures, but I caved. And let’s remember that diamond engagement ring buying is a relatively new “tradiation” (only a few decades old here in the US). The notion of diamond engagement rings was created/heavily influenced by marketers. It was *not* an organic tradition w/ any long history. Alright, no further comments from me.

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  93. J2 says:

    I have not consistently paid more than 10c/mile for a car. Buy one for say $3,000 drive for 2 or 3 years and skip the comprehensive insurance (liability only).

    I’ve found that most people I talk to have no idea what the cost per mile of their vehicle is, even as they struggle with $700 or more in car payments on 2 vehicles in their driveway.

    I knew one guy who thought about buying a junker to drive when he exceeded the mileage limits on his leased vehicle. I explained that the 20c/mile extra was cheap, in that he was paying around 50c/mile for the first 15,000 miles (total payments divided by miles-until-trigger). Suddenly his 20c/mile seemed cheap by comparison and he continued driving his leased car.

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  94. beentheredonethat says:

    Fregosi –

    Without going into all the details that are nobody else’s business, and hopefully I’m wrong, but maybe your wife figures you’ll drink less of all those odd-ball brands?

    I know because it sounds like something my ex might have tried, although it wouldn’t have worked back then(unfortunately, that’s why she’s an ex.)

    Good luck…

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  95. Adam Kennedy says:

    I’m 30 and when I buy furniture I’m trying to think more about long term ownership than I used to. I’ve recently bought a great (and amazingly solid) wooden dining room table. I love it, and as a bonus it only cost $AU500.

    Since the optional “matching” chairs were wicker monstrosities, I’ve been looking for some matching and equally solid chairs to go with the table. I finally found two sets that go with the table perfectly, but they are around $AU600… per chair! I’d need six for a set.

    While I technically (just) have the money, it seems insane to spend so much on chairs. I understand that it’s worth paying a lot for good shoes, and for a good bed, but is it worth it for other furniture?

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  96. MariferCMS says:

    Dear Economist:
    I was reading through some articles about credit regulations the other day, and couldn’t help but wonder; what are the implications of a lowering of the credit regulations in a banking system of a country?

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  97. MariferCMS says:

    Dear Economist:
    The other day, I was having a huge argument with my little sister about who deserved the bigger room in our new house. It turns out, that I’ll be going off to college in about a year and she will continue to live here for about 7-8 years. Who should get the room? Should it be me because I’ll be leaving soon, or her because she’ll be staying in it longer?

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  98. PG says:

    #91 – just get a good quality/size ring in cubic zirconia. Most people will think it’s real diamond, and you will have saved $$$ too.

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  99. Greta Hoostal says:

    #75/Fregosi, assuming she drinks beer herself, maybe she could buy both Brand X and sampler packs of beer (if available, so you can get through the offerings faster-or you could stock up double on your week and she could buy sampler packs on her week), then you drink a Brand X while she drinks something else, and you taste whatever she has, to be polite to her, but you still have a whole Brand X and she can be happy that you’ve tried a new beer. You’ll probably want to keep a record, like Jack said, maybe where she can see it to use it as a checklist. Personally, I like trying new beers, even though Trappist ales are generally my favorite and there are (I think) only 20 in the world, mainly out of curiosity, and also because it IS possible I will eventually find something I like even better. Possibly you will, but this way I think you could still feel done searching. If she doesn’t drink beer, maybe you should just hold a party or take it to other people’s parties. I think you’d become very popular!

    #84/DCer, people are generally selfish so that probably has something to do with it, also, most people, whose interests are unfortunately generally unintellectual, would rather listen to their radios, CD players, and MP3 players, than read. But public transportation accommodations are generally at least a little dirty, and, being public, any person, no matter how loud, rude, smelly, or filthy, is allowed on. These things repel most people who can afford to travel otherwise. Maybe bringing back first-class seating is at least part of the answer.

    #97/MariferCMS, if you are going to live in a dorm room shared with a roommate (cramped quarters, definitely), then you should certainly get the bigger room at home first. Then, when you go to college, switch rooms with your sister. When you come back home for vacations, your room situation won’t be much of an improvement, but you’ll probably be working and going out with friends most of the time anyway. And it will be more important to your little sister to have the bigger room then since she will be in it much more. Once you’re a sophomore, you’ll probably have the option of a single dorm room (mine was about as big as an isolation prison cell, but that was about 15 years ago and they’re probably bigger now-maybe, get a loft). Eventually, you’ll probably get to move off campus and have much better options.

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