Reading About Kids and Economics
A while back, I wrote about the Game Theorist blog, in which my friend Joshua Gans writes about his adventures as an economist-parent (or equally, as a parent-economist). Each role seems to teach him something about the other, and his passion for both is infectious.
He has collected much of this material in his new book Parentonomics, which has recently received international distribution. Finally, those of us living beyond Gans’s native Australia can enjoy his insights and irreverent asides.
On a related note, Tim Harford reminds me that his latest book, The Logic of Life, is now available in paperback. It’s a highly readable account of just how far rational choice theory can take you in understanding everyday life. Of course, I’m biased, as the third chapter reviews much of my own research on marriage and the family. But there’s a heckuva lot more here. Dubner loved it too.
Harford has also been writing/blogging up a storm lately, and I couldn’t resist quoting his suggestion of how to explain the credit crunch to a 5 year old:
Once upon a time, there was a blameless girl called Consumerella, who didn’t have enough money to buy all the lovely things she wanted. She went to her Fairy Godmother, who called a man called Rumpelstiltskin who lived on Wall Street and claimed to be able to spin straw into gold. Rumpelstiltskin sent the Fairy Godmother the recipe for this magic spell. It was written in tiny, tiny writing, so she did not read it, but hoped the Sorcerers’ Exchange Commission had checked it.
The Fairy Godmother carried away armfuls of glistening straw-derivative at a bargain price. Emboldened by the deal, she lent Consumerella –-who had a big party to go to -– 125 percent of the money she needed. Consumerella bought a bling-bedizened gown, a palace, and a Mercedes, and spent the rest on champagne. The first payment was due at midnight.
At midnight, Consumerella missed the first payment on her loan. (The result of overindulgence, although some blamed the pronouncements of the Toastmaster, a man called Peston.) Consumerella’s credit rating turned into a pumpkin and Rumpelstiltskin’s spell was broken. He and the Fairy Godmother discovered that their vaults were not full of gold, but ordinary straw.
All seemed lost until Santa Claus and his helpers, men with implausible fairytale names such as Darling and Bernanke, began handing out presents. It was only in January that Consumerella’s credit-card statement arrived and she discovered that Santa Claus had paid for the gifts by taking out a loan in her name. They all lived miserably ever after. The end.