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?

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.


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?


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?


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?


Joe D

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?


John S.

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?


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?

Robert Sharpe

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


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)?

Chris Blalock


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

GW in IN

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?



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?



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?


#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.


Johnny E

>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.

Joe D

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!


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?


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.


Dear UE:

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


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.


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)