Saturday, December 27, 2014

Christmas Econ

It's a Wonderful Life - Econ Stories

Deck the Halls with Macro-Follies

Market behavior really is motivated largely by the same desire that transformed Scrooge on Christmas morning—the desire to help those who mean the most to us—and that motivation, when directed by the mundane morality of markets, results in our also serving the interests of multitudes of people we will never know. By emphasizing that a good economy, like a good life, is best achieved by the mundane morality of markets coupled with recognition of the motivational importance of magnanimous morality, economists would make a case for the morality of markets that has some of the same emotional appeal as does the transformation of Scrooge in Christmas Carol.

And the economists, oh, the economists, how they counted, and still count. Take up any copy of The American Economic Review to hand (surely you subscribe?) and open it at random. To perhaps Joel Waldfogel, "The Deadweight Loss of Christmas" (no kidding: December 1993; Waldfogel is arguing that since a gift is not chosen by the recipient it is not worth what the giver spent, which leads to a loss compared with merely sending cash. Who could not love such a science of Prudence?