Lovenomics Post author By Philip Lane Post date February 12, 2012 The NYT profiles Betsey Stevenson and Justin Wolfers here. Categories In Uncategorized 18 Comments on Lovenomics ← February 23rd: CSO Balance of Payments Seminar → Whelan: We should sign up to fiscal treaty despite the serious flaws 18 replies on “Lovenomics” “If you’re relatively affluent, as they are, they recommend outsourcing child care and domestic chores so you can spend your time on more leisure or economically worthwhile pursuits. That’s what they do.” Oh dear God. Yes, if you can afford it you can entirely miss out on your own children’s childhood – certainly that’s the efficient thing to do: and who would want to miss a well earned summer break for two in the Hamptons? Perhaps it would be more efficient if the West simply had some sort of baby-slave empire located elsewhere that would free up plenty of valuable work-life time. @ Philip Lane Have you just posted this in a mischievious attempt to ruin the post-Sunday dinner mood? More choice quotes: “Economics has clearly been good to them. Their home in Philadelphia, in a historic building that once housed an African-American publishing house, [progress eh, can’t beat it.] features soaring ceilings and custom iron work. A glass-top Noguchi coffee table is in the living room, next to a white Jonathan Adler casting couch covered in a sheepskin throw from Costco. In the attic is a home gym with a treadmill, a boxing bag, a recumbent bicycle and a flat-screen television. “Matilda’s nanny has a master’s degree in education and draws an annual salary of $50,000. (She works Monday to Friday, 8 a.m. to 7 p.m.) The couple also have someone [ poss explanaition: “we don’t know their name – we never asked”] who drives them back and forth to Princeton and who cooks, does the laundry and snakes the drains when they are clogged.” What a shame the lovely family photo leaves out the nanny. Mind you, Matilda looks a bit worried, probably wondering who the hell the people holding her are. Who do they pay to look after Max the dog I wonder? … “I was the most self important 22-year-old you ever met,” Mr. Wolfers said, [before adding; “Now I’m 39 – and still at the top.] …. Still, Ms. Stevenson said her self-esteem took a beating at Harvard. “My confidence had been so eroded that I was the one saying, ‘Well, maybe this …’ But you can’t exist in economics that way,” she said. “It’s not a profession that rewards modesty in any way.” Arrogance pays I see – tip there for you prof. Lane. … Mr. Wolfers said that although he has an emotional side, “as an economist I’ve learned to squash it like hell.” Cracking. Just cracking. …. “So while it could appear that increases in happiness flattened out after incomes reached a certain point, “the richer you are, the more dollars it takes to give you the same increase in well-being,” Ms. Stevenson said. “To get a 10 percent increase in income, you need more dollars than when you are poor.” ” Moral, the wealthy really, really need a lot more money just to get a little bit happier – and that explains everything. Sorry for banging on – but let’s have a quick glance at how that whole rational economic decision making thing is going over in Greece. “As Greece stares into the abyss, Europe must choose” “As I write, the Greek parliament is preparing to vote on the bond swap agreed with the country’s private creditors and on the new deal with the EU and the IMF, which would lend the country €130bn in exchange for cuts that slice the last little bits of flesh from the economy – including a 22% reduction in the minimum wage and 150,000 public sector job losses by 2016. Without the deal, Greece will default by March; with it, the country will sink into a still deeper depression, with no end in sight.” … “All eyes are fixed on Athens, but the way out of the crisis requires a choice about what kind of Europe we want. The one we have now, with its deep structural inequalities and its rigid adherence to a failed economic ideology, protects neither democracy nor human rights. Stiff-necked and punitive, it prefers to eat its children.” http://www.guardian.co.uk/commentisfree/2012/feb/12/euro-crisis-stake-greece-identity-europe Their approving mention of ‘Freakonomics’ prompts me to refer readers of this Blog (not for the first time) to an expose on this stuff: http://www.americanscientist.org/issues/pub/freakonomics-what-went-wrong/1 @ Gavin “If you’re relatively affluent, as they are, they recommend outsourcing child care and domestic chores so you can spend your time on more leisure or economically worthwhile pursuits. That’s what they do.” As someone who has been misquoted and misinterpreted on various occasions by journalists, I’d note that this doesn’t seem to be a direct quote. I don’t know Justin and Betsey from Adam but I’d bet they love little Matilda as much as the rest of us love our kids. I suspect they were merely telling the journalist that they believe in paying for a nanny to allow them both to work. It would hardly make them History’s Greatest Monsters. @ All FYI. http://www.guardian.co.uk/science/2012/feb/12/black-scholes-equation-credit-crunch John Looby has an equally scary article (The Insider) in today’s SBP. ….and the banksters have taken over Greece! Not a good plan. Sad day And one final thought – they’re not burning buildings in Reykjavik tonight. Two roads – which one would you rather be on? Be afraid – be very afraid. @DOCM Strongly recommend this read for a riveting account of how Black Scholes and the EMH blew up http://www.amazon.com/Call-Judgment-Sensible-Finance-Dynamic/dp/0199756074 But you won’t find the Justins or Betseys talking about that. No birthday cake for the kid and taxes ‘mostly’ keep the couple from marrying! There can be a downside to this type of self-promotion. The more interesting item in the NYT was on the Catholic bishops and birth control. The arrogance of preaching about ‘liberty’ when they had to be shamed into taking action on the abuse of children. More interesting still is an interview by Francis Fukuyama with Peter Thiel, an early backer of Facebook who is an unconventional venture capitalist. http://www.the-american-interest.com/article.cfm?piece=1187 @Gavin Kostick, You seem to be letting this ‘colour piece’ bother you a bit too much. If, by virtue of intelligence and effort (and I suspect some good fortune), these folks are able to live their lives in such a way as to allow them to add something to the sum total of human knowledge, then I see a net gain. But I would worry a tad about their daughter along the lines of Stephen Spender’s “My parents kept me from children who were rough…” Oh, and as a diversion from this slightly saccharine stuff, I’ve just noticed that Karl Whelan is advising us to hold our noses and swallow the fiscal compact: http://www.irishtimes.com/newspaper/opinion/2012/0213/1224311683084.html They’ve crossed the line , these two. They’re no longer your average professional couple with one child and a dog. By virtue of letting a journalist into their home (input), they’ve achieved the big splash in the NYT (output) that transforms them into ‘celebrities’. Presumably some bright young publishing agent advises them that this is the way to boost sales of their forthcoming book – so interesting that I’ve already forgotten, five minutes after reading this article, what it was they said it was about – or persuade a publisher that they’re worth a multiple book contract. Now that would finance a few holidays in the Hamptons or wherever it is they prefer to hang out. She likes books, he likes kindle; so there’ll be no issues about the publishing format either. Quids in, all round; especially since there’s clearly an emerging market in these times of broke and bust for some snake oil economists’ take on ‘How to become a happier, richer person through freakenomics’ to replace all that by now remaindered, and discredited, self help gibberish penned by psychologists and ecologists and every other sort of ‘ogist’ that used top the Xmas sales list in the boom era. The cost which these economists have not factored into this worthy endeavour is the loss of their privacy, which is now gone, forever, as exemplified by the fact that a few thousand miles across the Atlantic total strangers on an economics blog are gossiping about what they may feed the dog. And if they want the advice of an old mother – which I am sure they don’t – they should watch out too for that ‘helicopter parent’ tendency and expose their daughter to as varied a diet as possible, including sweets and sugar and red and white meats, if they want her to grow up to have a healthy relationship with food and diminish the risk of eating disorders later in life. @ Karl Whelan Well, the fawning tone of the article with its uncritical admiration for a very particular kind of material and social success may not have done them any favours. And certainly it isn’t their fault that this popped up as images of Athens burning was being played across the news stations. But the attempt to present what appears as a playful and unexceptional view of the role of economics, when it covers a highly charged and ideological position remains problematic for me. @ Paul Hunt The Karl Whelan column is much more important and pace some of our recent discussions, it would be good to move on. But, I’m biting my lip here: “the sum total of human knowledge” indeed. “But the attempt to present what appears as a playful and unexceptional view of the role of economics, when it covers a highly charged and ideological position remains problematic for me” Agreed. Interestingly (and in recognition of this) the University of Amsterdam where I work they have just introduced two compulsary modules for econometric students (correctly dont call it economics here anymore). These are: 1. Philosophy of Science (which includes everything from Popper, Kuhn to Lakatos). The purpose of this modules is to make explicit the extreme limitations of econometrics for analysing the world in real-empirical-historical time. The course concludes with a defence of a multi-method approach to economics. 2. Post-Keynesian Macro-Economics (which includes everything from Keynes, Joan Robinson, Kalecki and Minsky). The purpose is to illustrate that economic orthodoxy have long been challenged, that economic systems are not ergodic and stable over time. Furthermore , it conludes with a recognition that logical-deductive models that form the basis of equillibrium theory are very useful but empirically false (most of the time). This reflects a willingness of the economics department at UVA to be self reflexive. It is also absolutely neccessary for the next generation of economists that they get this broader training (what is still missing is the study on the different performance effect different variants of capitalism i.e. institutional economics). I am curious if Irelands economics departments have made similar reforms to reflect the impact of the great recession? @ Paul Quigley Thanks for the tip. I noted the following in the article by Karl Whelan; “At least those who inflicted damage on the world economy by sticking to the Gold Standard in the 1930s could claim to have been following prevailing economic thinking. The politicians who have designed these rules will have no such defence”. Maybe the economic thinking is just as wrong as it was in the 1930s and the politicians are taking the right decision on this occasion! Whatever about the argument for flexibility to adopt counter-cyclical measures, which seems to me to have considerable validity, that in relation to structural deficits seems to ignore the reality of the situation in which developed Western economies find themselves. It can make no sense to continue to live beyond one’s means. The fact that is difficult to measure the extent to which one is doing so is no argument for ignoring the fact. @ Aidan R An example that should be more widely followed but adding a module on international law. @ All As the SBP is now subscription only, I can only quote from the article by John Looby. “Having cut the price of short-term money to almost zero and bought substantial quantities of treasury bonds, the Federal Reserve is now all but impotent in determining the money supply. Many believe that, contrary to the views of Milton Friedman and his most famous student, Ben Bernanke, the continuing lack of demand for credit renders the Fed effectively powerless to reverse meaning fully the deleveraging forces dominating the economy or the current level of bod yields”. Although I have no deep understanding of the technicalities, the “many” would seem to me to be right in their view! If the ship rights itself, it ill have little to do with the instructions from the bridge. @Gavin Kostick But the attempt to present what appears as a playful and unexceptional view of the role of economics, when it covers a highly charged and ideological position remains problematic for me. Exactly so, the piece sounds like an attempt to pass off subliminal neoclassical propaganda (sorry Mr Whelan) as a lifestyle piece at a time when its proponents are intellectually on the ropes (though sadly still politically influential) and widely reviled for their moral emptiness. The work of this particular power couple on the Easterlin Paradox seems to paint them as a kind of anti Richard Wilkinson and Kate Pickett (of The Spirit Level fame). However I will never know the full depths of the piece, anything or anyone that mentions the dire Freakonomics in an uncritical way detracts from the sum total of human knowledge. When you couple that with a favourable mention from the loathsome Greg Mankiw you have some people who are going to make you either very annoyed or more self-satisfiedly sociopathic depending on your level of insight and whether you were cared for by a nanny while your wealthy parents maximized their utility elsewhere. Yuck. Comments are closed.