19 Aug 2007, ST
In his new book, Professor Tyler Cowen explains how to use economic thinking to better your life in small ways
NEW YORK - Economics Professor Tyler Cowen delights in using his expertise to get the best out of life. In his new book, he says anyone can.
From choosing a restaurant to persuading a child to wash the dishes, Discover Your Inner Economist follows in the footsteps of the best-selling Freakonomics, by showing how to put economic thinking to work in almost every area of life.
'Small improvements in understanding can bring a much better use of incentives, leading to much better decisions and much better lives,' writes Cowen, who teaches at George Mason University in Fairfax, Virginia.
In a restaurant, he will order the most elaborate dishes rather than plainer fare on the assumption that, having invested in going out, there's no point eating food that you can cook at home.
By the same token, he will order several dishes - more than he can eat - to sample as much as possible and maximize his return on the cost of the outing. What he doesn't finish, he takes home.
For good value, he will seek restaurants in less-expensive parts of town because, he says, those in high-rent areas are either for the masses or very expensive.
'There are better food buys in East Hollywood than West Hollywood, where the movie stars live,' he writes.
He sees dating as a good place to apply the economic principle of signalling - the idea that, for example, people study for an MBA degree at Harvard more for what it says about them than for what they learn.
Playing hard to get fails to separate the winners from the losers, he concludes. In economic-speak, it doesn't satisfy a separating equilibrium - because it's too easy for losers to mimic the behaviour of winners.
Not surprisingly, he says that in marriage and family life, financial incentives are either too hard to get right or counterproductive, as he found when he tried paying his stepdaughter to wash the dishes.
Similarly, he cites a day-care centre that started fining parents for picking up their children late and found this made the problem worse. The fines allowed parents to make a financial calculation about what they had previously seen as a question of courtesy or parental responsibility.
Cowen, who discusses many of these issues on his blog (www.marginalrevolution.com), also finds that museums are run for their donors, not for the public.
He also contends that the book market is not about reading or enjoyment - a big proportion of books are bought but unread.
His own strategy when reading a book is to dip in, sample a few chapters, read from back to front, or simply discard the book if there is a better one to be read. If he starts 10 books, he says, he may finish just one.
'Why not be brutal about this?' he writes.
'Is this the best possible book I can be reading right now, of all the books in the world? For me at least, the answer is usually (but not always) no.'
Reuters
Discover Your Inner Economist (US$17.13 or S$26) is available on www.amazon.com
In his new book, Professor Tyler Cowen explains how to use economic thinking to better your life in small ways
NEW YORK - Economics Professor Tyler Cowen delights in using his expertise to get the best out of life. In his new book, he says anyone can.
From choosing a restaurant to persuading a child to wash the dishes, Discover Your Inner Economist follows in the footsteps of the best-selling Freakonomics, by showing how to put economic thinking to work in almost every area of life.
'Small improvements in understanding can bring a much better use of incentives, leading to much better decisions and much better lives,' writes Cowen, who teaches at George Mason University in Fairfax, Virginia.
In a restaurant, he will order the most elaborate dishes rather than plainer fare on the assumption that, having invested in going out, there's no point eating food that you can cook at home.
By the same token, he will order several dishes - more than he can eat - to sample as much as possible and maximize his return on the cost of the outing. What he doesn't finish, he takes home.
For good value, he will seek restaurants in less-expensive parts of town because, he says, those in high-rent areas are either for the masses or very expensive.
'There are better food buys in East Hollywood than West Hollywood, where the movie stars live,' he writes.
He sees dating as a good place to apply the economic principle of signalling - the idea that, for example, people study for an MBA degree at Harvard more for what it says about them than for what they learn.
Playing hard to get fails to separate the winners from the losers, he concludes. In economic-speak, it doesn't satisfy a separating equilibrium - because it's too easy for losers to mimic the behaviour of winners.
Not surprisingly, he says that in marriage and family life, financial incentives are either too hard to get right or counterproductive, as he found when he tried paying his stepdaughter to wash the dishes.
Similarly, he cites a day-care centre that started fining parents for picking up their children late and found this made the problem worse. The fines allowed parents to make a financial calculation about what they had previously seen as a question of courtesy or parental responsibility.
Cowen, who discusses many of these issues on his blog (www.marginalrevolution.com), also finds that museums are run for their donors, not for the public.
He also contends that the book market is not about reading or enjoyment - a big proportion of books are bought but unread.
His own strategy when reading a book is to dip in, sample a few chapters, read from back to front, or simply discard the book if there is a better one to be read. If he starts 10 books, he says, he may finish just one.
'Why not be brutal about this?' he writes.
'Is this the best possible book I can be reading right now, of all the books in the world? For me at least, the answer is usually (but not always) no.'
Reuters
Discover Your Inner Economist (US$17.13 or S$26) is available on www.amazon.com
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