July 17, 2006

Know yourself, understand economics

Linnaeus wrote "Know yourself" in his description of Homo sapiens. As a biologist I tell you that understanding economics can help a lot to know yourself. Here is a brilliant example by Jacqueline Passey, inspired by poor Greg Mankiw.

The moralist in me believes that smart people should not be trying to dupe stupid people out of their money but should instead be using their talents to make the world a better place.
Well, Greg, what does the economist in you (is he still there? is there room for him? it seems crowded in there) have to say about people responding to incentives? Terrence easily makes 10-20 times more per hour as a professional gambler than he could in a regular job. I don't make nearly as much as he does but I still make at least twice as much per hour gambling than I could in a regular job. This is in addition to all the less tangible benefits like choosing our own schedules, only having to work part time, being able to live where we want and travel frequently, not having bosses to answer to or obnoxious coworkers or customers to deal with, etc. The market clearly values us more as gamblers than it does as anything else. If you really think we should be in more "socially valuable" careers, please be pointing to all these great jobs that pay as well as gambling and offer as many benefits as gambling that we are qualified for. I don't think that any exist.

1 comment:

  1. Passey has given us an excellent example on why environmental issues should be intervened by goverments. If gambling with environmental risk gives a higher profits in the short term for the individual -and especially if other, not him, suffer the negative externalities- he will play regardless of the social and ecological consequences.