DISCOVER YOUR INNER ECONOMIST: USE INCENTIVES TO FALL IN LOVE, SURVIVE YOUR NEXT MEETING, AND MOTIVATE YOUR DENTIST
By Tyler Cowen
Dutton Adult, $25.95, 256 pages
REVIEWED BY JEREMY LOTT
’’Markets in everything’’ is a perennial obsession of George Mason University economist Tyler Cowen, as readers of his popular Web site, Marginal Revolution, well know. Posts with that heading are usually short, informative and eye-popping.
Did you know that there are firms in China whose job it is to sell you fake receipts that look just like the real thing? That a company in the UK markets extra-sticky, spray-on mud you can use on your license plates to beat the speed cameras? That you can buy a demilitarized missile silo on eBay? If you’re a regular reader of Mr. Cowen’s site, you just might.
Many economists regard this as a good thing — full stop. If you have a willing buyer and a willing seller, the exchange makes the world a better place, whether the commodity is a stock, a candy bar, a used car, a baseball card or sex.
Mr. Cowen isn’t always sure about that. The subtitle of his book, ’’Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist,’’ is somewhat tongue-in-cheek. While Mr. Cowen believes economic literacy can help make your life better, he believes this for a surprising reason. By studying incentives, he says, you can better learn about things that money can’t buy.
For instance, Mr. Cowen’s wife cleans the family living room. Mr. Cowen benefits from that but, he writes, ’’I would be crazy to start paying her for that.’’ Why? Because she ’’already has the intrinsic motivation to do the job, and she earns a good living as a lawyer. She doesn’t need money to support her cleaning habit.’’ Instead, he should thank her and perhaps offer to cook dinner.
Mr. Cowen thinks markets are generally good but can be overdone. He writes in the introduction to one section, ’’This is not much of a ’how-to’ chapter. This is an ’oh, please, let’s not’ chapter.’’ He faults even those markets that encourage good behavior because they can replace inner motivations with outside incentives. In the long run, Mr. Cowen believes that what we really need to become better people is greater strength of will.
’’Discover Your Inner Economist’’ combines at least three books into one. The first is competent, the second frustrating, the third likely to make many of Mr. Cowen’s fellow dismal scientists spit glass. But the prose makes the going easier. Mr. Cowen has a way of explaining difficult material to lay readers without a hint of condescension.
Book number one is an addition to the pop-econ genre (e.g., ’’Freakonomics,’’ ’’Freedomnomics,’’ ’’The Undercover Economist’’). Mr. Cowen sheds light on many practical problems by peering at them through the strange lens of an economist.
Mr. Cowen uses a study of 150,000 unpaid parking tickets issued to U.N. officials between 1997 and 2002 to examine corruption, respect for the rule of law and anti-Americanism. The diplomats from Sweden, Canada, Ireland, the Netherlands and the U.K. all paid their parking tickets, though they could have got away with tearing them up. How about Kuwaiti diplomats? They rang up ’’more than 246 unpaid parking tickets per diplomat.’’
The next several gross violators shouldn’t surprise: Egypt, Chad, Sudan, Bulgaria, Mozambique, Albania. Mr. Cowen explains that ’’the higher a country ranks on indexes of domestic corruption, the higher the number of unpaid New York City Parking tickets.’’ Further number crunching also reveals a strong correlation between the number of unpaid parking tickets and the home country’s feelings about America. Statistically, the diplomats prove ’’more willing to behave irresponsibly when they have contempt for the country they live in.’’
The second book is an attempt at economics as self-help. Mr. Cowen has some good suggestions, along with several questionable and irritating ones. He gives readers tips on how to become a ’’cultural billionaire’’ even if you aren’t well off. You can visit museums and force yourself to pay attention by asking, if you could buy one painting in the room, which one would it be? That strategy might work well for Mr. Cowen, an art collector, but I’ve always preferred the go-with-a-cute-girl-who-cares-about-this-stuff approach.
Likewise, his advice on great dining might be useful to teetotaling foodies with a jones for the ultimate ethnic dining experience (Mr. Cowen’s online ethnic dining guide is a great resource for the D.C. area). But people who place some value on familiarity and great booze are likely to be disappointed. The suggestion to limit your tips makes great sense — if you’re not planning to return to that particular restaurant.
The third book is Mr. Cowen’s take on economics itself, which he argues is more an applied art or craft — like welding, say — than hard science. Economics does teach some important truths and helps to clarify many things, but Mr. Cowen counsels against economics-as-everything schools of thinking. He goes as far as to argue that studying economics can make people selfish and rude. I’m guessing it’s a good thing he’s tenured.
Mr. Cowen thinks that economics too often assumes something like perfect rationality on the part of decision makers. However, ’’Many of the limitations of markets are rooted in the imperfections of the human mind,’’ and those are ’’imperfections’’ that we can, at best, acknowledge and try to work around. That’s not a plea for government intervention; the same limitations apply to the brains of bureaucrats.
Most authors are poor judges of their own work, but Mr. Cowen recently wrote on his blog that he thought of ’’Discover Your Inner Economist’’ as an exercise in secular Thomism, and that seems about right. Why? Because it suggests that ’’people are capable of simply doing the right thing, although we should not necessarily expect them to do the right thing.’’ Also, ’’not everything can be bought and sold, yet markets have a very important role in human life.’’
Maybe this book should have been titled ’’Discover Your Inner Economist, and Introduce Him to Your Conscience.’’
Jeremy Lott, author of ’’In Defense of Hypocrisy,’’ is writing a book about the vice presidents.
Please read our comment policy before commenting.