Dear Undercover Economist…

Attended a talk by Tim Hartford, author of the Undercover Economist, as well as an FT column at LSE last week. (I know, I know, I’m way behind on my blogging, but you won’t believe the amount of work they throw at us graduate students. That, and all those parties on weekday nights…)

Anyways, Hartford specializes in using economics to solve everyday problems, or in his own words, “to make people happy”. Sort of like an economist’s version of that Aunt Agony page in one of those trashy teen magazines. Here are just a few of the topics he covered:

On how to be happy
Hartford mentioned that there have been many studies by psychologists on happiness. He cites a typical psychologist’s “happiness equation”, which would go something like: Autonomy + Purpose + Leisure = Happiness. Now this is absolutely ludicrous from an economist’s point of view. This equation has no intercept, no coefficient, no error term, etcetc – it violates the very principles of econometrics.

Of course, we economists are very proud of econometrics. It’s what makes economics a “science”. (Perhaps I don’t entirely agree, plus I know Nassim Nicholas Taleb would have something to say about this, but we’ll leave that for now) Now the basic idea behind econometrics is to take a bunch of data, run a regression (which is just fancy stat-speak for drawing a straight line), and try to figure out the relationships between different sets of data.

Perhaps it’s because economics has been deemed the “dismal science”, but economists, like psychologists, have been very interested in what makes people happy. So they collected a wealth of data on people’s backgrounds and how happy they were, and ran regressions. In a nutshell, they found that the happiest people were:
1) Female.
2) In school. The next happiest people were self-employed.
3) Wealthy and educated. (Surprisingly, money does make you happy)
4) In terms of relationships, from the happiest: Married, single, divorced, separated. Which is interesting because in order to benefit from being happily married, you also have to run the risk of getting divorced and being miserable. Also interestingly, if you’re unhappy with your marriage, you’re better off getting a divorce than merely separating.
5) In terms of number of children, from the happiest: 0, 2, 1, 3. (Hah! I knew kids were bad news. However, if you really MUST procreate, it seems that 2 kids is the optimal solution)

Economists also found that sex was the activity that generated the most fun (big surprise here), yet it was also the activity that people spend the least amount of time on. (tell me about it…) In general, people like being around other people – the one person that people did NOT like spending time with was their boss. But Hartford also wondered how people felt about sex with their boss, which I thought was hilarious.

Of course, as a budding economist and critical thinker (yay liberal arts education!), I need to point out that we can’t accept the results of this study at face value. Firstly, we can’t mistake correlation for causation, ie just because females tend to be happier doesn’t mean that being female causes happiness. Along those lines, it could be quite possible that these supposed factors could be autocorrelated (econ techie jargon that would take too long to explain here). But hey, if being a wealthy and married female PhD student having lots of sex and no boss/children is what it takes to boost the odds of being happy, I guess it can’t hurt to try it out (except maybe the female part).

On dating
Hartford mentioned the practice of speed dating, which provided excellent data on men and women’s romantic preferences because there was every incentive to tell the truth when they wrote down who they wanted to see again. (Men and women would only get each other’s contact information if there was a match. If they liked someone and said that they didn’t want to see them again, they wouldn’t get to see them again. If however they didn’t like someone and lied that they did, they ran the risk of having some stalker calling them every day.)

The one conclusion from the speed dating data was that people adjust their standards depending on the alternatives available. We’d like to think that we have strict standards: if we meet someone who surpasses those standards, we date them, and if they don’t, we don’t date them. However, data from the speed dating experiment showed that regardless of how good-looking the men were, women would always indicate one or two men that they’d like to see again, out of a group of perhaps 20. When there was a high proportion of good-looking men, women adjusted their standards upwards. If the group wasn’t as attractive, women adjusted their standards downwards and still chose one or two men they’d like to see again. Surprisingly, men behave the same way. (No, we aren’t all the sex-crazy bastards you’d like to believe we are – we have standards too)

On food and wine
Apparently you can get away with serving cheap wine at parties, but not with cheap food. Studies showed that bottles with fancy labels significantly increased drinkers’ perceptions of wine. Even the supposed wine “experts” could be fooled. During wine-tasting contests, a typical expert would give different scores to the same wine when it was served in the first, third and fifth glasses that she drank from.

Food, however, is not as easy to get away with. People could tell the difference between duck liver pate and dog food. However, they couldn’t tell the difference between cheap food (like chicken liver) and dog food.

… Trust economists to come up with the idea of giving dog food to people. Perhaps we really do need people like Hartford to prevent the rest of the world from burning us at the stake.

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