Tim Harford, author of The Undercover Economist, was interviewed on Planet Money last week. Both, Planet Money and Tim Harford, form a perfect pair. Planet Money has a blogs (and podcasts) for making the economy simpler for the common man and Tim Harford writes about economics in layman’s language. Tim also writes a column, Dear Economist, for Financial Times.
The interview starts with extramarital affairs. After the uproar against South Carolina Governor Mark Sanford for flying to Argentina to meet his mistress, this topic is contemporary. But it is strange to pose this question to an economist! Tim is unperturbed and quotes a fellow economist Ray Fair and his paper, “A Theory of Extramarital Affairs”. In this paper, Ray explains the rationale behind decision on having an affair. It solely depends on the amount of time you have! In order to explain this further, Tim argues it would have been difficult for Mark Sanford to clear his schedules and make time for his Argentinean mistress!
In addition to time, Tim also brings in the topic of preferences. For any economist, there work on preferences. But all the preferences may be satisfied because of the constraints. So you choose the preferences that will maximize your happiness. This is how you rationalize your choices. So, having an affair also depends on how happy you are with that person.
In the show, the hosts also read out three questions that appeared on Tim’s column, Dear Economist.
The first question was from a person who was dating using a popular site. This person wanted to pick and choose from multiple dates before zeroing in on his ideal choice. Tim explains the supplier theory. This is an ideal situation when you have two or more suppliers. You keep all of them interested in order to identify the best!
The second question was from a lady who suspects her husband having an affair. Tim agrees the situation is bad and friends keep mum about this in spite of having knowledge of a liaison. So, he explains information markets to ferret out the information. In order to determine the value of a product or performance of the company, the companies like Google, HP set up a information market. The company places a bond or a bet about a decision on the information market and the employees vote anonymously on this. Depending on the performance of the bond or bet, the company can make an informed decision and the employees are not worried about telling the bad news. So, Tim asks the lady to set up a information market and asks her friends to buy a bond for/against her husband getting caught in an affair. Depending on the what the friends vote, the lady can make an informed decision. The friends will vote for getting caught if he is really having an affair!
The third question was from an unattractive young man. He asks, “Why am I unappealing as a singleton and hot property when with a stunning girlfriend?”.
Picture Courtesy: www.timharford.com, Fran Monks(photographer)Tags: Audios,An Economist Views the World,Tim Harford,The Undercover Economist,Planet Money,Economics,Dear Economist,Mark Sanford,Ray Fair