Thinking Like an Economist

DismalScience

I recently read two things related to economics: some economics blogs (particularly Marginal Revolution), and a list of economics jokes.

For someone like myself who doesn’t see everything in economic terms, the world of those who do is very bizarre. For instance, when we think about wealth inequality and how to reduce it, we inevitably come up with familiar concepts like increasing tax rates for the rich, capping their income, regulating investments, and so on. But the first article I stumbled upon, “Two Surefire Solutions to Inequality,” provided two strange solutions: increasing the fertility rate among the rich, and decreasing the fertility rate among the rich.

The tl;dr arguments are as follows: Increasing the fertility rate among the rich means that large wealthy families will be forced to divide their wealth every generation, thus lowering individual wealth slowly over time (of course, assortative mating slows this down).

On the other hand, decreasing the fertility rate among the rich means that the rich class will slowly disappear over time.

This seems really strange. Neither solution obviously solves any problem, and they might make make things worse in the short term. In addition, any government mandate on this would be hard to define and would be met by resentment on both sides in either situation. In other words, these solutions are absurd.

But in another sense, they are not absurd at all. They both make perfect logical sense. Assumptions were made, but not much more so than any other economic model. So why are these solutions so strange? Is it just social norms holding us back? A fear of anything resembling eugenics? A desire to not mess with peoples’ rights?

For a change of pace, here are some funny economics jokes, from the link given at the beginning:

An economist is someone who has had a human being described to him, but has never actually seen one.

When doctors make mistakes, at least they kill their patients. When economists make mistakes, they merely ruin them.

One night a policeman saw a macroeconomist looking for something by a lightpole. He asked him if he had lost something there. The economist said, “I lost my keys over in the alley.” The policeman asked him why he was looking by the lightpole. The economist responded, “It’s a lot easier to look over here.”

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