Calculating Paradise

The price is reasonable, said XOJet chief executive Paul Touw, because the teak-and-glass villas here cost $7 million to $20 million. "These people could probably afford it," Touw said.

With the profusion of private jets, Friedberg told Touw, "Turks and Caicos competes in the same market as Maryland's Eastern Shore." Either way, it's about three hours to the beach. On Grace Bay, the average price of properties rose 27 percent in three years, according to one study.

The real estate rush, Friedberg said, is being fed by "trickle-down cachet." As with trickle-down economics -- which posits that tax cuts for the wealthy indirectly enrich others -- beach houses for the stars indirectly glamorize others. First the Rolling Stones' Keith Richards vacationed here, Friedberg said, "next come the podiatrists and tax attorneys."

The trend started in the late '90s, when Melissa Ong went diving off Parrot Cay, a 1,000-acre island near Providenciales. Ong thought her mother, Singapore style icon Christina Ong, would like the turquoise water.

"So they bought the island," said Jeff Morgan, hotel manager of the Parrot Cay resort, driving Friedberg in a golf cart. Ong turned the island into one of the Caribbean's most exclusive destinations. Jodie Foster tried to reserve a house recently, Morgan said, but none were available.

The villas come with furniture, a private pool and a butler imported from Asia. Friedberg started to ask Morgan, "Did wages fall from the increase . . ."

Morgan broke in: "The butler takes care of any needs the guests have, short of going to the bathroom with them."

Friedberg rode past Donna Karan's estate, which has a separate yoga pavilion. She saw Bruce Willis's compound, where the five-bedroom house rents to tourists for $10,000 a night and a three-bedroom bungalow ($4,800 a night) was used by Jennifer Garner and Ben Affleck for their wedding. Hotel guests often request to stay at Keith Richards's house, Morgan said, because he has a 60-inch TV.

Next door, at Christie Brinkley's ($5,100 a night), Friedberg admired the St. Ives Apricot Scrub and Pantene shampoo in Brinkley's shower. "She uses the same cheap stuff I buy from CVS."

Friedberg dropped into the chair in Brinkley's whitewashed bedroom and asked, "When you're faced with people who have infinite money, how do you set a price?"

"These people have people working for them who examine every penny," Morgan said. "They'll dispute irrigation bills. We bill them for tiki fuel, and they're like, 'Why are you billing us for that?' "

"But what's the market structure?" Friedberg inquired.

And on went the professor, for five sugar-sanded, icing-blue-sky days, until she was back on the runway, on the plane, with the engines vibrating her armrest.

Friedberg looked outside, down at the pale blue water. "Why would people purposefully leave? Why should universities be in freezing, miserable places instead of here, now that there's the Internet?"

But the economist knew why. She sighed and said, barely audible over the revving engines:

"Agglomeration effects."