DISCOVER YOUR INNER ECONOMIST
By Tyler Cowen
Dutton. 245 pp. $25.95
"We are all Keynesians now," President Nixon is said to have declared in 1971.
His words affirmed the influence of John Maynard Keynes, the famed British economist who decades earlier had argued that smart governments could fine-tune a nation's economy and avert major slumps by manipulating taxes and spending.
These days, though, big-think economic theories feel a little passé. Why worry about inflation or unemployment or budget deficits when you can use economics to figure out why hotel mini-bars are so expensive? Or why people pay for gym memberships they rarely use? Or which first name will maximize your newborn's lifetime earnings?
We may have been Keynesians once, but times change. We are all Freakonomists now.
Steven D. Levitt and Stephen J. Dubner's 2005 bestseller, Freakonomics, captivated readers by using economics to demystify the little conundrums of daily life. I'd never wondered what schoolteachers and sumo wrestlers have in common, or why drug dealers live with their moms, but somehow Levitt and Dubner made me care.
It hardly took an economist -- freakish or otherwise -- to recognize a new market. A glut of similar books soon emerged, such as Tim Harford's The Undercover Economist, Robert H. Frank's The Economic Naturalist and, now, Tyler Cowen's Discover Your Inner Economist.
The books have much in common, including food imagery on their covers. Freakonomics shows an apple cut open to reveal an orange inside. (Message? Expect the unexpected!) Discover Your Inner Economist dangles a carrot. (Incentives are everything!) And The Economic Naturalist puts a pie chart next to an actual slice of pie. (Theory becomes practice!)
But open the covers, and the differences are notable. Inner Economist may not be the best organized or most gracefully written, but it could prove the most useful of the lot, especially if you share the author's interests. An economics professor at George Mason University, Cowen has written extensively on art and ethnic dining, and his chapters exploring those topics are particularly engaging.
The key to tapping your Inner Economist, Cowen explains, is the ability to identify people's true incentives, which are usually more than money. Suppose you want your daughter to help out around the house by washing dishes. Should you pay her?