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Donald Boudreaux

Donald J. Boudreaux: Jokes about economics reflect myths, misunderstanding

| Tuesday, Feb. 6, 2018, 9:00 p.m.
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Here's an old joke: Economists are like accountants, except with less personality. Ha ha.

Every profession is the subject of tired jokes. Perhaps I'm overly sensitive, but to me, an unusually large number of jokes and self-righteous quips seem to target economists. Nearly all those jokes reflect misunderstanding of economics.

One of the most famous involves an economist, a physicist and a chemist stranded on a desert island with only canned beans to eat. Trouble is, they have no can opener. The physicist proposes opening the cans by catapulting them hard onto a tree stump. “But that'll cause the beans to spill out,” the others observe. The chemist suggests using acid to eat through the metal. “But the acid will mix with the beans, making them inedible,” the others note. Finally, the economist says, “I've got an ideal solution: Assume that we have a can opener!” Hardy har har.

The implication is that economists' conclusions about reality spring from absurdly unrealistic assumptions, rather than from realistic assessments of facts. And being so ill-begotten, these conclusions can be ignored. While some economists have, unfortunately, indulged in far-too-fanciful theorizing, the typical competent economist does not simply assume conclusions that he or she draws.

Every analyst's work unavoidably includes assumptions. The challenge is to make only useful assumptions — such as assuming away irrelevant features of reality to focus on relevant features. An example from physics is helpful.

When predicting a golf ball's path, the physicist assumes away the irrelevant possibility that a bird will swallow the ball while it's aloft. Good economists' assumptions are of this sort, not the sort that makes economic analysis a joking matter. When asked, for example, to predict the effect of eliminating minimum wages on teen employment, I answer that teen employment will rise. Implicitly, I assume away many unlikely possibilities, such as teens suddenly becoming chronically lazy.

Anyone who looks carefully will discover that all great economists, from Adam Smith on, offered genuinely useful and important analyses of reality.

Among the most poorly targeted quips is this gibe: “Economists know the price of everything and the value of nothing.” Although it emits a scent of profundity, this quip reveals complete ignorance of economics. True, we economists are proud of our ability to explain both what causes prices to be what they are and what roles prices play. But we also understand that many costs and benefits don't come in the form of prices.

Unlike many politicians, economists understand, for instance, that a job's value to a worker often is more than the wage. That value often includes “non-price” amenities such as job experience, workplace safety and the job's prestige. Therefore, jobs with many such amenities generally pay less. Economists understand what many non-economists don't: These lower wages reflect things that workers value.

So, I urge you: Please do not assume that what you hear about economists is true.

Donald J. Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.

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