Market Power

Musings by an academic economist on the power of markets and the power over markets.

Tuesday, November 09, 2004

This is Economics

The fellas at Marginal Revolution mentioned a paper by Deidre McCloskey entitled The Secret Sins of Economics. I haven’t read through the whole thing but have skimmed over some of it. I like the passage on Gary Becker’s answer to why people have children:

“…because children are durable goods. They are expensive to produce and maintain, over along period of time, like a house. They yield returns over a long future, like a car. They have a poor second-hand market, like a refrigerator. They act as a store of value against future disasters, like pawnable gold or your diamond ring. …the number of children that people have is a matter of cost and benefit, just like the purchase of a house or car or refrigerator or diamond. A prudent parent decides whether to invest in many children or few, extensively or intensively, early or late, just like investing in a durable good.”

Yup. I find myself thinking that way sometimes.

This is how heavy metal musicians must have seen themselves after first seeing “This is Spinal Tap”.

Now I need to go and play with my durable goods.