Economic explanations for the way things are

Glenn Reynolds:

Economists are everywhere these days. Ever since Steven Levitt published "Freak-onomics," in 2005, books explaining everyday pheno-mena in economic terms have been flying off the bestseller shelves and - proving that economists respond rationally to incentives - inspiring imitators.

Tim Harford struck early with his celebrated "The Undercover Economist," and he has now followed up with "The Logic of Life: The Rational Economics of an Irrational World," which should do well for Harford's personal economy, too. But why, exactly, are books like this so popular? And do they really deliver useful insights?

At one level, the appeal is obvious: The world is a complex place, and any approach that lets us lay down some sort of a grid that makes sense of all that confusion seems pretty good. People are often ready to accept approaches that are fairly obviously bogus (astrology? aura readings?), so a simplifying and clarifying approach that has academic respectability is even more appealing.

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Why do single women outnumber single men in Manhattan? Because women, seeking men who make a lot of money, converge on places that are rich in men who make a lot of money. Then those women complain that there aren't enough good men. "Manhattan's women may constantly grumble about the lack of marriageable men in the city, but it is their rational choice not to relocate to Alaska," he writes.

But it turns out that the imbalance causes more problems than sheer scarcity. Eligible males benefit from competition among eligible females, allowing them to commit later, expect sex earlier and so on, and even a slight imbalance in the gender ratio produces a big imbalance in dating power, since women don't want to be left empty-handed at the end.

Nor is this limited to the wealthy, as Harford observes a similar pattern in poor black neighborhoods where a higher percentage of men are in prison or otherwise poor marriage prospects, drastically strengthening the bargaining position of those who remain. (Of course, it's a two-edged sword: When I was a single lawyer at a big Wall Street firm, I felt that many women saw me as a walking paycheck, more interested in my prospects than my personality, just as many women feel that some men are more interested in certain other attributes. I suppose that's different for lawyers nowadays, with the much-richer hedge-fund guys around to play the walking-paycheck role.)

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The walking paycheck appeal is similar to that of blonds with big breast for those into shallow relationships. If prospects take a downturn the former walking paycheck will be treated like a wife who has lost her appeal. Troy Aikman, former Dallas Cowboy quarterback once said that it is amazing how much more appealing you become when you win a lot of games. Reynolds has written an interesting piece about some interesting economic findings.