A Simple Guide to Discovering Your Inner Economist

Author and professor Tyler Cowen describes himself as “a curious intellectual nerd polymath,” which by itself doesn’t sound too promising. But he is perfect for the job. The “loving husband and stepdad” offers more common sense than the average nerdy economist. I was already a big fan of Cowen’s before I picked up Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist, but the further I read into this wonderful book, the smarter (and funnier) he got.

Discovering your “Inner Economist” doesn’t mean thinking about indifference curves and such mysteries. There are more practical things to consider in life. Like, say, whether to leave the toilet seat up or put it down after use. Cowen writes of an individual, whom we can assume is a nerdy economist, who wrote an economic analysis of the toilet seat question using “complicated mathematical formulas to conclude that economizing hand motions is the key variable.”

This unnamed analyst believes the toilet seat should be left “as is” when done. After all, the next user may want it in the same position. No doubt this guy is single. Cowen knows better. “A more sophisticated approach, based on a longer chat with one’s Inner Economist, would recognize that such matters should be arranged to please one’s wife, and that usually means putting the seat down after use. It is symbolic recognition of her value.”

With that, Cowen proves himself to be an economist worth paying attention to. During the housing crises and after, guys would ask me if I thought they should buy a house. My question back to them was always, “Are you married?” Most of the time, the answer was yes. I’d then ask if their wife wanted a house. The answer was always yes. My advice was (and still is): “If your wife wants a house, buy her a house.”

Houses aren’t investments. For married guys, houses are “symbolic recognition” of their wives’ value. I wasn’t aware of that term when I gave the advice, but it must be shorthand for “If momma ain’t happy, nobody’s happy.”

Guys looking for a mate have heard of playing hard to get. Supposedly, the way this works is people want what they can’t get, so make yourself unavailable. Cowen calls BS on this notion because it’s “too easy for losers to mimic.” If this strategy worked, “hermits would be in fantastic romantic demand. They are not.”

Discovering your Inner Economist doesn’t mean thinking about indifference curves and such mysteries.

So what does everyone want more of? Beyond money and material goods, which become less important as the world gets richer, Cowen says it’s attention and time. The George Mason University professor urges us to use incentives to overcome our own imperfections.

He’s a lover of music and art and says we can be “cultural billionaires” on a tiny budget. Our attention spans are scarce, even when doing things we enjoy. How many books are read after being purchased with the best intentions? We all have plenty of CDs or albums gathering dust after listened to once.

Culture is even more of a challenge. Our legs and back beg for an easy chair after roaming around a single wing at the local museum. Cowen urges us to work with that constraint. Don’t try to look at everything and read all the descriptions. Focus on the art you like; decide what you’d take home if you could, and why. Give yourself an imaginary budget (we have more training in shopping), and skip the first room of the exhibit. A week later, focus your reading and research on the artists and works you liked.

And lighten up. Admit you don’t care about art for art’s sake. You care about you and what you like. With that in mind, going to the museum becomes fun, not a burden. Museums are not made to make you, the customer, happy, but to make their donors happy. Patrons are the ones who love art for art’s sake.

Can’t bring yourself to dive into the classic works of literature? Cowen lists eight ways to maximize your time and attention in pursuit of culture in the printed word. So don’t think you have to swallow Ulysses whole.

Cowen gets the Inner Economist juices flowing with three parables to illustrate the use incentives: “The Car Salesman Parable,” “The Dirty Dishes Parable,” and “The Parking Tickets Parable.” The trick is to offer the right incentives at the right times.

Car salesmen are easy to figure out. No pay, no sales. From there, it gets a little trickier. Proposing to pay your kids to do the dishes may not turn out the way you think. And diplomats from different places respond quite differently to being exempt from parking violations.

“It is not just getting the mix of incentives right,” Cowen explains. “You also have to know something about the values and cultures of the people you are dealing with.”

People want to feel like they are in control of something. Criminals constantly believe themselves to be in crisis. They must be constantly experiencing pleasure, like drugs. Doing a regular job and waiting for a paycheck does not satisfy their anxieties. A robbery to gain quick cash and a quick fix does.

Stressed people gain control by conforming to social opinion. Other people’s approval provides them a security blanket for their feelings of being out of control.

Cowen doesn’t spend all his time telling us how to get what we want. He includes a cautionary chapter to keep the reader from getting too smug. There’s lots of sin out there, says the economist, and markets for it everywhere. As calorie consumption and life expectancy have increased, so has sin, and enterprising entrepreneurs have created businesses to meet the demand. But the author urges us to stand firm, exercise control, and maintain a good self-image.

Cowen has been around the world and has seen his fair share of poverty. In a chapter devoted to helping the poor, he writes, “If you are going to give, pick the poor person who is expecting it least.” Cowen is suspicious of beggars who devote too much time, effort, and even money to begging.

The professor has high hopes for all of us, aiming to making the world a better place one discovered Inner Economist at a time. Good decision making will lead to people achieving their highest potential and in turn enhancing a positive social order the world over. Packed with fun and wisdom, this is a book everyone should read.

Sincerely,

Doug French
for The Daily Reckoning

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