Monday, July 26, 2010


Reading my subscription of "I'm smarter than you, you miserable weenie"1, I've realized that laissez-faire economics has taken a bit of a hit lately. This is saddening to a man who wishes he were a Libertarian. What is the world coming to, when perfectly good corporations are no longer allowed to act with impunity? Who is going to destroy the free market, when free market corporations are hindered by the government? Do you think the government can handle the demise of capitalism? It has its hands full handling the demise social security and other unfunded obligations.

Luckily, I've been studying2 the younger generation, and I have hope for the future. There are brilliant economic minds yet to be found within the dross that is the terrible twos.

Young children have an innate understanding of economics. Take the principle of sunk costs. If I ignored sunk costs as a good little econ student, I would forget about the 2/3 plunge my stock options took during the lockout period after the acquisition, and not hold on to them to this day, huddling in the shower and rocking myself back and forth, sobbing3 and praying that they once again regain their future glory. Children, however, do not have this problem, as they do not remember anything after approximately 6.5 minutes, and thereby always ignore sunk costs when making decisions. That does not prevent them from sobbing in any bathing scenario, unfortunately.

Little kids also understand the principle of scarcity, and its impact on price. For example, they will always fight for the scarcest toy in the vicinity, no matter what that toy actually is. There could be fifteen imperial star destroyers manned by storm troopers armed with lasers sitting in the play room, and the children will be fighting for hours over the one poopy stick that was given to them by a mangy dog. Furthermore, they will endeavor to fight within earshot of the maximum number of people, or, absent a crowd, will fight whenever I attempt to read, or, absent a book, will fight whenever a phone is in use.

As a corollary, kids will always want what the other kid has. I brought presents to my nephews a month or so back4, specifically choosing items they desired. My nephew Seth had no interest in the large bag of candy I offered him; he wanted the gum that I gave to Gavin, never mind that the candy was approximately seven times the weight and value of said gum. Seth typically has no interest in gum, except in those precious moments in life when he can take it from Gavin and cause pandemonium.

Lastly, children truly understand the balance between marginal cost and marginal benefit, and optimize to set those two equal. For example, I was recently invited to the birthday party of one of the children of my friends,5 wherein the birthday girl shunned a large stuffed Minnie Mouse roughly three times her size, and expressed her preference for a rubber ducky by eating said ducky. She obviously figured the marginal benefit of eating the mouse was not worth the marginal cost of attempting to wrap her mouth around it, and thus stayed with the duck. My premise and conclusion are further supported by the fact that said duck was given to her by me6, which means I can award myself the sum total of all praise that was heaped upon said gifts, which is what I would have done anyways, except I wouldn't have tried to justify it with economics.

Economics is also useful for making jokes at parties, when you and your nerd friends are shuttled off to the corner, away from the frightened young children, who do not believe it is natural for a grown man to repeatedly quack at them. You can also use it to understand the principle of scarcity of future invitations sent your way.

1. That is, the Economist.
2. Read: listening to their screaming at family reunions.
3. I once had a roommate who participated in said behavior on multiple occasions. There's not much else I feel comfortable describing about the situation, except that those situations normally found him covered in soap suds; the hot water having run out.
4. Having no children of my own, I am forced to buy the affections of others'.
5. Which was confusing to me; I wasn't invited to children's birthday parties when I was a child, so why am I being invited now?
6. And by "given to her by me", I mean the Shoemakers thought to bring two presents and were kind enough to attribute one of them to me.

1 comment:

Marie said...

on point 6: and it was a duck? how perfectly perfect.