The "Heart of Economics"

I'm currently teaching a course on "the economics of social problems." It can be a tricky course because I need to communicate to students that, for example, poverty is about more than low income. Its also about opportunities, happiness or well-being, cognitive adaptations (i.e., beliefs) and more.

With this in mind, I found today's piece in the NY Times by Ed Glaeser interesting. He writes:

Teachers of first-year graduate courses in economic theory, like me, often begin by discussing the assumption that individuals can rank their preferred outcomes. We then propose a measure — a ranking mechanism called a utility function — that follows people’s preferences.

But then we turn to welfare, and that’s where we make our great leap.

Improvements in welfare occur when there are improvements in utility, and those occur only when an individual gets an option that wasn’t previously available. We typically prove that someone’s welfare has increased when the person has an increased set of choices.

When we make that assumption (which is hotly contested by some people, especially psychologists), we essentially assume that the fundamental objective of public policy is to increase freedom of choice.

Economists’ fondness for freedom rarely implies any particular policy program. A fondness for freedom is perfectly compatible with favoring redistribution, which can be seen as increasing one person’s choices at the expense of the choices of another, or with Keynesianism and its emphasis on anticyclical public spending.

Do Incentives Affect Fertility? The Case of Quebec

Quebec has been experiencing lower-than-average birthrates for some time. Going back to 1997, the porvincial government has attempted to increase birthrates, the number of monthers returning to the labor force and fathers' involvement in child rearing through a set of policies grouped under the rubric of "Family Policy." A recent episode of the Current discusses these policies and their effects. From the episode:

The Quebec Government is pulling out all the stops for parents these days. If you're a working couple with two children in Ottawa, you'll probably pay 80 to 100 dollars-a-day for childcare. Across the river in Gatineau, Quebec ... you'd pay 14-dollars-a-day. You'd get better parental leave too. There's even a special leave just for Dads. And as of last month, if you're infertile, the Quebec Government will cover the cost of In Vitro Fertilization.

The Quebec Government has spent 13 years overhauling its Family Policy. The goal has been to boost two demographics ... new births and working women. As part of our project Shift, our Quebec Producer Susan McKenzie decided to take a look at whether the program has worked and whether it's sustainable. We aired her documentary, Baby Bump.

Time Spent Eating and Obesity

A new post by Catherine Rampell at the NYT's Economix blog identifies a relationship between obesity rates and the amount of time individuals spend eating. The amount of time spent eating may be a sign of the amount of "fast food" (which is typically high in fats) consumed. Interestingly, it may not be the smoking and the wine drinking that keeps the French so healthy; it may just be the time spent eating (as a signal of the types of food they eat). Before you start changing your lifestyle by taking longer to eat and enjoying a cigarrette, recall the caveats regarding correlation versus causation.

Art and Economic Crisis (Economic Photo of the Week for April 14th)

Over the weekend I was talking with several friends about the effects of economic crises on individuals' well-being (both material and psychological). As part of the discussion, we talked about what images are most salient to us when we think of depression and recession. During the oil crisis and recession of the 1970's, my friends and I agreed that the long lines at gas stations were the dominant image. However, this image (in and of itself) is predominantly one of effect of crisis on material well-being.

When we talked about the crisis of the 1930's (although none of us were around during that one), Dorthea Lange's photo was the image we thought captured the effects of economic crisis psychological well-being. Indeed, this is probably one of them most well-known and important images from the 20th century. It made us wonder what image will be in people's minds when they look back on the current economic crisis.