Category Archives: Economics

Time is Money – the True Cost of Labor Saving Devices

It seems to go almost without debate these days that if you have the means you should load your home and life up with what we’ll call Labor Saving Devices such as a dishwasher or clothes washer and dryer.

But what other ‘devices’ could fall under this category of trading money for time?   Perhaps a  riding lawnmower, maid, Roomba, gardener, pool guy or dog walker would count as well.  Do these makes sense from an economic perspective?  Is this a waste of cash or a true time saver? Let’s discuss.

Whether you’re purchasing a service or a machine to do your work you have to take several items into account to determine if it makes sense.

Does it need to be done?

I think we can all agree that dirty clothes and dishes should be

Are you spending too much on gardening?  Tusk tusk.
Are you spending too much on gardening? Tusk tusk.

washed.  It’s clearly a cheaper path to clean the items then to buy them anew each time.  Vacuuming is a good idea, as is gardening.  But vacuuming every day may be overkill.  And getting your bushes turned into elephant topiaries might also be a bit more than you really need.  So first consider what really needs to Continue reading

Gary Becker

On May 3rd, 2014 the world lost a great economist in Gary Becker.  A 1992 Nobel Prize winner for his work arguing that most human behaviors are rational and utility maximizing, Becker’s name is not broadly know – in fact, it was unknown to me until I read this article in the Economist.

Today it’s common to hear economists explaining why we might choose to buy one car versus another, cheat on our taxes, or write an over-the-top recommendation for a friend.   The success of the Freakanomics franchise (books, podcasts, movie, etc) has shown that audiences have a great appetite this sort of material.  Gary Becker was the pioneer here as the first person to try to apply economic principles to everyday life.

Some of his early works were very controversial.  His dissertation for the University of Chicago covered the economics of discrimination.  He found, and proved by mathematical model, that bigotry hurts both the target and the bigot.  Imagine a hiring manager removing some applicants based on race.  This would not only harm those who did not get work due to this bigotry, but also harms the business in that it has a smaller pool of qualified applicants from which to choose.

Other controversial topics Becker covered include:

  • Why the number of children a society has is inversely related to their wealth
  • How crime might make sense for the criminal when evaluating the costs/benefits
  • Why drug addiction is very rational for some
  • Why popular Broadway shows don’t gouge their audiences more (though some may argue this one)

The next time you read a fascinating article on human behavior based on economics take a moment and think of Gary Becker, the man Milton Friedman called “the greatest social scientist who has lived and worked in the last half century”.  

Gary Becker - making it easier than it looks
Gary Becker – making it easier than it looks

For those who would like to read more, the University of Chicago hosts a page on the books and collections of work by Gary Becker.