Daniel S Hamermesh is Sue Killam Professor in the Foundation of Economics at the University of Texas at Austin and Professor of labour Economics, Maastricht University.
His research, published in nearly 100 refereed papers in scholarly journals, has concentrated on time use, labour demand, social programmes, academic labour markets and unusual applications of labour economics (to beauty, sleep and suicide). His most recent book is Beauty Pays: Why Attractive People Are More Successful. He is also a regular contributor to the Freakonomics blog.
Is economics actually fun?
Oh gosh, yes! Of course it’s fun. Partly because it’s relevant, but partly because there are an awful lot of things that are basically just fun stories. I wrote a book, Economics is Everywhere, which contains stories from my life and things I see, designed to illustrate economic ideas. Some of them are just hilarious. And it’s not just me, whose humour is sort of weird, I admit. Almost anyone can read them and get a good laugh out of them, while learning something. And that’s the best way to teach, I think.
Can you give me your favourite example?
I have lots of favourites! It’s like choosing among my children… How off-colour are you allowed to be on this?
It’s completely up to you.
Every year 500 students in my introductory economics class have to write a story like the ones in my book. Last year one student wrote that it was three in the morning on a Sunday, and she was in the dormitory lounge having been “sexiled”. Her roommate had thrown her out of the room, for reasons that are implicit in that term.
She argued that this was a wonderful example of what we call “externalities” – her roommate and the roommate’s boyfriend were making so much noise it was impossible to sleep there. Moreover, they were also disturbing people down the hall, because the walls are so thin. There’s also the question of who owns the rights to the room – this is called an issue of “property rights”.
So what the girl illustrated was both the concept of an externality, and the notion of property rights in a very cute way. I thought that was a winner. It’s not the best, but it’s well up there. The top 10 each year out of the 500 get extra credit, and I steal a few stories for my book too, with full credit to them
But economics is hard isn’t it? To be a practitioner, you have to be good at maths, for example.
Keynes had a wonderful line, that you have to be good at maths, but not too good, you have to be good at history, but not too good, and you’ve got to be good at philosophy but not too good. I really think that’s the case. I’ve seen people who are superb at maths, who really have no intuition at all and can’t think like an economist, even though they can solve the most abstruse maths problems. You can’t be too good at anything, or you wouldn’t be doing this.
OK, but it’s a question of degree. When I went to Harvard as a graduate student, economist Jeff Sachs was teaching a class on the inequality of nations, why some nations are so rich and some so poor. I wasn’t studying economics, but I went along to the first class. He started talking about what he was going to teach, and I thought, “Wow this is so fascinating, I can’t believe my luck that I’m here.” Then after 15 minutes of preamble, he started the actual class by writing an equation on the board.
At the higher level of course that’s true. It’s going to be more abstruse. I teach econometrics and even there I like to think that I can pick sufficiently neat examples to get across the ideas and the techniques that are still fun. But at the introductory level, to my mind, there’s no excuse for kids being bored. If they are, if people tell me it’s the most boring class they ever took (as my son did when he took it at Yale, I think partly to make me feel bad) it’s just bad teaching, that’s all. Of which there is much in my business…
I have to say, your book, Economics is Everywhere, really helped me understand things. Like comparative advantage, which I think is a counterintuitive concept for non-economists. There was a funny blogpost about it by economist David Glasner. He wrote that “even most students who can correctly answer an exam question about comparative advantage don’t believe a word of what they write”. But when I read your example, about the swimming relay team, I thought, “Aha. Now I get it.”
I got that example from a student who raised his hand in class. The best examples are the ones I get from the kids.
Is it because they understand what’s hard to understand?
Suddenly something clicks in their minds. I’ve gone through something theoretically and they realise that something in their own lives is an illustration of it, and that’s exactly what I want.
Big-Time Sports in American Universities
Let’s go through your books. The first is from 2011, Big-Time Sports in American Universities. Tell me a bit about it, and how it fits into the “Economics is fun” theme.
It’s fun because large numbers of people in this country, myself, to a small extent, included, enjoy sports. The second thing is that the US is unique in that the training grounds for professional athletes are, and have increasingly become, universities. No other country in the world has universities that also train professional athletes. What’s the economics of this? Who pays for it? What about the labour market for college athletes? Here’s the thing that intrigued me most, and I learned it from Charlie Clotfelter’s book. (I should stress, he is a buddy of mine.) I hadn’t thought about this, but when you, as an alumnus give money to a university in order to get good seats at football games, it’s a gift to a university and it’s therefore tax-deductible.
So if I were to give $5,000 to UT Austin for football tickets – which I can assure you, I don’t do for a whole variety of reasons – I’d be getting the federal government to pay about $1,600 of that, because of the tax deduction. So, in a very real sense, the federal government and you, the average taxpayer, are subsidising big-time sports in American universities. I had not thought about that, and it struck me as outrageous. As I wrote on the back of the book: “A fascinating, insightful discussion of the arms race that is big-time intercollegiate athletics…The convincing, novel demonstration of the role of tax subsidies in supporting these operations should raise every reader’s blood pressure.” It certainly raised mine.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.