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December 05, 2006

Blowhards and Economics

Michael Blowhard asks an interesting question:

How helpful is economics so far as explaining the blogosphere goes? Here's a flourishing, socially-significant field of activity that's undertaken by most of its participants without any expectation of remuneration. Many of them do their blogging and commenting under, ahem, fake names, thereby making not just money scarce but real-life recognition nonexistent. The question isn't just, "Where's the money?" It's also, "Where's the self-interest?" and "What are the incentives?"

(Incidentally, and for what little it's worth: I think economists might very well be able to give an interesting economic account of blogging, I just have my doubts about how well that account would stand up as an explanation.)

These questions occured to me yet again on reading this LATimes piece about how some economist-bloggers are becoming blogosphere stars.

You'd think that this phenomenon -- economists becoming stars in a field that's anything but money-driven -- would have at least a few of them taking fresh looks at some of their pet theories, wouldn't you? "Good lord! What to make of this!" -- why aren't more of them asking themselves this question?

Why indeed? As one listed in that LA Times piece (last, which is the correct position I think) perhaps I can provide an answer?

Michael is assuming that economic theories rest upon the maximisation of monetary income. Given that, it is indeed extremely odd that practitioners of the dismal science would do something like blogging for no money (or pittances, certainly less than could be earned elsewhere).

However, extend that thought. Why would such people, who know how the world works, do such silly things like become a college professor? OK, it's not that badly paid but it isn't, with a very few exceptions, the route to a fortune. Why are they doing this silly research, publishing those papers that only 10 people (including their own mother) will ever read? Why aren't they pounding out the Harlequin novels instead?

Could it actually be that such economists rather like doing research? Thinking about the world? The long vacations? The short work week? Even, perhaps, the respect of their peers?

Now, thinking of it this way we've actually divorced the motivation of people from purely monetary matters to something of a ragbag of bits and pieces here and there. Certainly, some people are more motivated by that cash than others, just as some simply want to strut the stage, play football, drink wine or, very strangely, become politicians.

Economists even have a word for this mixture of motivations. Utility. And it is that utility maximisation, not the maximisation of monetary income, that is at the heart of economics. Michael's question, when looked at this way, doesn't really make sense because he's operating from a false (although widespread) premise. Economists don't think that people do things (except for a few fortunately rare people) purely for money. They think people do things because they want to, because they make them feel good. That definition of what people want to do, makes them feel good, being different for different people.

Yes, there are some universals (sex, food, shelter etc and even then people put different weights on them. Some will pay for fine dining, others will forgo that pleasure for a bigger house etc.) and some decidedly odd, like blogging.

But once you get that we're all talking about utility, not money, then an economist blogging makes perfect sense. Those who do it do it because it makes them feel good (for whatever complicated reasons it does so).

December 5, 2006 in Economics | Permalink

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Comments

As I've said before, here I think, monetary wealth is hardly the only possible driving force in this world for a person's greed.

That's the problem with socialists. They bang on about how the right wingers are greedy and just want money, but socialism requires the draconian expansion of the state, thereby empowering them. Political power can also be a potent driving force of greed.

Of course, I think this guy is just annoyed because he can't now dismiss economists and their "pet theories" as just being the product of a bunch of greedy, selfish Tories.

Posted by: Josh | Dec 5, 2006 9:52:55 AM

Michael is assuming that economic theories rest upon the maximisation of monetary income.
Of course he is. Surely that is the whole point of economics? The mistake that both of you are making is the assumption that economics can be applied to all human activity:
The question isn't just, "Where's the money?" It's also, "Where's the self-interest?" and "What are the incentives?"
You just can't apply this type of thinking to most non-commercial activities, it's just not valid. Where's the self-interest and what are the incentives for watching TV for example?

If you ask me, blogging is a bit like sending the seasonal round robin - except with the added benefit that somewhere in the whole blogspherethere there just might be someone who is actually interested.

Posted by: newparadigm | Dec 5, 2006 10:40:06 AM

Does Michael Blowhard know that most of us spend 128 hours a week doing things we don't get paid for?

Posted by: Paul Zrimsek | Dec 5, 2006 1:29:33 PM

newparadigm,

"Where's the self-interest and what are the incentives for watching TV for example?"

ummm... because it's enjoyable to the person watching it?

Posted by: Tim Almond | Dec 5, 2006 3:48:32 PM

Stephen Landsberg, author of The Armchair Economist, sums it up rather well:

"Wonks want Americans to die rich; economists want Americans to die happy." (p. 44)

Posted by: k hagen | Dec 6, 2006 1:09:51 AM

Tim, Thanks for the thoughtful response. I'd buy it if "utility" seemed a little less slippery a concept than it does, if economics textbooks included chapters on such topics as "how do economists account for and/or describe the pleasures of goofing off?", and if people coming out of econ classes didn't fixate as much as they do on quantification and money. Plus it seems to me that the "utility" account of blogging is simply saying, "Hey, people blog because they dig it." Which doesn't exactly take economics experts, or even economics at all, to recognize, no?

But I'm still struggling with the basics!

Posted by: Michael Blowhard | Dec 7, 2006 4:17:13 AM

Plus it seems to me that the "utility" account of blogging is simply saying, "Hey, people blog because they dig it." Which doesn't exactly take economics experts, or even economics at all, to recognize, no?

No, that's silly Michael.

Dentist will tell you to brush your teeth. We all know that brushing one's teeth is good for dental hygiene and certainly don't need dentists to tell us that.

We can say the same thing about doctors, physicists, etc. and the recommendations or claims made by people from those professions.

See how silly that argument is?

Posted by: Tim (not Worstall) | Dec 9, 2006 9:03:32 PM