Why?

Today I was all set to blog about a question posed by Arnold Kling (originally asked by Matthew Kahn). Given that we somtimes (er, most always) think we know better than the rest of the world, why are there so few economists in elected offices? As as economist I obviously think the world would be a better place if we were running it, but I had several tounge-in-cheek explanations ready to explain the dearth of economists in office. C'mon, we can do better than Phil Gramm and Dick Armey! Before I could do that, though, I found myself in a situation that led me to question my decision making ability -- I found myself shopping for books!

Those of you that know me well know that the last thing I need is more books. I blame the whole thing on the Quality Paperback Book Club. [By the way, if any of you want to join, I can get some free books. Heck, you might even talk me into sharing.] See, they suckered me in with a classic example of 2nd degree price discrimination. If I bought just one book (the one I wanted) at full price, they'd sell me an unlimited number of additional books at 1/2 their already low price. Did it work? Well, I've got 4 new books on the way to Decatur!

Now it's tempting to say that I was foolishly taken in by a scheme even though I recognized it upfront. As an economist, though, I can't admit that. Seriously, [I'll take a teaching opportunity here] this should serve as a reminder that just because a deal is good for one party (QPB) that does not mean it is automatically bad for the other (me). In other words, QPB obviously gains from this pricing structure, else they wouldn't offer it. That does not mean, though, that I got taken. In economics-speak, my marginal utility for each additional book was lower than the original book, hence I would not have purchased them at the original "high" prices. By lowering the price on a subsequent book until it reached my reservation price, QPB gained a sale and I got a book (3 actually) that I wouldn't have bought otherwise. Do I feel ripped off? No, or I wouldn't have bought the books even at the lower prices.

Hmm, I guess I've changed my mind as I've been writing. I DON'T feel that this was an example of bad decision making that should count against economists running the world. Now it may be that I have screwed up priorities (buying additional books when one already has more books than he'll ever get around to reading), but my decision is not irrational from a utility maximization point of view. Of course, von Mises argued that economic man cannot be irrational in that any action is taken to further a subjective utility, but that seems to be splitting hairs.

Nope, I'm back to thinking that economists really should hold elected office. Whew, for a minute there I thought my economics hubris was waning.