Tuesday, February 1, 2011

How to be a Happy Economist


A mathematician, an accountant and an economist apply for the same job.
The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."
Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."
Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says "What do you want it to equal?"


Economists are thought of as people who bring bad news and that their theories do not represent reality- then why do they have so much power?? The reality is that decisions and future decisions involve choice and every choice involves something that has been forgone. (this is known as opportunity cost in economics) Often this choice involves a political decision and a particular group or region will lose or gain which means that as the politicians have to make a difficult decision - economics is often the reason or the stated reason.
Look at the picture and work out how this relates to Economics (try opportunity cost and choice)
So how do you be a happy economist- well by realising that humans are irrational and accepting that despite all the ideas and forecasting that economists are never totally correct.