Economics is hilarious!

There are times when I wonder how my economics degree will be of use when I in a years time enter the job market. No doubt that higher education is a good investment as evident by plugging in some numbers on tuition fees, living costs and future/forgone earnings in a simple present value formula (my very first lecture at Sussex University showed me this comforting and convincing argument - very strategic induction). But in the midst of colorful textbook theory and analysis, mastering the tools of central bankers or understanding the intricacies of global equity markets seems far far away. Nevertheless, in microeconomics which seems light years away from these aspects, the rational and dull economy is transformed into a "freakish" rendition of the planet we trod on and everyday life.

Bare in mind that my initial incentive to write this post was to complain about the very strange questions I had to review for my exams. In retrospect I have come to appreciate the topics a lot more, especially when beginning to read Freakonomics (Levitt and Dubner 2005) and surf on the blogs of many contemporary great economic thinkers (often authors of the tedious textbooks mentioned above). Let me give you some examples of the sort of questions and dilemmas we are talking about:

Why should a producer of Christmas trees cut down the trees when they grow at the rate of interest?
Why do drug dealers live with their mothers?
This is in addition to numerous examples testing our understanding of probability, such as the Game Show Puzzle - try it!

Levitt and Dubner has written a book full of these interesting applications of microeconomics. Read it if your curiosity does not end at the above mentioned drug dealers but you also want to find out what members of the Ku Klux Klan and estate agents have in common. Or, if you wish to know if falling crime rates have more to do with abortions than a thriving economy. All of the above have a mesmerizing x-factor which is guaranteed to make you become an undercover economist looking for (or creating) social, economic and moral incentives hidden in innocent media and politics. The crucial lesson to learn is the difference between correlation and causation.

So, in the end I suppose I will at least have an amusing story to tell in the job interviews next year thanks to my degree. In the meantime I find immense pleasure in drawing pretty graphs, indulging in the wonders of the "invisible hand" and knowing that it is just to relax - everything is in equilibrium and everyone rational!