“Most of what goes on in the marketplace is about gains from trading, not gains from raiding.“
Two economists, Stan Sigma and Ollie Omega are overheard talking in the faculty lounge.

Stan: Ollie, you know the worst part about being an economist? You meet someone at a cocktail party, you tell them you teach economics…

Ollie: …and they say “Oh, yeah, I took that in college. I hated it. It was sooo boring!”

Stan: Then come the observations about the professor’s personal hygiene and it goes downhill from there.

Ollie: At which point you say “Sorry, did I say economics? I meant Sunday comics. I teach Sunday comics.

Stan: Never works though.

Ollie: I have an idea. I have a plot for a made-for-TV movie about economics. I’ll show ’em! Ready?

Stan: What’s the title?

Ollie: Hmmm. Let’s see. I’ve got it. Equation 14!

Stan: Equation what? I’m not optimistic.

Ollie: Wait, listen, this is gonna be good.

The scene: A small, stuffy seminar room in the economics department at Meadows College.

Professor Ralph Whittemore Heinous, 35, struggling, still not tenured, is teaching a senior honors economics seminar.

Sally Bright, star student, is presenting a draft of her thesis, a penetrating, complex new theory of how to adjust interest rates in order to keep the economy on track. Brilliant, original stuff.

That night, Heinous, sitting in despair amid the detritus of dozens of failed projects, catches his reflection in the porthole-sized window of his cramped office. Ben Franklin on a bad hair day, he thinks. At least he was published… I’m… I’mperished. Suddenly, Heinous picks up Bright’s thesis paper, and, in a fit of opportunistic frenzy, submits it to the high profile National Conference of Economic Research under his own name.

“I taught them everything they know,” Heinous thinks, “I have every right.” But deep down he knew it wasn’t true. The theory was all Bright’s. Desperate, Heinous blotted out the thought. “I deserve tenure—this is my ticket: the economics profession needs me, and I need it—I won’t give up just because a bunch of stupid editors willfully ignore my genius. I’ll show them!”

The night before the conference: Heinous, preparing, gets a sense of unease. The beginning of the paper is brilliant, and the conclusion straightforward, but something about the logic in the middle just doesn’t hang together.

No matter, Heinous thought… it’s under control… I’ll just downplay that middle part.

Next day, it’s the conference. Heinous presents the paper. The crowd loves it: the original insights, the straightforward conclusions. Heinous is on top of the world, he’s starting to actually think of the theory as his own.

Just a little Q&A, and my big splash will be complete. Publication, tenure, fame… I’ll finally be getting what I deserve… I’ve worked so hard for this day!

But, during the Q&A, crusty old Hank Stegosaurus, emeritus monetary theorist par excellence, keeps going back to some weak spots in the middle of the theory. There’s something funny about equation 14. It’s like a piece of corn lodged in Steg’s dentures: he can’t let it go.

Heinous is beginning to sweat. He too knows something’s not quite right, but he’s not agile enough to wrestle with it on the fly.

Even worse, while struggling to make sense of errant Equation 14, Heinous sees a familiar face in the back of the room: Sally Bright!! When did she get here? How did she find out about this?

Easy, easy. Not to worry. Stegosaurus is still talking. Time’s almost up.Just a minute left of the Q&A—these presentations are strictly timed. Almost home. Run out the clock, Heinous thinks, just run out the clock and we’re home free.

With seconds to go, Bright puts up her hand up and to Heinous’s horror is recognized by the chair.

“The alpha terms cancel,” she says.

“What?” the crowd collectively asks.

“Equation 14—the alpha terms cancel in equilibrium. I figured it out this morning. Once those terms are gone, everything hangs together. See the monetary decision rule? With the new equation 14, you get a closed-form solution. It clears up all the earlier contradictions and ambiguities.”

Shouts from the crowd: What did she say? Who’s this kid? Equation 14?

Steg (grumbling): “I knew that alpha stuff was amiss, I just knew it.”

Heinous desperately interrupts, “Interesting speculation, young lady. Sorry we’re out of time. Thank you Professor Stegosaurus for your very helpful comments. We’re out of time. Thank you, thank you, thank you.

Chair: “Hold on. I think we’ve got a few more minutes. Let’s go a little longer. This is getting interesting.”

Heinous: Umm… umm.

Chair (to Bright): Tell us more.

Bright: Well, there’s not much more to tell… the revised equation 14 ties everything together. I’ve figured it out in great detail… been thinking about it for months… you see… you see… It’s my theory, I derived everything myself, it’s from my senior honors thesis for Professor Heinous’s class.

All hell breaks loose…

<COMMERCIAL BREAK>

Stan: Commercial break! I can’t handle the suspense. What happens!

Ollie: Yeah. Commercial break. Check it out.

There are still dozens of new Toyotas left… you won’t believe these prices after rebate!

(Mom, Dad, kids, dog, and sales guy jumping up in slow motion in a car show room… balloons floating toward the sky… ) They all shout:

“We Love You Toyota!”

Stan: Then what? What happens to Heinous? Do they drag him out of the room raving and foaming at the mouth. Is he fired? What happens to Sally Bright? Nobel Prize?

Ollie: What difference does it make?

Stan: I care. I want to know what happens.

Ollie: Sure you do. That’s because getting the credit for Equation 14 is a zero sum game. And we care about zero sum games. There’s drama. There’s tension. There’s a loser for every winner. It makes for good TV, doesn’t it? But it’s not very common in reality. What common in reality is both sides are better off. The buyer and the seller of the car in the ad. That’s reality. No violence, no theft. Boring balloons. Boring happy people. Economics is boring.

Stan: I still want to see Stegosaurus rock Heinous with those bony plates.

Ollie: Bony plates?

Stan: You’re the guy who named him Stegosaurus.

Ollie: Yeah, but just remember. Most of what goes on in the marketplace is about gains from trading, not gains from raiding. Raiding sometimes happens, and it’s dramatic, but it’s not what economic life is mostly about.

If you like TV, and you want to learn about economics, watch the commercials. Or better yet—immerse yourself in the boredom of an economics class!

Stan: Come on, it’s not that bad!

Ollie: Maybe we could bring the Taco Bell Chihuahua out of retirement and have him teach a discussion section…

Stan: “Drop the graph of the supply and demand for chaloupas!!”

Ollie: There you go!

Stan: Maybe not…

Ollie: Yeah. Maybe not.

 

*Donald Cox is Professor of Economics at Boston College. His email address is donald.cox at bc.edu.

For more articles by Donald Cox, see the Archive.