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Dismal science? Not by a hoot
By: David Ivanovich
December 14, 2008
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It may be time to read the books and blogs of economist Tyler Cowen, general director of the free-market-oriented Mercatus Center at Virginia’s George Mason University, who explains the vicissitudes of financial life in accessible, even hilarious, fashion.
Cowen’s interests are eclectic, to put it mildly. He’s fascinated by everything from the Grossman-Stiglitz paradox (more about that later) to how much the kidney stone of “Star Trek” legend William Shatner fetches on eBay ($25,000).
Part Adam Smith, part Carolyn Hax — with a dash of Bill Moyers thrown in — the 46-year-old economics professor draws readers of his blog and his books into the arguments now raging at the Federal Reserve and on college campuses across the country, while adding practical advice and cultural commentary for good measure.
Cowen offers up strategies on how to manipulate your dentist (“I pretend to have no fear”), gives tips on how to prod a teenager to wash the dishes (don’t pay cash), and serves up his own brand of marital advice: “Delusion is one secret to a good marriage.”
At a time when opening a 401(k) statement constitutes an act of personal courage for many Americans, Cowen helps ordinary people understand dire economic news without first slogging through such texts as “Aggregation Without Separability: A Generalized Composite Commodity Theorem.”
In his chatty, strikingly helpful book, “Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist,” and on his readable (honest!) economics blog (marginalrevolution.com), Cowen delves into theories like the Grossman-Stiglitz paradox, which holds that if all the relevant information were really reflected in the market price, then no one would have an incentive to acquire that information.
But then he’ll discuss how much to tip a waitress — Cowen deems 15 percent sufficient — or speculate why UFO sightings have dropped off in recent years (he figures the ubiquity of cell phone cameras makes earthlings less willing than before to claim alien encounters without photos to document the event).
Who knew the dismal science could be so much fun?
That’s not to say Cowen doesn’t have a sobering assessment of the current economic mess, which he says will be “worse than anything since the Great Depression, almost certainly and soon.”
His advice: “Spend less, save more, be poorer for a while.”
The son of a Chamber of Commerce executive in northern New Jersey, Cowen was one of a trio of high school buddies who went on to become economists — Daniel Klein also teaches at George Mason University, while Randall Kroszner sits on the Federal Reserve Board of Governors.
Cowen joined the faculty at his alma mater George Mason in 1989. Nine years later, he took over the helm at the Mercatus Center, which advises Washington policymakers on economic issues (Mercatus is Latin for market or trade).
Cowen “makes sure our work is relevant ... and actually explains the way the world works rather than just be a fancy concept on the blackboard,” says Brian Hooks, the Mercatus Center’s chief operating officer.
Cowen describes himself as “a moderate libertarian — small l.” Friend and George Mason colleague Alex Tabarrok says that Cowen is “an original thinker” among libertarian-minded economists.
“He’s always coming up with contrary arguments, which fluster us to no end,” Tabarrok says.
In 2003, Cowen and Tabarrok teamed up to launch their blog, with the theme: “Marginal Revolution: Small steps toward a much better world.”
Marginal Revolution contains much of what a reader might expect from an economics blog. With the current crisis prompting comparisons with the Great Depression, for instance, Cowen comments frequently on John Maynard Keynes’ classic work “The General Theory of Employment, Interest and Money.”
But the site often veers to the unexpected. Cowen recently posted a reading list for spring, including Robert Alter’s translation of “The Five Books of Moses” and Peter Hoeg’s “Smilla’s Sense of Snow.”
“People want to hear what you think,” Cowen says. A writer unwilling to inject himself “can’t keep a blog.”
Cowen thinks his greatest contribution to his field has been his research on the economics of the arts. His love of the arts is palpable, his taste all over the lot.
He likes classical Indian music, for instance, and is an avid collector of Mexican “Outsider” art. Colorful folk paintings, many produced by a single, extended family from a remote Mexican village, cover the walls of Cowen’s Fairfax living room, and ceramic piggy banks decorate his hearth.
Cowen is a “real Renaissance man,” Tabarrok says, or as the Financial Times’ Tim Harford puts it, a “culture vulture.”
“Someone can be talking to him about hip-hop music, and he’ll be conversing fluently on that,” Tabarrok says. “The next minute, he’s talking about monetary theory. A few minutes later he’ll be talking about European history, then Beethoven or Schubert. On all of these topics, each person who spoke with him will say, ‘That’s really an expert on something I thought I really knew well.”’
Cowen’s secret? “He reads unbelievably quickly,” Tabarrok says.
Cowen bemoans the fact many great works of art have been so overexposed that they have become cliches. Take Beethoven’s “Fifth Symphony”: “I’ve used it up,” Cowen says, adding that viewing the “Mona Lisa” is now “like looking at a shopping bag.”
Accompany Cowen to the movies and he’s liable to watch parts of one film, portions of another. On one visit to the local cineplex, he sampled four separate films. “It would have been worse if I had sat through any of them,” he laughs.
Despite his quicksilver mind and professional expertise, Cowen, like so many of the nation’s great economists, failed to anticipate the severity of the current crisis. And when it comes to putting the economy right, Cowen warns: “We still don’t know what we’re doing.”
During the Great Depression, the weaker banks failed quickly and quite painfully. This go-round, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have been scrambling to keep the nation’s banking sector afloat. While Cowen doesn’t advocate a return to the Depression-era approach, he wonders about the long-term prospects for the “zombie” banks, which are either insolvent or of questionable solvency and aren’t functioning like real lending institutions.
Some economists have drawn parallels between the current downturn and the prolonged recession that plagued Japan for more than a decade in the 1990s and early part of this century. “That’s what we may be in for,” Cowen says.
In his various endeavors and enthusiasms, Cowen seems to take seriously his blog’s theme of taking “small steps toward a much better world.”
To his friend Chug Roberts, these words sum up Cowen’s genuine desire to help other people.
“He’s made my life a lot better,” Roberts says. He’s even told Cowen, “When you die, Tyler, I’ll bet your funeral is packed.”
