My husband is better than yours.

Part of being happy in my marriage is that Dr. Bryan Buckley is just so freaking awesome. One evening, he's going on about the literature of Ayn Rand over stir fry. Another night, he's explaining the economics of prostitutes over my roasted chicken.

The other night, Bryan provided everyone (and my reblogging friend Harrison) with a little economics lesson. Seems like he beat even THE economics blog to the punch: The Prisoner's Dillemma Makes a Reality TV Appearance.

Boom. Let's go out for margaritas and fajitas!

Economics of the Bachelor Pad

Note this economic analysis came not of Dr. Buckley's desire to watch the Bachelor Pad. He has a very convincing wife who loves reality tv and strategy gameshows.

Tonight was the finale of The Bachelor Pad, which if you haven't been watching, let me catch you up:
A bunch of the favorite and not so favorite contestants of previous seasons of the Bachelor (the dating game show with 1 guy and 25 women or 1 lady and 25 men) come together in one giant sexy house to compete for $250,000 and possibly a chance at love. Various alliances were made; many relationships formed; competitions were intense. For the final six, the top three guys picked a girl to create a team, or a couple. Everyone has been voted out except one couple Natalie and Dave.

Okay, you're caught up. We have Natalie and Dave. Natalie is a party girl, and she has kissed the most guys, drank the most and played on different sides of the ladies. Dave has backstabbed some of the guys, broken hearts of two ladies and had a good time. But, through all of this, the pair claimed they were developing a slow relationship which might possibly lead to love.

Here they are, so close to winning, and the host Chris Harrison offers them a choice. They can choose to share the $250,000 evenly, or they can choose to keep it all for themselves. Only, it gets more interesting.

If they both choose to share it, they will split the money evenly and each get $125,000.
If one chooses to share it and the other chooses to keep it, the one who chose to keep it gets the whole $250,000 and the other gets nothing.
If they both choose to keep it, the money gets split evenly among the contestants who've been kicked out and are sitting onstage.

Okay, get ready for some economics.

This is a Prisoner's Dilemma. What you need to think about is a Best Response Function. What is your best move in response to whatever they do?

Let's think about it from Dave's point of view. If she's definitely going to keep the money for herself, does he prefer to play keep and give the prize up to the losers of cast or does he prefer to share, so she can win? If Natalie's going to play share, what is his best response? Would he prefer to split the money with her or screw her over? If he preferred giving her the money rather than the chance of having to give the money to the rest of the cast, then share is his best response in either case.

Natalie might know that, and then she has her best response function. Does she want to share the prize money of $250,000 with him or does she want to keep it all? What do you think happened?

Cover Charges and Other Bar Economics

This weekend, we went to a bar that had a $5 cover charge. Once inside, we bought a round of drinks. And another. We were having fun with some friends, and I remembered we had beer at home.

I said, "Bryan, let's go home and drink some free beer!" Well, that was not the right thing to say. We paid for the beer, so it's not free.

I continued my non-PhD thought process and said, "Let's get one more round since we paid $5 to get in!" Again, not right.

Bryan explains that the $5 cover charge is a sunk cost, so it shouldn't have any bearing on our current decision making process. It's a common misconception called the Sunk Cost Fallacy.

Bryan continues, it should be as if we got in free; it's essentially the same. What you want to think about is the benefit of being there for another hour versus the opportunity cost of being there for another hour. Because the cover charge is something we've already incurred, it does not really affect the cost or benefit of being there for another hour.

And who says economics doesn't relate to the real world?

Professors of Different Fields Make Different Amounts

We had dinner last night with the manager of the Jazz Lab in our new small town. She was a wonderful guest who came bearing wine and fancy cheese which accompanied my pasta dish.

Over dinner, she mentioned the salary of the jazz professors, those with doctoral degrees and years of experience, and I was surprised that it was much lower than what Bryan is making.

Apparently, that's the case. And for my economist husband, it was obvious that those of different fields would make different amounts. But for those of you who think like me, let me break it down:

According to Salary.com's Salary Wizard (median salaries),
an accounting professor makes $104,000
a business professor makes $75,111
a chemistry professor makes $51,445
a civil engineering professor makes $68,311
a communications professor makes $52,450
a drama professor makes $48,380
an economics professor makes $67,573
an education professor makes $53,000
an English professor makes $50,750
a music professor makes $49,500

Bryan explained to me that part of the salary for anything represents your opportunity cost which is typically what you could do somewhere else.

If you think about an accountant, in order to get her to be a professor, you'd have to pay her at least what she would make in the business world. You won't get people to leave the business world unless you pay well. Also, there's the difficulty in the field of study that contributes. Accounting is really difficult; it's complicated, and that's why they make more money. It's all about opportunity cost, apparently.

Interesting. I learned something new.

Don't Send Emails Like This

Oh my god brian for the love of god I will send it to you today im so sorry I haven’t even checked my email thank you so much for reminding me im so sorry. And thank you for the update!
-J

Examples To Use in Class

As I help grade the multiple choice section as carefully as possible, Bryan furrows over his students' handwritten attempts at economic theory.

Reading over questions 16-20, I giggle. Bryan is using the country of Dortugal (Strongbad, anybody?) and for his goods: Pogs and Slammers in his international trade section. I asked Bryan if he knew that he was the coolest professor ever. Of course, he's bashful and tells me to stop. But then he listed for me all the great (and eccentrically Bryan) examples he uses for his students.

Dr. Buckley's Top Examples of Goods
-rubber ducks
-slinkies
-skip its (commercial - I was a skip it addict as a child)
-rubber chickens
-koosh balls
-toobers and zots
-legos
-drunks
-wine and cheese
-orphans and movies: Brad and Angelina (comparative advantage)

I want to take his class next fall.

Excerpts from Dr. Buckley's Syllabus

Tests are par for the course in college. Dr. Buckley is no different: he offers three exams. And he has the coolest exam policy I've ever heard of.

There are no makeup exams - for any reason. According to the syllabus, you can decide not to take either the 1st or 2nd exam. If you opt not to take the 2nd exam, then the 15% of your grade represented by that exam gets shifted to your 1st and Final Exams, so that they are worth 17.5% and 27.5% respectively. You can not choose to miss both the first and the second exam, and you must take the final.

Those are the rules. Do what makes you best off.


Can you say live your life according to what you teach? This man is such an economist.