Monday, February 7, 2011

Why Greg Mankiw shovels snow off of his roof?

Greg Mankiw is the author of one of the leading intro to econ text books, and like any intro to econ book he discussed comparative advantage. In short comparative advantage shows you can be better off if you do what you're best at. So instead of shoveling snow off of his roof, Mankiw should spend an extra hour consulting and make $500 and pay someone $100 to shovel snow off of his roof. Yet Mankiw last week was up on his roof shoveling snow, despite his worries he might fall off an injure himself (he wasn't worried about dieing as much since he had life and not disability insurance)

Few people hire someone to do everything for them, most people cook their own food, wash their own clothes, and spend time with their children even though many people could earn more working extra. The basic theory doesn't include a few things.

1. People on salary might not be able to earn a few extra dollars to make trade offs.
2. After a certain number of hours working is less fun, even things like being an economist. We do get utility from cooking our own dinner, so at some point we might like to do things ourselves
3. Transaction cost are high, I could hire someone to do my laundry, but either I would have to take it somewhere, a pain, or pay more to get it picked up and delivered.

But I think Mankiw still would have not been influenced by 1-3. In short, I think Mankiw just couldn't find anyone to hire. He was worried about his roof collapsing and in the snow storm most crews were over booked (although they should probably raise their price then) or might not get to the Mankiw residence in time.

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4 comments:

CaracterLibre said...

I think the crews should have a sort of "priority insurance" paid every week no matter the weather is. Then, also rising prices during storm days, maybe offering their service in Ebay as an auction, could be a possible solution.
However, watching one of the most famous economist in the world shovelling off the snow from his roof is also a worthwhile show

Japanese said...
This comment has been removed by the author.
CaracterLibre said...

"a Japanese genius Economics student". First and foremost, humility...

Max said...

Maybe shoveling snow is Mankiews comparative advantage?