Monthly Archives: May 2009

Having become more computer-literate in recent months, I have made an unpleasant discovery. My husband has been visiting pornographic websites and has also downloaded explicit videos. I love my husband, but am not sure what to do now. Is his behaviour common?
Katie Durlap, Cincinnati, Ohio

Dear Katie,

If only you had a subscription to the Journal of Economic Perspectives. One of its regular features is a data-driven description of different markets in action, most recently a study by Benjamin Edelman asking “Who buys online adult entertainment?”

The latest data reported are from 2006, when adult entertainment clocked up $13bn in retail sales in the US – about $50 per adult, presumably somewhat skewed towards men. Much of this was video sales and rentals, but internet and cable subscriptions are also substantial and, unlike video, growing briskly.

Paid subscriptions to internet porn sites remain a minority hobby. Edelman studied subscriptions to one top 10 service provider and found that almost all states had between two and three subscribers per 1,000 home broadband users. Ohio, incidentally, is towards the low end of that range.

Is your husband, then, unusual? Not that unusual. Scale up Edelman’s numbers to include other service providers, add cable subscriptions and you’d conclude that about 5 per cent of connected households are paying for regular porn. This doesn’t include the largest category, video rental – and more importantly, doesn’t include free internet porn. Since free internet porn is ubiquitous and presumably more private, one can only surmise that it is far more widespread.

I can’t tell you what to do about your husband – but he is certainly not alone.

Questions to

If 80 is the new 60, and 50 is the new 30, I’m a teenager again, looking forward to a bright future at university. I certainly had a thought-provoking tutorial recently at the hands of UBS’s professorial George Magnus, one of the prophets of the credit crunch but also the author of a book about demographics, The Age of Aging.

The statistics about an ageing population are starting to become familiar: people are living longer and having fewer children, and this is true not only in rich countries but much of the developing world. But the implications are often misinterpreted. An ageing society is not, primarily, a demographic crisis. The problem is a failure to adapt – a failure that afflicts politics, management and society.

The simplest way to see this is to think again about what the demographic “problem” is supposed to be. It is simply that people are tending to live longer and longer, often in good health. That doesn’t sound like a problem to me – are we supposed to prefer a world in which people die younger and younger?

The remainder of the article can be read here. Please post comments below.

I tend to procrastinate and leave tasks until the very last moment. As a consequence, I always feel as though I could have done more and that my potential has been somewhat unfulfilled. However, I find I concentrate much better and am more prolific with a deadline dangerously close. Can economics help me resolve this tension?
T.N., Limerick, Ireland

Dear T.N.,

The answer is obvious: make sure you always have a deadline to hand, and you will always be prolific. That, at least, is the logical implication of your letter. It is also backed up by research.

The behavioural economists Dan Ariely and Klaus Wertenbroch conducted an instructive study of procrastination with three groups of students at MIT. Each group had to complete three assignments over the course of the 12-week course. The first group had a separate deadline for each paper, after four, eight and 12 weeks. The second group had no intermediate deadlines: all three papers were due at the end of the course. Students in the third group were asked to impose their own deadlines.

Students with well-spaced deadlines – those in the first group and a subset in the third who had spaced out their deadlines – tended to achieve the highest grades. Students who had assigned themselves no intermediate deadlines, or had been assigned none, fared poorly.

You must learn this lesson. Ensure that a binding deadline is always looming. Chop up large tasks into smaller ones and assign a deadline for each one. If you do not have a professor willing to make these deadlines meaningful, you can do so yourself. Make firm commitments to your colleagues or clients. Alternatively, write out a schedule and make bets with a few friends that you’ll stick to it. If “the very last moment” is always “now”, you’ll be the world’s most productive procrastinator.

Questions to

It is hard to avoid the conclusion that newspapers, at least in their printed form, are dying out. True, almost half of US adults still read a daily newspaper, but that figure is down from more than 80 per cent in 1964. The most obvious impact has been on local competition: a century ago, nearly 700 US cities had more than one daily paper; now, only about a dozen still enjoy the privilege. And this year has already seen the loss of the print editions of the Seattle Post-Intelligencer, Denver’s Rocky Mountain News and the Citizen of Tucson.

All this is despite America’s long-standing Newspaper Preservation Act, which in 1970 gave distressed local newspapers an exemption from competition laws, allowing them to form business alliances, fix prices to advertisers and subscribers, and prop each other up. The act is evidently not enough to keep competition alive.

The internet, of course, is both a cause of this trend and, perhaps, the reason it may not matter much. Publishers are more worried about the loss of advertising revenue than readership. Newspapers flourished by bringing together local advertisers and local readers, but in an internet age, that no longer looks like such a difficult trick.

The remainder of the article can be read here. Please post comments below.

More or Less airs on Radio 4 today at 1.30pm BST and Sunday at 8pm BST. You can also listen online, subscribe to a podcast, and read more at the More or Less website here.

This program is the last in the series, but a new series is already on the horizon: we’ll be back in August. Until then:

  • Are MP’s in safer seats more likely to run into trouble with the Daily Telegraph?
  • Was Rafa Benitez right to say that Manchester United aren’t necessarily the best team in the premiership?
  • Why is a Luxembourger’s vote worth more than a Brit’s?
  • The return of TimTracker.

Do please tune in or listen online.

Not very long ago, Americans were terrible savers. In 2007, the average person put aside 60 cents of every $100, or .6% per paycheck. However, the current economic downturn has shocked us into depositing more at the bank. As of February, the personal savings rate was more than 4%. That’s a big improvement, but it’s still half of 1980s levels, when Americans routinely socked away 10% of their paychecks. Why is saving so hard? And how can we be smarter savers?

Behavioral economists—researchers who mix psychology and economics—have uncovered three reasons why people find it so difficult to save. The first is temptation: Although we often later regret it, we just can’t resist spending. The second is lack of understanding: Our brains can’t quite grasp the profitability of saving. The third is optimism: We believe that everything will work out, even if we don’t save…

That is me over at Parade magazine, by all means read it all.

A confession: I have been too complacent about technological fixes for the twin problems of climate change and finite oil and gas reserves. Without looking very closely at the numbers, I figured that if politicians would finally get their act together, and if we avoided some of the more unlucky possibilities (such as the release of methane ice from the oceans), cheap, clean energy would be within our grasp, given suitable research incentives and some technological brilliance.

Looking at progress in computer chips, I dreamt about how cheap photovoltaic solar panels might become over the next 50 years. Solar wallpaper, solar paint – who needs fossil fuels? Most climate-change scenarios look at a 100-year time scale. Surely, in that time, we should have figured out a way to take greenhouse gases out of the atmosphere again.

I still wouldn’t rule out such techno-fantasies, but having read a remarkable book by David J.C. MacKay, a Cambridge physicist (you can download it at I am far more pessimistic about the potential of technology to help us out. In Sustainable Energy – Without the Hot Air, Professor MacKay makes this point very simply by sidestepping the economics altogether. Technological progress and economic growth loosen the corset of cost-benefit analysis, but not the laws of physics. No matter how cheap and efficient solar collectors become, there is only so much solar power available per square metre of land. Hydroelectric energy is constrained by the quantity of rainfall and the height of reservoirs above sea level. The most perfectly designed windmill is limited by the energy of the wind. It would barely be possible to make the numbers add up even if renewable energy generators were free.

The remainder of the article can be read here. Please post comments below.

Should I sell my home and liberate cash? If I sell today I will have made a 400 per cent return over 12 years. I am not English and will be leaving the country for an extended period, perhaps for ever. However, I don’t have to sell and I love my home dearly.
Max Mulhern

Dear Max,

You need to move away from qualitative pros and cons, especially since few of the ones you give stand up to scrutiny. A quantitative estimate of costs and benefits is more useful.

Let’s start with your estimate of a 400 per cent return over 12 years. You do not state whether this is before or after inflation, but who cares? It is the likely future return that matters for your decision. You do not know that and neither do I, but I suspect it will be poor.

Make a guess, and add the income you would expect if you let out your house – assuming this is what you would do. Those are the financial benefits of keeping the house.

On the other side of the equation, make a guess as to the return you could earn if you simply sold your home and invested the cash in the best available prospects. Bear in mind that you might even buy a home overseas; this would have the distinct advantage that you could live in it. These are the opportunity costs of retaining your existing house.

So, yes – the opportunity costs will outweigh the likely financial benefits of keeping your home. Fine. You imply that you are wealthy and declare that you love your home. Perhaps this affection is strong enough to outweigh the financial loss, but I doubt it. Behavioural economists warn of the “endowment effect”, in which people irrationally overvalue what they already have – the “bird in the hand” maxim inflated to unwise proportions. So make your choice: but first, figure out how much your sentimentality will cost you.

Questions to

Stephanie Flanders puts her finger on an important point about the MPs’ expenses farce:

if you give someone £100 to buy a chair, you can’t say for sure that he bought a chair with your money – even if he shows you the chair, and a receipt. All you can say for sure is that you made him £100 better off, and he has bought a new chair…If, like so many MPs, your MP has claimed the full amount – around £24,000 in the most recent year, then the point to note is that he or she has had £24,000 a year more to spend…David Cameron could be spending his allowance on underground swimming pools and platinum cycle helmets. All we know is that he has utility bills and mortgage interest to pay of more than £20,000 a year…”When you give $1bn to a developing country”, a World Bank economist once said to me, “you may think you’re giving $1bn to your pet project, but the reality is you’re giving it to the president’s.”

Well put. In other news, Stephanie is in a play about goats.

More or Less airs on Radio 4 today at 1.30pm BST and Sunday at 8pm BST. You can also listen online, subscribe to a podcast, and read more at the More or Less website here.

This program: we return to Kate Bush – did More or Less get it wrong? Surely not. We investigate a mutating pandemic – not swine flu but the statistics on domestic violence. Why the newspapers have been publishing misleading statistics on unemployment (et tu, Financial Times?) and what happens when Noel Edmonds meets a mathematical mindset.

Tim Harford’s blog

This blog is no longer updated but it remains open as an archive.

Tim, also known as the Undercover Economist, writes about the economics of everyday life.