I am a third-year university student and I share a flat with a student on the same course as me from the year below. We are good friends, but I, alas, want us to be more than that. The risks of my confessing my feelings are quite high. If it works out, I have a girlfriend; if it doesn’t, I’ll end up homeless, looking for an (almost prohibitively expensive one-person) apartment, having lost my best friend. If I keep her in the dark I’m guaranteed to have a roof over my head for the two remaining years. Can economics provide an answer to my dilemma?
Unnamed student, London

Dear student,

The cost-benefit analysis here is deceptive, so let me walk you through it. Your mistake has been to frame your dilemma as a static choice problem: either you confess now and take your chances, or you never confess.

That is wrong. There is, dare I say it, a third way. Simply wait and see whether anything is clearer tomorrow, or the next day, or the day after that.

In technical terms, you have an option on making a pass at this lucky lady, and you will continue to have that option until either you actually do so, or until either you or she falls for someone else. The option is valuable and should not be exercised lightly, and thus expended. Option valuation models suggest that you should make your move only if you are absolutely sure (you clearly are not) or if other suitors are circling and your option is about to vanish anyway.

Even in the latter circumstance, you shouldn’t make your move if you feel the odds are against you. I suspect they are. The chances are that this young woman knows exactly how you feel. Since she has done nothing to encourage you, I expect she is praying you’ll keep your feelings to yourself.

Questions to economist@ft.com

The Royal Economic Society reports:

RES Young Economist of the Year 2009 - Competition Launched
by Jim Riley

The Royal Economic Society has announced the essay title for the 2009 Young Economist of the Year essay competition. It is:

“Are economic recessions inevitable?”

Once again the prize is £1,000 + an engraved trophy for the winning entry (£500 for the runners up). This is a great opportunity for AS & A2 students to get involved in a piece of extended writing.

The closing date for entries is midnight on Monday 18 May 2009.

This year all entries are to be submitted online. The online submission form and promotional posters can be found here via the tutor2u website: https://tutor2u.wufoo.com/forms/res-young-economist-of-the-year-2009/.

Please contact tutor2u directly should have any queries.

The BBC Magazine says not, with examples:

In a collection published by the Guardian’s Simon Hoggart, one mother wrote:

“Harry was Jesus in the school Jesus Christ, Superstar. This was the best production I have ever seen, youth or adult. Both boys, especially Harry, were physically and emotionally drained at the end. I was drained too… seeing your son crucified nightly is not an experience I would recommend.”

Very funny. But I am not sure the round-robin letter deserves the bad press it gets. A Dear Economist letter from two years ago:

Dear Economist,

Christmas cards are starting to drop through the letterbox and many contain infuriating round-robin newsletters from people I barely know. This is no substitute for real friendship. Why do people send junk mail instead of a proper letter?

Tom, Lancaster

Dear Tom,

You say that people send newsletters “instead of” a proper letter, but I wonder if this is true. Newsletters are subject to extreme economies of scale: the first copy is time-consuming to produce but the rest take just seconds. The likely result is that many people receive newsletters who might otherwise get nothing at all, or only a card reading “best wishes, Brian”, leaving you to wonder who on earth Brian might be.

That is no consolation if it is really preferable to receive nothing at all than to receive a newsletter. But that seems unlikely: economists talk of “free disposal”, a theoretically convenient assumption that would not apply to a half tonne of manure on the doorstep, but surely describes the marginal cost of throwing away Brian’s newsletter along with his card. If you are so certain that these newsletters contain nothing of interest, waste no time in reading them.

You have evidently not discovered the work of economists Jess Gaspar and Ed Glaeser, who show that the new communication technologies - mobile phones, e-mail, word-processors - are not substitutes for traditional human interaction but complements to it. These newsletters, like e-mails and weblogs, help keep friendships alive and actually increase the number of old-style face-to-face meetings.

If you are finding that despite all these newsletters you still have no real friends, I don’t think you should blame the newsletters.

A quick question, as the Christmas cards arrive on the doorstep. Do you prefer the ones with round-robin letters or the ones with nothing but a quick signature or “hope to see you in 2009″? Yes, a handwritten letter in every card would be best, but one must be realistic.

And no, I did not send round-robin letters this year. I probably should have.

Strictly for Strictly Come Dancing fans…

If you want to succeed at Strictly Come Dancing, you need the full package: the clothes, the moves, the smile. The ability to add up would not go amiss, either.

Last week’s voting fiasco on Strictly saw the show’s organisers effectively giving up on the whole point of the format, cancelling the dreaded “dance-off” and declaring that all three couples would proceed to the final.

The apparent problem was that two couples tied for first place in the judges’ affections, giving them three points each and leaving Tom Chambers and Camilla Dallerup languishing in third place with a single point.

Only the leading couple could avoid the dance-off, so while the viewers were being invited to phone in and save Tom, it was ever so slowly dawning on the show’s producers that even if every single viewer voted for him, he couldn’t magically leap into first place.

The BBC’s head of entertainment, Jon Beazley, said the bungle had been “unforgivable” but blamed the “exceptional circumstances” of a tie at the top of the leader-board. But were the circumstances really so exceptional?

More or Less, BBC Radio 4’s programme about the numbers in the news, does not think so. Inspired by an email from a listener, we looked at how often we should expect a tie…

A matter of national interest, I’m sure you can agree. You can read the rest of the article on the More or Less website. 

David Warsh shouldn’t have to write this:

I have given a pretty good account of how Harvard professor Andrei Shleifer was found to be investing in Russia, along with his wife, deputy, and deputy’s family, in violation of his contractual obligation to provide disinterested advice… but you would never have a clue that any of this had happened from three of the most widely-read economists’ blogs, the Freakonomics site, J. Bradford Delong’s Semi-Daily Journal, or N. Gregory Mankiw’s blog. Why?  Because they are economists, and not committed to “without fear or favor” news, though they deliver plenty of interesting tidbits over the course of a week.

The point is, Warsh’s site, Economic Principals, tells you things you won’t hear elsewhere. It is highly recommended.

Elsewhere, Shanta Devarajan of the World Bank has a new blog about Africa. Recent posts discuss Paul Krugman’s ideas on economic geography and their relevance to Africa.

Also elsewhere, my wife has a blog, How To Make A Difference. Each post is a profile in words and pictures of someone who is changing the world in one way or another.

This morning, I had a remarkable experience: I strolled into a delicatessen and bought some delicious Stilton. What made the shopping trip unusual was that I was wearing a brain scanner while I did it.

My costume consisted of an electroencephalograph (EEG) cap, which looks like a polka-dot shower cap with wires plugged into it; a pair of wrap-around glasses with a tiny video camera attached; a clothes peg on one finger to measure my heart rate; two other finger monitors that functioned like a lie-detector; a thermometer patch on a fourth finger; and a satchel to hold a computer gathering the data.

Most of these devices, or their equivalent, can be hidden under clothes or baseball caps so that the wearer looks as if they are sporting only shades and an iPod, but in my case the boffins hadn’t bothered, and so I entered the deli looking like an extra from a 1970s episode of Doctor Who.

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

A few yards out, something brushes against my leg - a fish? A floating bottle? - causing a reflexive, panicky yelp. Then, as we head out towards the middle of the lake, I feel myself growing in confidence. When I duck my head below the waves, at first I can see the weeds and the water. After a while, there’s nothing down there but shafts of green light disappearing into the darkness. It’s disconcerting to look for more than an instant.I flip between sidestroke and back crawl while Fran, the stronger swimmer, sticks to a confident breaststroke. The wetsuits are a miracle, taking the water’s sting away. We arc out towards the centre of the lake, venturing gradually further from the shore, while the walking party disappears from view behind a ridge.Wordsworth once praised the view from the centre of Crummock Water, but he was in a boat, which is cheating. He was right, though. With dead-flat water all around us, cormorants swooping low over the surface ahead, and the vast bulks of Mellbreak and Grasmoor above, this is the most impossibly beautiful place.

The full article is here. I don’t want to spoil the plot, but it involves me getting wet. Pictures in today’s FT Magazine.

I can attest that he’s an excellent speaker and always provocative.

‘Decisions, Probability and Beliefs: Beware Mickey Mouse probability’ is on Monday 13 October at 7-8.30pm in the Sheikh Zayed Theatre, New Academic Building, LSE, 54 Lincoln’s Inn Fields, London, WC2A 3LJ.