Here’s a letter to the Baltimore Sun:
Describing University of Maryland economists’ efforts to devise a sensible system for use by the state government to buy back dormant commercial crabbing licenses, you write “Economists acknowledge that while money matters to watermen, there are some factors, such as the desire to work on the water, that their models can’t capture” (“A new theory of ‘crabonomics’,” April 6).
Yes and no. Even the best economic models fail to capture many (one hopes economically insignificant) aspects of reality. But the most foundational of all economic models – supply and demand – in fact does capture many non-monetary human sentiments, such as “the desire to work on the water,” that non-economists wrongly assume are missed by economics.
The non-monetary pleasure that watermen enjoy from working on the water makes the supply of waterman higher because, at any given wage, more people are willing to work at pleasant jobs than at unpleasant ones. So, as a result, the model of supply and demand predicts that watermen’s monetary pay is lower than it would be if working on the water were less pleasant. Part of watermen’s pay comes in the form of the non-monetary pleasures they derive from their jobs.
In reality the economy is certainly not all about money, and economics – when done properly – captures this reality.
Donald J. Boudreaux
P.S. Should the watermen’s non-pecuniary pleasures be added to their pecuniary incomes when calculating their taxable incomes? What about when calculating figures on income ‘distribution’?
Show me a good economist and I’ll show you someone who never supposes that money, money prices, and monetary wealth are all that matter – in fact, someone who understands that, at the end of the day, money is never (save in the psychopathic cases of misers) what ultimately matters to anyone.