I had recently been “in search of explanations for everyday enigmas” when I happened upon a book by Robert H. Frank.Â FrankÂ believes that “even those who have taken an economics course in college typically emerge with little working knowledge of basic economic principles.Â I agree and in The Economic NaturalistÂ Frank compiles numerous examples from everyday life.Â While the title may scare many people away, it is an entertaining book to read and is not at all dry.Â Through Frank’s examples you get a great background on how the free market and economics play a role in many unusual ways.
Have you ever wondered why airlines charge business passengers who are their best customers the most for their tickets?Â Why do most cleaners charge more to clean women’s clothing than men’s clothing?Â Why do female models charge more than their male counterparts?Â Why do hotels charge so much for the products in their minibars?Â Why does Apple charge more for a black computer than for the white models?Â
One that always bothered me was the fact that my mortgage company will charge meÂ $20.00 to make my payment electronically.Â I can pay with a paper check for free even though they have to pay someone to process the check and generally wait several days to get the funds transferred.Â I would prefer to pay electronically as I do with most of my other bills, but don’t want to pay the extra money.Â The basic answer to these questionsÂ is because they can.Â “The demand for a given product is a measure of what people are willing to pay for it…People will keep buying more of a product as long as the value they assign to the last unit consumed is at least as great of its price.”Â
My son bought a black MAC, but my daughter opted for the white model.
Frank also explains the historical perspective behind many of our customs.Â Â Do you know why women’s buttons are on the left and men’s are on the right?
I don’t want to give you the impression that The Economic Naturalist is a frivolous book.Â The author provides background from noted economists like Adam Smith and his invisible hand and the fact “that unbridled competition always produces the greatest good for all.”Â Frank also noted the fact that the very high standard of living of Americans is due in large part to our strong beliefs and laws protecting private ownership of property.