Samuelson on Why You Should Study Economics

Paul Solman: We continue this week with excerpts from an interview I did with Paul Samuelson in his office almost a decade ago, just after the dot.com collapse in the year 2000. I was helping make a series of videos to accompany McGraw-Hill’s introductory textbooks, a line of offerings begun with Samuelson’s fabled McGraw-Hill textbook of 1948. (The company has since adopted the General Motors strategy of a textbook for every level of buyer, differentiated not by social class — Chevy to Cadillac — but sophistication, with “Samuelson” occupying the highest niche.)

SOLMAN: Why study economics?

SAMUELSON: Well, because it’s an important part of human life, of social life, and I think, properly presented, it’s actually very interesting in its own right. That’s why it’s the biggest course in most colleges.

SOLMAN: It’s the biggest course in most colleges because kids want to get into business school and that’s a way to prove that you’ll get in.

SAMUELSON: Well, that’s true, and it won’t hurt you in making the personal selfish business decisions of life and might well help you. But more than that, we live 24 hours a day, we’re voters, we’re not chasing the buck and living by bread alone all the time, so that the kind of economics that I believe in, I think is extremely important.

SOLMAN: But if life were largely by bread alone, then the reason you would study economics to get more bread.

SAMUELSON: Right. But [if not, as] James Mill, who brought up John Stuart Mill, said, ‘John, we don’t believe in poetry, you and me, but because people do think it important, you should study how to write poetry and how to appreciate it.’

SOLMAN: In one of the recent editions of your textbook, co-authored by William Nordhaus of Yale, you use Robert Frost’s “Two Woods Diverged” –

SAMUELSON: Path Not Taken?

SOLMAN: Yes, the road not taken. Is that a good example of opportunity cost?

SAMUELSON: Yes, it is, and it’s a perfect example of how to rate the decision trees [LAUGHTER]. You know what Yogi Berra said?

SOLMAN: Let’s not go to there.

SAMUELSON: I want to add to your education. Yogi Berra said, when you come to a fork of a road, you take it. [LAUGHTER]

SOLMAN: But you can’t. The point of economics is, you can’t, right?

SAMUELSON: [LAUGHTER] You’re not making a decision if you come to a fork in the road. [LAUGHTER] There is no “it” to take. It’s one or the other.

SOLMAN: And that’s the point.

SAMUELSON: Yes.

SOLMAN: Right. And so the road less travelled is that you come to two roads diverging in the wood —

SAMUELSON: Right. And I have to tell you that, in my professional life, I’m always doing contrafactual history.

SOLMAN: Meaning?

SAMUELSON: The history is as it really worked out. The contrafactual history is what it would have been the other way. Think of the Kennedy triumph in the missiles crisis. Worked out fine. Khrushchev blinked and so forth. The other road, you don’t want to think too hard about. You could have had nuclear missiles wiping out a tenth of the globe.

SOLMAN: But as an economic metaphor, two roads diverging in the yellow wood, I took the one less traveled by, and that has made all the difference.

SAMUELSON: Right, yes. Also, pony in the woods, I have promises to keep.

SOLMAN: Yes?

SAMUELSON: That’s opportunity cost.

SOLMAN: “I have promises to keep and miles to go before I sleep and miles to go before I sleep.” Because?

SAMUELSON: I can’t stay, I have other duties that I have to do.

SOLMAN: [LAUGHTER] OK. This is the Robert Frost economics textbook.

SAMUELSON: By the way, Wordsworth is full of economics, metaphors and so forth.

[…TO BE CONTINUED]