Back from a vacation, I saw John Whitehead’s July 14 request for book reviews of interest to economists and others. While I have seen Freakonomics and The Lorax mentioned, I have not yet seen a review on this site of an incredibly influential series (at least, if you read some of the religious opposition to it), the Harry Potter books, by J. K. Rowling (whose most recent installment came out in July).
What does Harry Potter have to do with economics? Let’s just take a few of the themes in it and see how they fit.
Harry Potter (much to my children’s disappointment when they turned 11) is fantasy. What economist has not been told that our assumptions on human behavior fit in that category?
Witchcraft and wizardry? Any policy-oriented economist has been accused (sometimes with more justification than we’d like to admit) of conjuring information from virtually nowhere. And isn’t it magical how, in a world with no market imperfections (certainly as fantastic as the wizarding world), consumer and producer self-interest lead to maximum net benefits to society? Still, there is one theme that J. K. Rowling has put big neon arrows and flashing lights around: choice. In the second book of the series, Harry Potter and the Chamber of Secrets, Professor Dumbledore tells Harry that “It is our choices. . . that show what we truly are, far more than our abilities.” This theme gets its explicit repetition in Harry Potter and the Half-Blood Prince, the most recent addition to the series, in a discussion about the meaning of prophecies. There can be no question that we all must face choices – some of which are between bad and worse options – and that how we decide reveals our character. Well, isn’t this exactly what economics is about? The definition of economics that I give my students is that it’s the study of the allocation of scarce resources. If life didn’t involve tradeoffs, there would be no reason for this list, and the economics profession might be reduced to tallying wealth. Harry’s major choice -- whether and how to pursue the evil Lord Voldemort, at possibly lethal cost to himself – is a little more dramatic (and a lot more fun to read) than my decision whether to write this or work on my fall course syllabus. Still, making choices is the human (economic) condition. The second part of choices, as Dumbledore notes, is that they reveal who we are. The principles of demand theory, including nonmarket valuation, rely on this principle. How I spend my money, how I allocate time between work and other activities, and an infinite number of sublime to ridiculous choices disclose a lot about me. I may talk a good game about caring about the environment, but I’m much more credible if I put my money, time, or other effort into environmental protection – if I have to give something up in exchange. Harry Potter, from the beginning of the series, could have stayed away from anything having to do with the Dark Lord, but Rowling would have had to find a different character for her series. At the end of the current book (no, I won’t give it away), he yet again faces tradeoffs in pursuit of ridding the world of the bad guy, and he yet again chooses the battle. This is the core of revealed preference analysis. There’s even an environmental economics-related theme: killing Voldemort has nonrival and nonexclusive effects, and the fifth book in the series might be interpreted (okay, with a stretch) as a problem in provision of a public good. Then there’s that other stuff – mystery, adventure, friendship, romance, humor – that economists are usually considered to lack (except mystery, according to my students). I’ll let other reviewers handle that stuff. Now, back to that course.
