Monday, March 12, 2012

Tim Harford on sex - and other things

I had a part completed post, a follow up post to Sunday Essay - language, social change & productivity improvement, but then put it aside because I was roaring with laughter. The cause was Tim Harford's book Dear Under Cover Economist.  The following is an excerpt from one entry.

Dear Undercover Economist

I am seventy-four, vigorous, wealthy and boringly married. My girlfriend of eight years, who is thirty-seven, has found a man of her own age of moderate means. She has assets of £300,000 and a salary of about £50,000. I had intended to give her £250,000 and would still do so if she continued a discrete relationship with me. What do you think?

The response read in part:

Dear Mr Smith

Your plan must overcome two obstacles. First Milton Friedman's 'permanent income' hypothesis invites us to consider any temporary windfall in terms of the income it could generate in perpetuity. In 2004 your payment of £250,000 ... would have generated a permanent income of roughly £5,000 at prevailing real interest rates. This is only a modest sum compared with your girlfriend's salary....

There is a second concern - you cannot write an enforceable contract setting out what you expect for your considerable outlay.

I have left bits out, but this will give you a feel. It's really very funny. 

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