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Economics -- The Musical

John DiNardo wearing a jacket and tie

I've said for a long time that Bruce Springsteen would have been a great economist. Springsteen started writing about the widening economic and social inequality that hit the United States at the end of the 1970s (and continues through today), long before the economics profession even noticed.

John DiNardo, however, is an actual, practicing economist in what I think of as the Springsteen tradition. He is one of the country's best economists, with important and creative papers on inequality and labor markets in top economic journals including Econometrica, the Quarterly Journal of Economics, and the Journal of Political Economy. DiNardo is also a musician who sings about economic issues.

His personal web page includes four downloadable songs in MP3 format (about halfway to a CD): "Monopsony in Motion"; "Non-Convex Desires"; "I Wish Life Could Be (Like in the JPE)"; and "(My Little) Regression Discontinuity". He has also posted a video (in mpg format) covering The Romantics' "What I Like About You".

The first DiNardo song I ever heard was "Monopsony in Motion" (lyrics), named after London-School-of-Economics professor Alan Manning's Princeton-University-Press book of the same name. "Dynamic monopsony", as it is known formally, is a theory about the way the labor market works. The basic idea is that relatively small imperfections in the functioning of labor markets, especially with respect to the flow of information (say about the number and location of job vacancies), can have a significant impact on labor-market outcomes.

The most famous example concerns the minimum wage. In a perfectly competitive labor market, imposing a binding minimum wage (one above the market wage) inevitably leads to job loss, since employers will choose not to hire workers whose productivity is below the new minimum. If workers have only imperfect information about the job vacancies, however, employers may actually exercise a form of monopsony power (like the old example of the town with only one large employer). If employers do have some monopsony power, then setting a minimum wage might have no negative impact on employment and could conceivably even raise employment. (For a lucid introduction to dynamic monopsony, see the first chapter of Alan Manning's book or, for a somewhat technical overview, see economist Madaline Zavadony's account here. Of course, for the best discussion, read Manning's book.)

As fond as I am of dynamic monopsony, Manning's book, and the idea of the song, "Monopsony in Motion" is probably DiNardo's weakest song. Have a listen or read the lyrics, and judge for yourself. I like the idea of trying to give dynamic monopsony some emotional content ("Monopsony can break your heart / and tear your world apart" or "We all know it's a tragedy / But capitalists will rue the day / When workers have their way"), but the song falls short. The first verse sets off on the right track, by discussing the specific cases of a woman whose job "don't pay well" and a man whose labor "don't sell". Springsteen, however, would have built on this initial instinct to personalize the market imperfection, rather than jump straight into the "anthem rock" lyrics in the chorus and second verse ("Capitalist Man has got me down").

The other three original DiNardo songs on the page are really outstanding. DiNardo's lyrics use economics the way Springsteen's early music used cars (think "Backstreets" or "Thunder Road" or "Racing in the Streets" or "Streets of Fire"). The difference is that for Springsteen cars promised self-realization and freedom, while for DiNardo, economics is dehumanizing and oppressive.

In "Non-Convex Desires" (lyrics), DiNardo finds a lover that doesn't fit any of the standard economic models (non-convex desires, local non-satiation, a discontinuous love function). But, of course, this is what makes her so attractive ("Come on baby won't you share your non-convex desires with me"). After things fall apart, he concludes: "Too much economics / can lead a man straight to hell".

"I Wish Life Could Be (Like in the JPE)" (lyrics) mocks the economic rationality that characterizes the University of Chicago's Journal of Political Economy (where DiNardo has published). If life were like it is supposed to be in the JPE, then DiNardo would be happy because everything would always be "optimal" and he would "Never give a god god damn for anyone but [him]self".

Musically, DiNardo is, of course, no Springsteen. "(My Little) Regression Discontinuity", written in homage to a 2003 academic conference on "The Regression Discontinuity Method in Economics", however, has some appealing guitar, better than passable vocals, and a nice hook built around "discontinuity" (surely a first in American, if not world music). Though, personally, I'd lose the synthesizer.

While it has nothing to do with economics, I also loved the short video of DiNardo and a little guy covering The Romantics' "What I Like About You", one of my favorite songs from the early 1980s.