There has been much hype about a recent book by sociologist Catherine Hakim, [amazon_link id=”1846144191″ target=”_blank” ]Honey Money[/amazon_link]. I’ve not read it, but neither am I encouraged to do so by the almost universally bad reviews.

Meanwhile, a book called [amazon_link id=”0691140464″ target=”_blank” ]Beauty Pays: Why Attractive People Are More Successful [/amazon_link]by respected labour economist Daniel Hamermesh has landed on my desk. It’s a short and sober book mainly documenting the existence of a wage premium earned by those who are rated as being above-averagely attractive (rather than explaining why it exists, contrary to the subtitle). The data are mainly North American, although some other countries are included, and cover decades as long ago as the 1970s.

Hamermesh reports that there is a 4% premium for a good-looking man as compared to an average-looking man; a 4% penalty for a below-average looking woman as compared to an average-looking woman. Of course there are questions about the data. ‘Beauty’ is assessed by looking at pictures and rating them on a 5-point scale; but on the other hand there is consistency between different people’s assessments of beauty. The regressions also need to control for a wide range of other factors that affect earnings, such as education, age, health and so on.

The existence of the pay premium makes sense of the large market for beauty-enhancing products, of course. Why not invest in face cream if it pays off in higher earnings or a promotion? The economic evidence seems pretty clear.

So does that mean sociologist Hakim is vindicated in (apparently) advising her readers to make an effort to gussy themselves up, increasing their ‘erotic capital’ to do better in the work place? Well, what I’d have hoped for from a sociologist is an analysis of the reasons for the existence of the beauty premium and in particular the extent to which the premium is a social construct rather than reflecting, say, evolutionary basics such as a link between health and beauty. Economists can help here by repeating the kind of work reported by Hamermesh in Beauty Pays for a range of cultures and for different time periods. But the fundamental question is whether the ‘beauty premium’ is an exogenous given or the product of a social norm that can change. As a feminist, I’d rather concentrate my energies on making society better than on shopping for beauty products.

[amazon_image id=”0691140464″ link=”true” target=”_blank” size=”medium” ]Beauty Pays: Why Attractive People Are More Successful[/amazon_image]

Like many others, I’ve enjoyed the Keynes-Hayek raps and the recent Keynes-Hayek debate. Today, while browsing through the Roy Harrod (1951) [amazon_link id=”0140214402″ target=”_blank” ]Life of Keynes[/amazon_link] – which is so good for its insight into the evolution of Keynes’s thinking – I came across the following quotation from a letter Keynes wrote to Hayek in 1944, about [amazon_link id=”0415253896″ target=”_blank” ]The Road to Serfdom[/amazon_link]:

“In my opinion it is a grand book. You will not expect me to accept quite all the economic dicta in it. But morally and philosophically I find myself in agreement with virtually the whole of it; and not only in agreement with it, but deeply moved agreement…. Your greatest danger ahead is the probable practical failure of the application of your philosophy in the US in a fairly extreme form. No, what we need is the restoration of right moral thinking – a return to proper moral values in our social philosophy. If you could turn your crusade in that direction, you would not look or feel quite so much like Don Quixote.” (p515 Harrod, 1972 paperback edition)

This is fascinating for at least two reasons – the heartfelt agreement, and the warning about the extreme application of the ideas in The Road to Serfdom in the US.

The real reason I was browsing in the first place was to try to get my head around the role of changes in wealth and household assets and saving in a situation of excess demand in labour and goods markets. Malinvaud’s [amazon_link id=”063117690X” target=”_blank” ]Theory of Unemployment Reconsidered[/amazon_link] highlights this variable. Adverse wealth effects for the household sector have been enormous, and of course interest on savings is more or less zero at present. But, not being a macroeconomist, I’ve not made much headway with this. More another time.

[amazon_image id=”0393300242″ link=”true” target=”_blank” size=”medium” ]The Life of John Maynard Keynes[/amazon_image]

I’ve spent a few days in Banff speaking at the Alberta Innovates Technology Futures Annual Summit – the life of an economist can be rough.

Bow River,Banff, Alberta

I enjoyed the conference, and was delighted to find that the organisers were giving my book, [amazon_link id=”0691145180″ target=”_blank” ]The Economics of Enough[/amazon_link], as a gift to all the speakers, along with [amazon_link id=”1422166961″ target=”_blank” ]The Other Side of Innovation[/amazon_link] by Vijay Govindarajan and Chris Trimble. Chris was a keynote speaker too.

Generally I don’t read management books – there are plenty of economics titles that appeal more, and besides so many of the management books are truly dreadful – trite analysis and dire prose. However, The Other Side of Innovation is a definite exception to this generalisation. It is a clear exposition, drawing on many examples the authors have studied, of how to enable innovation within an incumbent firm, even though innovation will almost always be in tension with existing activities. As Chris said: “Corporations are machines designed to excel at yesterday’s business.” There needs to be an entirely separate project team looking after the innovation, the authors argue, and above all a senior leader in the organisation who will be responsible for the innovating team and adjudicate in its disputes with the mainstream of the business. This sounds like common sense but it is evidently only rarely done. And I found it so refreshing to find this written in jargon-free, steady prose instead of the usual management-speak.

My other gift book (rather than a copy of my own) was [amazon_link id=”0465003001″ target=”_blank” ]Reinventing the Sacred[/amazon_link] by Stuart Kauffman, which I’m looking forward to reading. And what a delightful gesture to thank speakers with some beautifully wrapped books – it wouldn’t work if we only had e-readers.

[amazon_image id=”1422166961″ link=”true” target=”_blank” size=”medium” ]The Other Side of Innovation: Solving the Execution Challenge (Harvard Business Review)[/amazon_image]

On my travels, I’m allowed to read books that are not specifically about economics, and I’ve just finished Mavis Gallant’s [amazon_link id=”0241127122″ target=”_blank” ]Paris Notebooks[/amazon_link]. In it is a marvellous essay about the architectural and social damage done to Paris in the 1970s. And I found this comment about the large numbers of alienated and despised young people already living in the desolate estates in the Parisian outer suburbs – for obvious reasons it brought to mind our London ‘riots’:

“One wonders if any society is so rich in youth and strength and vivacity that it can afford such a waste.”

The first half of the book is her diary of the events of May 1968, and makes for gripping reading too.

Looking at the various reactions to Ben Bernanke’s speech yesterday at Jackson Hole, with its hint that the Fed could consider QE3, but not yet, I was reminded of a fascinating memoir of the 1930s by Benjamin Roth. Roth was a lawyer in Youngstown, Ohio, and kept a diary about financial and economic events, recently republished as [amazon_link id=”158648799X” target=”_blank” ]The Great Depression: A Diary[/amazon_link]. What struck me when I first read it was the way the Depression dragged on and on, with numerous false dawns. As Roth noted in 1936: “When I started these notes, it never occurred to me that the depression would last more than two years. We are now in the beginning of the seventh year and the road is not yet clear – with the possibility of inflation ahead. We seem to be emerging form the panic, industry is picking up etc – but so much of it has been created by artificial spending that it is difficult to know where we stand.”

The long, long era of slow Japanese growth, and many other examples set out in that essential resource [amazon_link id=”0691152640″ target=”_blank” ]This Time Is Different[/amazon_link] by Reinhardt and Rogoff, underline the same point. It takes a long time for the economy to recover from a significant banking crisis.

[amazon_image id=”158648799X” link=”true” target=”_blank” size=”medium” ]Great Depression Diary[/amazon_image]