In our daily lives we are affected as frequently by the workings of economics as by the laws of gravity, or the sunspot cycle. So why should it be that the economy can seem more mysterious than the natural world and economists the practitioners of an arcane cult? After all, isn't it we who do the work that determines how the economy moves?
          To shed light on the basics of economic science, Dr. Robert H. Frank, the H. J. Louis Professor of Management and professor of economics at Cornell University's Johnson Graduate School of Management, dispensed with many of the charts, graphs and mathematical formulas that can cause learning minds to blur. Instead, he and his students have for many years sought out instances of economic decisions at work, case histories that reveal the cost-benefit principles behind human activity. The best of the questions and answers have now been collected in "The Economic Naturalist: In Search of Answers to Everyday Enigmas." These enigmatic encounters include:

Why do so many supermarkets, even in small towns, stay open 24 hours a day?
Why does the phrase "as seen on TV' appear on print ads and product packages?
Why might an appliance dealer hammer dents into a refrigerator?
Why are brown eggs more expensive than white eggs?

          In each instance there is a cost/benefit relationship than can be observed and calculated. The costs are not always monetary, nor are the benefits immediate and bankable, but in every case they reveal something about both economic principles and human nature.
           As Professor Frank explained in an interview with Cornell ETV (which you can hear here), he was aware that first-year economic students often retained little or nothing of what they should have learned in class, and this was due to the technical nature of the tutelage. "If they don't catch something in a narrative structure, it doesn't get remembered very well." So over the years, Dr. Frank and his students have posed questions and researched the answers, often finding strong threads of irony in the cases. He was motivated in part by the work of Cornell's John S. Knight Institute for Writing in the Disciplines.

Why do rental car companies impose no penalty for canceling a reservation at the last minute, whereas both hotels and airlines impose significant cancellation charges?
          ...Customers don't like cancellation fees, and a rental car company that does not charge them would have a competitive advantage over other companies that did. Airlines and hotels, of course, have the same motive for avoiding cancellation fees. Presumably they charge such fees because allowing customers to cancel at the last minute would also be costly. Airlines would have many more unfilled seats on each flight, and hotels would have many more empty rooms. In each case, it would be necessary to charge substantially higher prices to stay in business...
                                                  -- from The Economic Naturalist

          Robert Frank is the author of many books and articles, including "The Winner-Take-All Society" and "Luxury Fever". He co-authored "Principles of Microeconomics" with Princeton economist Ben Bernanke, now chairman of the Federal Reserve. Dr. Frank is also a monthly columnist for The New York Times. He joins Bill Jaker to tell about the forces that move the economy and to share examples of economic naturalism. For your questions or observations - and more "everyday enigmas" - call during the live 1:00 PM broadcast to 1-888/359-9754 or post a comment to WSKG.Radio@Gmail.com.

NEXT TIME: In the 1950s baseball fans would facetiously remark that "the Kansas City Athletics is the New York Yankees major league farm club." But it turns out that wasn't much of a joke. The new book "The Kansas City A's and the Wrong Half of the Yankees" details the unsporting moves that allowed the Yankees to control two American League franchises. Author Jeff Katz, who lives in Cooperstown, visits OFF THE PAGE on Tuesday, June 12th to tell about a deal that changed baseball history.

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