marginal utility

I had a bad habit. I would get up, check e-mails; next thing I knew, several hours of surfing would have gone by. As 2007 wound down, I worked out 1) that the marginal utility of spending an extra two hours online was infinitesimal compared to the utility of going to the gym (2 hours including travel and changing) and 2) that the marginal utility of spending an extra 4 hours online was negligible compared to the advantage conferred by going to a language course 5 days a week and tackling German. If I had replaced 6 hours of time online with those 2 activities daily for the whole of 2007 I would now be 1) thin, fit and cheerful and 2) in a position to get a job. I say 'year' but 3 months would have done the trick. So I have been getting in touch with my inner Utilitarian.

Meanwhile, Tyler Cowen has a post on Marginal Revolution referring to his article with Karl Bordeaux about microcredit, the full text of which is available at Wilson Quarterly. He says:

Sometimes microcredit leads to more savings rather than more debt. That sounds paradoxical, but borrowing in one asset can be a path toward (more efficient) saving in other ­assets.

...Westerners typically save in the form of money or ­money-­denominated assets such as stocks and bonds. But in poor communities, money is often an ineffective medium for savings; if you want to know how much net saving is going on, don’t look at money. Banks may be a ­day­long bus ride away or may be plagued, as in Ghana, by fraud. A cash hoard kept at home can be lost, stolen, taken by the taxman, damaged by floods, or even eaten by rats. It creates other kinds of problems as well. Needy friends and relatives knock on the door and ask for aid. In small communities it is often very hard, even impossible, to say no, especially if you have the cash on ­hand.

...Under these kinds of conditions, a cow (or a goat or pig) is a much better medium for saving. It is sturdier than paper money. Friends and relatives can’t ask for small pieces of it. If you own a cow, it yields milk, it can plow the fields, it produces dung that can be used as fuel or fertilizer, and in a pinch it can be slaughtered and turned into saleable ­meat or simply eaten. With a small loan, people in rural areas can buy that cow and use cash that might otherwise be diverted to less useful purposes to pay back the microcredit institution. So even when microcredit looks like indebtedness, savings are going up rather than down.

In other words, read Keynes's chapter 17, go long on animals (liquidity premium exceeds carrying costs), go short on money (carrying costs exceed liquidity premium, at least in poor countries), and increase your future expected net wealth.

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and now I must go to the gym before returning to verbs and their prepositions.