In Print and On the Air

Nobel Prize winners and top academics fumble the sorts of decisions Bush's Social Security overhaul plan would ask average Americans to make in taking charge of their own investment accounts, the Los Angeles Times reported May 11. Several Nobel laureates in economics told the newspaper that they have invested large portions of their nest eggs in money market accounts, some of the lowest-returning investment vehicles available. Hoover Senior Fellow DOUGLASS C. NORTH, who won the 1993 Nobel Prize for work on the importance of institutions in fostering growth, decided to trust his gut rather than institutions when it came to investing his prize money. He concluded that the stock market had peaked, and poured money into low-interest municipal bonds. When stocks doubled in value, "My wife spent years berating me," he said. Eventually, stock prices reversed course. Chief among the rewards he said he collected: "My wife quit berating me." Because research suggests that most people don't behave anything like the economically savvy folk that free-market advocates say they are, some experts argue that Social Security should be kept as it is today—a safety net—rather than convert it into an investment vehicle. "We have a lot of people out there with 401(k)s who have never managed an investment in their lives and are just trying to keep themselves from drowning," said WILLIAM F. SHARPE, professor emeritus at the Graduate School of Business and 1990 Nobel laureate who founded a company that offers to make people's retirement choices for them. "I suspect if you asked them, they'd say: I've got enough trouble; I don't want to screw up my Social Security," he said.

According to new research by economics Assistant Professor MURIEL NIEDERLE and Lise Vesterlund, a University of Pittsburgh economist, men and women have different appetites for competition, the New York Times reported May 24. The economists recently carried out an experiment on competition by paying men and women to add up five numbers in their heads. At first they worked individually, doing as many sums as they could in five minutes and receiving 50 cents for each correct answer. On average, the women made as much as the men. But when they were offered a choice to take a piece rate or compete in a tournament, most women declined to compete, whereas most men chose the tournament. "Even in tasks where they do well, women seem to shy away from competition, whereas men seem to enjoy it too much," Niederle said. "The men who weren't good at this task lost a little money by choosing to compete, and the really good women passed up a lot of money by not entering tournaments they would have won."