One reason that might motivate a worker to accept a riskier job at higher pay, for example, would be that doing so would enable him to bid more effectively for a house in a better school district. But if other workers did likewise, none would achieve the goal they were striving for.

If the search is for examples that contradict the predictions of standard economic models, a good rule of thumb is to start in France.

We're in a classic demand-shortfall recession. There aren't enough jobs because total spending is too low. Consumers won't lead the way because they're busy paying down debt and are fearful they'll lose their jobs, if they haven't already. Businesses, which are currently sitting on mountains of cash, won't spend either, because they already have sufficient capacity to produce more than people are willing to buy.

Economics, as it is often taught today, portrays us as homo economicus-someone who doesn't vote in presidential elections, doesn't return lost wallets, and doesn't leave tips when dining out of town. Julie Nelson reminds us that most people aren't really like that. She helps point the way to a richer, more descriptive way of thinking about economic life.

When the economic pie grows larger, it's always possible for everyone to have a larger slice than before. So it's really in all of our interest to make the economic pie larger by eliminating waste whenever and wherever possible.

For the three decades after WWII, incomes grew at about 3 percent a year for people up and down the income ladder, but since then most income growth has occurred among the top quintile. And among that group, most of the income growth has occurred among the top 5 percent. The pattern repeats itself all the way up. Most of the growth among the top 5 percent has been among the top 1 percent, and most of the growth among that group has been among the top one-tenth of one percent.

All parents want to send their children to the best possible schools. But because a good school is a relative concept, a family cannot achieve its goal unless it outbids similar families for a house in a neighborhood served by such a school. Failure to do so often means having to send your kids to a school with metal detectors at the front entrance and students who score in the 20th percentile in reading and math. Most families will do everything possible to avoid having to send their kids to a school like that. But because of the logic of musical chairs, they're inevitably frustrated.