The most glaring deficiency in traditional economic models is that they completely ignore the role of context in evaluation.

Questions like, "Is my suit OK?", or "Is my job performance satisfactory?", are impossible to think about in the absence of a suitable frame of reference. For an interview suit to serve its purpose, it must make you look good relative to other candidates for the job you want. For your job performance to be satisfactory, it must compare favorably with the performance of others who want the same promotion you do. As Charles Darwin saw clearly, much of life is graded on the curve, and conventional economic models completely ignore that fact.

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 rich build bigger, they shift the frame of reference that shapes the demands of the near rich, who travel in the same social circles. Perhaps it's now the custom in those circles to host your daughter's wedding reception at home rather than in a hotel or country club. So the near rich feel they too need a house with a ballroom. And when they build bigger, they shift the frame of reference for the group just below them, and so on, all the way down.

As economists have long noted, the puzzle is not that so few people vote, it's that so many do. After all, no individual's vote has ever tipped the balance in a presidential election.

Getting the economy back on its feet is properly viewed as an investment in future prosperity. When businesses and consumers confront attractive investment opportunities, often the only way to seize them is by borrowing. The same is true for government. Contrary to the pronouncements of critics of economic stimulus, these investments will not impoverish our grandchildren. Continuing to allow the economy to languish in recession is the surest way to impoverish them.

No one could argue with a straight face that the couples getting married today are much happier just because their wedding celebrations cost three times as much as those in 1980. Bigger mansions and costlier parties are wasteful in the same sense that larger antlers on all bull elk are wasteful. The good news is that simple changes in the tax system can eliminate much of this waste without having to deny people the right to decide for themselves how best to spend their money.