Ego or Money?

Greg Mankiw complains that if taxes go up for people with incomes as high as his, he won't work as hard and that means he won't be able to leave as much for his kids. Incentives matter he says. If that's the case, I wonder why someone who is trying to take away the incentive for his kids to work hard and be successful on their own doesn't leave academia and become a high paid consultant.

I'm sure Greg Mankiw could clean up as a consultant. The same effort he puts into academics would be much more highly compensated somewhere else. The fact that he decided to become an academic in the first place indicates that it's not all about the money.

As Greg Mankiw makes clear every chance he gets, he's at Harvard. That tells me that the return to his ego is every bit as important as the financial return. I'd further guess that even if the New York Times stopped paying him for his column, he'd write it anyway. It's a boost to his ego and reputation that he'd want even without whatever small payment he gets for each column (he could make more by using the time to prepare a talk "to a business group, consulting on a legal case, [or] giving a guest lecture," so the opportunity cost of the column is quite high).

But, I suppose we will see. If taxes do go up, I expect Greg Mankiw to give up his NY Times column -- he's implied it just won't be worth it -- so we shall see if he really means what he says:

Now you might not care if I supply less of my services to the marketplace — although, because you are reading this article, you are one of my customers.

If taxes do go up and he doesn't give up the column, then we'll know he was mostly blowing smoke.

Oh, and did you hear that Greg Mankiw is at Harvard?