https://www.nber.org/papers/w34952 grade inflation

https://x.com/nberpubs/status/2035069223026721062 wfh fertility 

Pride and Profit: The Intersection of Jane Austen and Adam Smith

That is the title of a book by Cecil E. Bohanon and Michelle Albert Vachris. 

Click here to read the review by Carlos Rodríguez Braun. He is a professor of History of Economic Thought at the Universidad Complutense in Madrid.

"That Jane Austen can be associated with moralists, Adam Smith in particular, has been well known for many years. Although the English novelist does not quote the Scottish philosopher and economist or any other intellectual authority, for that matter, there are reasons to suspect that she had read Smith. Half a century ago Kenneth Moler showed that the distinction between vanity and pride drawn by Mary Bennet in Pride and Prejudice is remarkably similar to the one made by Smith in The Theory of Moral Sentiments (“The Bennet Girls and Adam Smith on Vanity and Pride,” Philological Quarterly 46 [October 1967]: 255–62). And other authors have followed this line of research down to the present.

This fine book by the professors of economics Cecil E. Bohanon and Michelle Albert Vachris is a step forward because they present the full picture of the problem in the following sense: they go over all the novels by Austen and indicate what they call the “intersections” of her ideas and Smith’s in order to prove that she “embellishes, refines, and explains Adam Smith” (p. 4).

The book is divided into three parts, and there is also an appendix at the end of the book with a synopsis of Austen’s six completed and published novels. The title of the first part is “Adam Smith’s Theory of Moral Sentiments: A User’s Guide for Jane Austen Readers,” presenting Smith’s ideas in chapters 2 and 3.

Part II, “Austen Reflects and Illuminates Smith,” is the core of the book: from chapter 4 to 9 it links each novel by Austen to a particular Smithian concept. Chapter 4, “Self-Command in Sense and Sensibility,” presents Elinor Dashwood as “a model of Smithian virtue” (p. 46). Chapter 5, “Prudence, Benevolence, and Justice in Mansfield Park,” deals with this “virtue Trinity” highlighted by both Smith and Austen. Chapter 6, “Vanity in Persuasion,” studies vanity in both Persuasion and Mansfield Park. Chapter 7 analyzes “pride in Pride and Prejudice.” Chapter 8, “Greed and Promises in Northanger Abbey,” distinguishes greed and ambition, as Adam Smith did, and includes reflections on greed in Mansfield Park, Persuasion, and Sense and Sensibility. Chapter 9, “Man of System and Impartial Spectator in Emma,” studies the character of Emma Wodehouse and takes a look at Mrs. Morris, Lady Catherine de Bourgh, and Lady Russell as “men” of system in Mansfield Park, Pride and Prejudice, and Persuasion, respectively. It also focuses on impartial spectators in Emma’s enlightenment as well as in Sense and Sensibility, Northanger Abbey, and Mansfield Park.

In part III, “Economic Life in Smith’s and Austen’s Times,” Bohanon and Vachris study land rents, income, and entails (chapter 10); representations of business in Smith and Austen as well as the adoption of what Deirdre McCloskey calls the bourgeois virtues (chapter 11) (see McCloskey’s book The Bourgeois Virtues: Ethics for an Age of Commerce [Chicago: University of Chicago Press, 2006]); and social rank in Smith and Austen (chapter 12). This part ends with some reflections on the intersection between Austen and Smith and its relevance for today (chapter 13).

There has been a certain tendency from the Left in recent years to revitalize the old thesis that questions Adam Smith’s sympathies for capitalism and the free market, a thesis originally defended in 1927 by Jacob Viner in his famous article “Adam Smith and Laissez Faire,” published in the Journal of Political Economy (35, no. 2: 198–232). And this tendency has used the example of Jane Austen to prove the rigors of poverty and inequality in nineteenth-century England. (I have criticized this approach recently in “Piketty Misreads Austen,” The Independent Review 21, no. 3 [Winter 2017]: 465–76). However, Austen and Smith in general terms saw eye to eye in the acknowledgment of economic growth and the appreciation of how the liberalmarket and liberal institutions produce “that universal opulence which extends itself to the lowest ranks of the people” (Adam Smith, Wealth of Nations, [Indianapolis, Ind.: Liberty Fund, 1981], vol. 1, p. 22). Bohanon and Vachris point out: “In Austen’s work, we start to see the emergence of respect for business” (p. 143).

Adam Smith, in spite of his celebrated remarks against businessmen who conspire to obtain privileges from the state at the expense of consumers, underlines the usefulness of commerce; in his lessons, he recalls that Ulysses was asked “by way of affront, whether he be a pirate or a merchant. At that time a merchant was reckoned odious and despicable. But a pirate or robber, as he was a man of military bravery, was treated with honour” (Lectures on Jurisprudence [Indianapolis, Ind.: Liberty Fund, 1982], p. 527). And in the Wealth of Nations, he states: “The prejudices of some political writers against shopkeepers and tradesmen, are altogether without foundation” (vol. 1, p. 361).

Smith criticizes anticapitalist positions, and as Bohanon and Vachris say, “The attitudes of most of the landed gentry of Jane Austen’s novels reflect this pre-commercial way of thinking” (p. 10). There is no “das Adam Smith Problem” here, and Bohanon and Vachris emphasize that markets and ethics are not contradictory: “markets need morality to work and markets make us moral at the same time” (p. 140). For Austen, as for Smith, contra the likes of Gordon Gekko, greed is not good (p. 159).

Just as self-interest can be a useful but also an excessive universal drive, much the same is true of inequality, which in itself does not conspire against social order, because of the moral sentiment that impels us to admire our betters, because we would like to be admired. But the distinction of ranks as well as the effort to better our own condition can corrupt, according to both Smith and Austen. This is why Austen’s novels do not applaud the aristocracy but rather the rising middle class of merchants, manufacturers, and professionals who progress by virtue of merit and not of birth. In the case of landowners, Austen prefers landed before titled gentry (pp. 148–50); she acknowledges and salutes social mobility and shares in the movement that changed the treatment of the commercial class from disdain to respect (p. 153).

Pride and Profit (a good title, by the way) convincingly argues that there are, in fact, numerous intersections between Adam Smith and Jane Austen; their lives might have overlapped by only fifteen years, but they had ideas in common with each other and with the Enlightenment atmosphere that surrounded them. It should be remembered that if a novelist can learn from a moralist, the opposite can also be true: Smith uses literary references in The Theory of Moral Sentiments and was a great admirer of writers such as Voltaire and Racine, whose tragic drama Phèdra was for him “the finest tragedy, perhaps, that is extant in any language” ([Indianapolis: Liberty Fund, 1984], p. 123).

According to Bohanon and Vachris, the final lessons we can learn from the professor of moral philosophy and the novelist are the following: “Develop self command over our passions so we can live a life that balances both sense and sensibility. Be prudent in our affairs but not to the extent of miserliness. Show benevolence toward those we care about, and justice to all. Have pride in our true accomplishments, but do not become too vain or greedy. Show respect to those who earn it. Finally, take those Enlightenment themes to heart by thinking for ourselves, tolerating others, and always striving for improvement” (p. 161). Some philosophers, economists, or novelists would perhaps disagree. Adam Smith and Jane Austen most certainly would not."

Related posts:

 

A ChatGPT story: What if Jane Austen and Adam Smith met to discuss his book The Theory of Moral Sentiments? (2025) 

Adam Smith's influence on three Jane Austen Novels (2025)

The romantic idea of an insight that suddenly dawns is misleading. Most breakthroughs come slowly.

See ‘How Great Ideas Happen’ Review: Building a Brainstorm by Belinda Lanksof The WSJ. She reviewed the book How Great Ideas Happen: The Hidden Steps Behind Breakthrough Success by George Newman. Excerpts:

"what we call inspiration is better understood as a set of habits and mental practices available to anyone willing to cultivate them. Creativity, in his telling, is more method than miracle."

"The first myth Mr. Newman challenges is the romantic notion that isolation breeds originality."

"As important, Mr. Newman argues, is what happens once those ideas surface: submitting them to the scrutiny of others, whose feedback often sharpens what solitary effort cannot."

"many innovations grow out of existing ones, often by borrowing or transplanting concepts from one field to another."

"the greatest breakthroughs contained only 5% to 10% novel material. What looks like brilliance, in other words, often turns out to be a strategic mix of the old with a touch of the new." 

"First comes deciding where to look, a stage he calls surveying. Next comes gridding the search, imposing structure and defining the project’s parameters. Only then does the familiar work of idea generation begin" 

"The final step . . . is . . . refining what has been unearthed."

"people dramatically underestimate how productive continued searching will be. In experiments involving brainstorming, participants predicted that their best ideas would come early and that additional effort would yield diminishing returns. In fact, the opposite was true"

"it’s less clear whether a poet searching for a metaphor or a composer developing a motif works by gridding constraints and digging methodically."

" sheer volume matters more than initial quality. Producing hundreds of ideas, after all, boosts the odds of finding a few good ones. But Mr. Newman insists that humans are still essential to the process"

This reminds me of a chapter on innovation from one of the text books I used called The Economics of Macro Issues by Roger LeRoy Miller and Daniel K. Benjamin. Here is something they said about innovation: 

 

An example was 

The likelihood that someone would purposefully take an item at self-checkout without scanning actually increased with income

Shoplifting appeals to entitled losers

By Emma Camp of The WSJ.  Excerpts:

"According to one 2025 survey, the likelihood that someone would purposefully take an item at self-checkout without scanning actually increased with income.

"A report from the Council on Criminal Justice released earlier this year found that while reported shoplifting decreased during the pandemic, rates have returned to roughly prepandemic levels."

"several shoplifters who were caught stealing from Whole Foods. None were acting out of necessity, and most stole what can accurately be described as luxury goods—$30 eye cream, strip steak, fancy organic chocolate. None expressed guilt"

"one explicitly justified her actions as being . . . “a kind of artist’s subsidy.”" 

"That they can’t indulge in such luxuries [like French cheese] feels to them like a moral outrage, one that can be rectified, in some small way, by taking what’s owed to them."

"When shoplifters justify their actions online, they make themselves out to be Robin Hoods. They claim it’s good to steal from large, and therefore evil, corporations." 

 Also see U.K. Priest Says Sometimes It's OK To Shoplift from NPR in 2009. Excerpts:

"Rev. Tim Jones created an international uproar on Sunday when he told his congregation that it is sometimes justifiable for desperately needy people to steal from stores."

"Last Sunday, Father Tim Jones spoke from his pulpit at St. Lawrence and St. Hilda in York, England about the needs of the poor. He asked his flock to consider how difficult a life in poverty can be and - then how hard it could be to get help. There are waiting lists just to see a social worker. He said, it's a hard time for anyone to find a job. Loan sharks and begging come at too high a price. Local charities may be good only for some cereal and toast every morning.

What to do? Well, to quote the reverend, my advice in these circumstances, when people have been let down so very badly by the rest of society is that they should not hurt anybody and cope as best they can. The strong temptation is to burgle or rob people, family, friends, neighbors, strangers. Others are tempted toward prostitution, a nightmare world of degradation and abuse for all concern. Others are tempted towards suicide. Instead, I would rather that they shoplift. My advice as a Christian priest is to shoplift. No surprise these words quickly started a controversy. The Church of England on its Web site quickly rejected the call to shoplift." 

There is a good discussion with law and philosophy professor Anita Allen. 

Startup Pitches X-Rays and AI to Catch Fraudulent Returns

Clarity says its screening machines help merchants find counterfeit merchandise more quickly and accurately

By Liz Young of The WSJ. Excerpts:

"A startup says its technology can help retailers identify counterfeit merchandise returned for a refund, a way for merchants to catch fraudsters trying to exploit their returns policies.

Clarity on Thursday emerged from stealth mode and said returns-management company ReturnPro will begin using its machines to screen returns in three of its U.S. facilities."

"The company’s machine is similar in concept to an airport security X-ray screener. It uses artificial intelligence to learn what a given product is supposed to look like by scanning an example of the genuine item. The machine can then alert whether a returned product contains any different organic materials inside—a red flag for possible counterfeits—or identify if there are missing parts such as a power cord that was left out of the box."

"Clarity says its system can verify whether goods are real or fake in about 3 seconds. Its goal is to supplement the work of warehouse employees who examine each item, which is an imperfect process: Workers aren’t typically trained on what every single item is supposed to look like, and they don’t usually have time to go through individual packages in depth."

Related posts:

How This AI-Infused Warehouse Sorts Real Louis Vuitton Bags From Fakes: The RealReal’s Athena system helps validate goods submitted for resale, cutting down the timeline to list them for sale (2026)

Online Returns Fraud Finds a Home on Telegram, Costing Retailers Billions: Efforts to exploit retailers’ return programs are growing more organized, fueled by websites and messaging accounts that target merchants (2024) 

You Spent $6,000 on a Secondhand Chanel Bag. Now Find Out if It Is Real: Handbag authenticators are cashing in on buyers’ anxieties about fakes; hardware must be champagne not bronze; that pink leather is only made in France (2024)

How does a company selling used luxury goods spot fakes? (signalling and conspicuous consumption) (2019) 

Stagflation, Recession? Probably Not

See Why the Oil Shock Probably Won’t Derail the Economy. And One Way It Might: The U.S. is a net petroleum exporter and productivity is improving, but the bigger risk is stubborn inflation by Greg Ip of The WSJ. 

Stagflation combines the words stagnation and inflation. If oil prices rise, supply shifts to the left because the price of a resource has increased. Then prices increase and quantity decreases (which is the stagnation).

We had stagflation from 1975-83. The average unemployment rate was 7.7% and the average inflation rate was 7.8% during that 9 year period. The unemployment rate for 2025 was 4.3% and the inflation rate was  2.7%.

I hope Mr. Ip is right. Excerpts:

"The economy has grown more resilient to oil shocks, and a productivity renaissance is under way, helped by artificial intelligence. Both should help sustain growth and cushion cost pressures."

"The U.S. consumed 4% less gasoline in 2025 than in 2007, while producing 42% more goods and services (as measured by gross domestic product, adjusted for inflation). The share of households’ consumption of energy, including electricity, natural gas and gasoline, fell from 5.7% in 2007 to 3.7% last year."

"the shale revolution has turned the U.S. into a net exporter of petroleum and major exporter of liquefied natural gas. That means the hit to consumers is offset by a boost to producers."

"Russia’s invasion of Ukraine in 2022, which at one point pushed up oil by $45 a barrel, only trimmed U.S. growth by 0.13 percentage point that year, while raising inflation half a point"

"Employment growth has been sluggish for a year, due less to weaker demand for workers than a shrunken supply as immigration dries up."

"last year . . . output per hour worked, i.e. productivity, rose 2.8%."

"Hourly compensation rose 4.1% last year, yet adjusted for productivity, business labor costs were up just 1.3%."

"Stagflation happened in the 1970s not just because of high oil prices and lower productivity, but because the Fed systematically raised rates too little or cut too much, partly because of political pressure." [those Fed actions meant too much demand and that means inflation] 

The Seasonally Adjusted CPI Was up 0.267% in February

Here are the changes in the seasonally adjusted CPI for the six months ending in Dec: 

July 0.2284%

Aug 0.3483%

Sept. 0.2951% (There was no report for October due to the government shutdown)

Nov. 0.2523% (change from Sept)

Dec. 0.2978%

Jan. 0.1708% 

 

The last decline was March 2025 when it was -0.0500%. Before that it was June 2024 when it was -0.0029%.

See Consumer Price Index for All Urban Consumers: All Items in U.S. City Average from FRED (Federal Reserve Economic Data) compiled by the Research Division at the Federal Reserve Bank of St. Louis for data on the seasonally adjusted CPI.

That site shows a graph but if you click on the Download button you will get the actual numbers in Microsoft Excel.

The Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPIAUCSL) was 327.460 in Feb. and 326.588 in Jan. Since 327.460/326.5881 = 1.00267, that means it was up 0.267%. If we had that every month for 12 months it would be up 3.25%. 

It was 319.679 in Feb. 2025. Since 327.460/319.679 = 1.0243, that means it was up 2.43% over the last 12 months.

The non-seasonally adjusted CPI was 326.785 in Feb. and 319.082 in Feb. 2025. That was up 2.41%. So pretty close to the seasonally adjusted CPI. This is still above the Fed's target of 2.0% (although they prefer to use the Personal Consumption Expenditures Price Index which was 2.8% higher in Jan. 2026 than Jan. 2025).

For more information see Consumer prices rose 2.4% annually in February, as expected by Jeff Cox of CNBC. Excerpt:

"Prices consumers pay for a broad range of goods and services rose in line with expectations for February, offering a final look at inflation pressures before an oil shock tied to the Iran war rattled the outlook.

The consumer price index increased a seasonally adjusted 0.3% for the month, putting the 12-month inflation rate at 2.4%, according to Bureau of Labor Statistics data released Wednesday. Both numbers matched the Dow Jones consensus forecast.

Stripping out volatile food and energy prices, the core CPI posted a 0.2% monthly reading and 2.5% annual rate, compared with forecasts for 0.2% and 2.5%, also in line with the estimates.

The annual rates were unchanged from January, indicating that inflation was holding above the Federal Reserve’s 2% target but not getting worse.

While the report showed inflation broadly stable, prices rose modestly for shelter and services while several goods categories, including used vehicles and auto insurance, saw declines."

The article also discusses what types of products are going up in price and what is going down. There is a graph of the monthly year-over-year percent change in prices and core prices going back almost 4 years.  

Related material: 

Consumer Price Index for All Urban Consumers: All Items Less Food and Energy in U.S. City Average (CPILFESL) This is also from from FRED (Federal Reserve Economic Data), compiled by the Research Division at the Federal Reserve Bank of St. Louis. It has the seasonally adjusted core CPI.

 

Consumer Price Index Data from 1913 to 2025

 

Personal Consumption Expenditures Price Index 

 

The Bureau of Labor Statistics makes seasonal adjustments. See Consumer Price Index Summary.

 

The table below has the annual inflation rate since 1914 in the columns labeled CPI %Ch. or CPI percentage change. It is from Consumer Price Index Data from 1913 to 2026 and is not seasonally adjusted. It is also the December to December change in the CPI. That site also looks at how the 12 month average for the CPI changed from one year to the next.

 

Year	CPI %Ch.		Year	CPI %Ch.		Year	CPI %Ch.		Year	CPI %Ch.
1914	1		1944	2.3		1974	12.3		2004	3.3
1915	2		1945	2.2		1975	6.9		2005	3.4
1916	12.6		1946	18.1		1976	4.9		2006	2.5
1917	18.1		1947	8.8		1977	6.7		2007	4.1
1918	20.4		1948	3		1978	9		2008	0.1
1919	14.5		1949	-2.1		1979	13.3		2009	2.7
1920	2.6		1950	5.9		1980	12.5		2010	1.5
1921	-10.8		1951	6		1981	8.9		2011	3
1922	-2.3		1952	0.8		1982	3.8		2012	1.7
1923	2.4		1953	0.7		1983	3.8		2013	1.5
1924	0		1954	-0.7		1984	3.9		2014	0.8
1925	3.5		1955	0.4		1985	3.8		2015	0.7
1926	-1.1		1956	3		1986	1.1		2016	2.1
1927	-2.3		1957	2.9		1987	4.4		2017	2.1
1928	-1.2		1958	1.8		1988	4.4		2018	1.9
1929	0.6		1959	1.7		1989	4.6		2019	2.3
1930	-6.4		1960	1.4		1990	6.1		2020	1.4
1931	-9.3		1961	0.7		1991	3.1		2021	7
1932	-10.3		1962	1.3		1992	2.9		2022	6.5
1933	0.8		1963	1.6		1993	2.7		2023	3.4
1934	1.5		1964	1		1994	2.7		2024	2.9
1935	3		1965	1.9		1995	2.5		2025	2.7
1936	1.4		1966	3.5		1996	3.3
1937	2.9		1967	3		1997	1.7
1938	-2.8		1968	4.7		1998	1.6
1939	0		1969	6.2		1999	2.7
1940	0.7		1970	5.6		2000	3.4
1941	9.9		1971	3.3		2001	1.6
1942	9		1972	3.4		2002	2.4
1943	3		1973	8.7		2003	1.9

 

Here is a timeline graph of this data: