How much cash do you carry? Better still, how much should you carry? For goodness sake, don't ask an economist.
This whole discussion came to mind the other night while out to dinner with a large group of friends. Since I am economically irrational in so very many ways, I had failed to conform to the Baumol-Tobin model and revealed myself as cashless when the bill arrived. So a good friend covered me. There is of course a mutual expectation of rough reciprocity among friends, but it occurred to me that a person who often dines and drinks in groups with friends could easily come out far ahead in this bargain, simply by being the guy who never has cash -- especially if his friends have short memories. It is true that, in a small group, sometimes you get stuck putting the whole bill on your card and collecting cash from your dinner or drinking partners. But then you've got cash without the hassle of going to an ATM. And if your friends are decent people, they round up, and you've been subsidized. Obviously, this is a winning strategy only if few other friends are playing it and if you are a horrible person who likes to profit at your friends' expense. But we were talking about an economist, right? [More]I average about enough for one round of Bud lite.