Save & Splurge

Paul Krugman, Princeton Professor of Economics, New York Times columnist, and acostee at the Democratic National Convention

How do you save money?

"I don't have any brilliant suggestions on that. I've pretty much always saved, basically by having my tastes not keep up with my income-I'm not sure that's a great suggestion. Basically, think about what you need and no more. Things can add up. Choose your small luxuries. You have to have small luxuries, but choose them wisely. Choose them to be things you actually get pleasure out of and drop the ones that don't seem to do it for you. Oh, and take public transit if you can! I'm a big believer in public transit. Do I have any tips for surviving the economic downturn? No. Short answer. I've actually been very lucky in that I've never had a cyclical job, so I have no insight at all. In the long run, the economy will right itself, but every economist's favorite quote from John Maynard Keynes is, 'In the long run, we are all dead.' It's going to be prolonged. I could wonkish here and say there is a change in the character of the business cycle. Recessions lately haven't been as steep as they have in the past. You don't have the industrial economy shutting down and ten million workers being laid off, but they last. The last two recessions dragged on for two and a half years, and the odds are this one will drag on longer. It could be short circuited if we had a really strong program of public investment to pick up the slack in the economy, maybe in a Democratic administration-maybe."

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Paul Krugman

What do you splurge on?

"I feel very luxurious-I just traded in my twenty-year-old car for only a four-year-old car. I also travel. Not blow-a-wad vacations, but get-away-from-it-all vacations. I try to spend as much of my intercessions between semesters someplace warm and with a beach. Our normal thing is St. Croix, which is not trendy or exotic, but it is warm and it has great beaches. It's even American, so I can claim to be patriotic. We also spend a lot on the garden. I don't have a green thumb, but if my wife tells me to dig here, I can do that."

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