A key question for any researcher is what to work on. Integral to answering is the method of search for an idea that might become a good paper. This is particularly an issue for many students starting on their theses, particularly after a period without a successful start. When I talk with these students, I spell out multiple ways of getting started that I have used, rather than presenting a dry, abstract list of approaches. Generally, students coming to me are trying to write theory papers, and it is my experience with getting started on theory papers that I relate in this essay.

A key part of that strategic process, and also of the tactics of completing and presenting papers, is trying to figure out how interesting an actual result or a conjectured result might be. My movements across different research areas and between basic applied theory and policy analyses have taught me the ongoing importance of strategic planning. This essay reports my memory of how I have proceeded strategically over the past fifty years, both before and after recognizing a need to think directly about these choices. Over time I have become aware of the diversity of research approaches that work at different times and for different people and the uneven quality of advice I have given on this issue. So this is one researcher’s story, not one researcher’s advice, a potted history from my memory of early conscious and not conscious choices.

The term money illusion refers to a tendency to be influenced by nominal as well as real monetary values in one's thinking about, and the conduct of, economic transactions. Money illusion has significant implications for economic theory, yet it implies a lack of rationality that is alien to economists.

It is an honor to have this opportunity to pay tribute to such a widely respected scholar. Nancy Schwartz was an excellent theorist. She wrote papers that developed models of real world phenomena. Thus it is fitting that I draw on my experience in social insurance as both a theorist and a policy analyst to discuss a topic where theory has been important in informing policy discussion and policy discussions have shaped issues for theoretical analysis. I will use the provision of retirement income as the social insurance issue to be discussed.

Two analytical characteristics particularly distinguish the writings of economists. One is the primary focus on the self as motivation for behavior, with the use of utility maximizing models as the analytical device for modeling this focus. The second is the use of equilibrium constructs to determine the outcomes that follow from individual choices. Analysts of social insurance generally recognize that a critical part of the case for having social insurance is the failure of individuals to adequately look ahead and provide for their own retirements. Thus social insurance analysis is one place where the rationality assumptions of economists are not given as full a reign as in most other areas of economic analysis.

I have been researching the inadequacies of conventional approaches to the modeling of time since 1968. My dissatisfaction with treatments of tatonnement stability led me to think about price adjustments in real time, with individuals aware that they are partaking in a process in real time. This approach to modeling equilibrium resulted first in my 1971 analysis of search equilibrium in a single market. Reading Mortensen (1978) made me realize the power of Poisson processes for developing tractable models of real time activities and moved my concern for real time allocation processes into a more productive phase. These lectures represent an attempt to express the image of the workings of an economy that lies behind much of my research. Being invited to give these lectures pushed me into a reflection on modeling that would not have occurred otherwise.

The book is divided into two lectures; each lecture is divided into two chapters. In the lecture about individual industries, I begin by considering explicit modeling of time in a competitive setting where investment and production are the only decisions by firms; the Walrasian auctioneer handles prices. The thrust of the lecture is how atemporal modeling is (and must be) informed by explicittime thinking and modeling. This is illustrated by a model with uncertainty about the production costs of individual firms and is argued by consideration of data on gross and net employment flows. The second chapter moves beyond this structure by recognizing price setting as a control variable of individual suppliers, dropping the fiction of the Walrasian auctioneer.