Re: Economics of rank vs. Economics of the most money
Jacob W Braestrup [EMAIL PROTECTED] wrote: How well this 'philosophy of envy' is rooted in people seems to me to be very dependent on culture. In the US people seem to care more about absolute gains than Europeans (especially Scandinavians, who seem to focus solely on relative gains). That sounds interesting. Can you back it up? Gustavo
Re: Economics of rank vs. Economics of the most money
Fabio Guillermo Rojas wrote: pretty ignorant. Is it only rank about people who exist, or do potential people count as well? Is it rank of money, power, or subjective utility? It doesn't have to be that complicated - how about rank among some small group? Like businesses trying to maximize market share at the expense of profits, or racial prejudice, where some employers might enjoy minimizing the wages of some workers, even if doing so has some tangible cost. It doesn't have to be complicated, but it does have to be specific. A business trying to maximize market share is pretty specific, though with multiple product lines and sets of consumers there remains the question of how to weigh these different market shares. An employer wanting only to minimize the wages of workers of some race is also specific, though we have to distinguish that from them wanting to minimize the consumption of those workers, to minimize the regard in which those workers are held by associates, or to maximize their mating with potential partners who these workers might compete for. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Economics of rank vs. Economics of the most money
Maybe the real puzzle is under what conditions do people maximize rank or total stuff. F It doesn't have to be complicated, but it does have to be specific. A business trying to maximize market share is pretty specific, though with multiple product lines and sets of consumers there remains the question of how to weigh these different market shares. An employer wanting only to minimize the wages of workers of some race is also specific, though we have to distinguish that from them wanting to minimize the consumption of those workers, to minimize the regard in which those workers are held by associates, or to maximize their mating with potential partners who these workers might compete for. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Economics of rank vs. Economics of the most money
This week's Economist magazine reported an experiment where subjects could pay to decrease the income of other subjects in the experiment, which they did with some frequency, although it didn't increase their income from the experiment. The article's author suggest that this was evidence for people's desire to put others down, even when they incur the costs of doing so. Question: How would economic theory change if we assumed that people would are trying to maximize their relative rank in a group, or had a taste for decreasing other's utility? Fabio
Re: Economics of rank vs. Economics of the most money
The original paper is available at http://www.warwick.ac.uk/fac/soc/Economics/oswald/FinalJuly13Paris.pdf. I think there's a major flaw in the experiment. When a subject pays to decrease the income of another subject, he's deciding to transfer some resources from himself and the other subject to the researchers (i.e. reduce the amount the researchers would pay out at the end of the experiment), and not to actually eliminate those resources. In order to show what the authors say the experiment shows, they should have made it clear to the subjects that paying to decrease another subject's income involves actual social loss. For example they could have committed to buying food with the money and then throwing them away in the garbage. I bet that would have made a huge difference.
Re: Economics of rank vs. Economics of the most money
- Original Message - From: Eric M. McDaniel [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Wednesday, February 20, 2002 12:56 PM Subject: Re: Economics of rank vs. Economics of the most money Has anyone read the article summarized in The Economist (Are People Willing to Pay to Reduce Others' Incomes?, in the February issue of Annales d'Economie et de Statistique)? Based strictly on the text of The Economist's article, it seems that the players were in fact attempting to maximize their income. There was a fixed supply of money involved in the game, which was initially divided equally among the four players. Players could each pay to reduce the money of other players. But it only cost each player between 2 and 25 cents to reduce another player's money by one dollar!!! Since the amount of money in the economy here was fixed, paying 2 to 25 cents to reduce another person's wealth by one dollar sounds like a pretty good investment decision to me, in effect raising one's own wealth by between 75 and 98 cents. Is this right? There's something wrong with your math. Assuming that: * there are exactly 2 players * each players have $50 at some time t0 * it costs Player1 2 cents to reduce Player2's wealth by $1 Let the state of the game be defined by ((Absolute wealth of Player1, Absolute wealth of Player2), (Relative wealth of Player1, Relative wealth of Player2 )) So at t0, the state of the game is (($50, $50), (50%, 50%)) After the predatory move, this state of the game is about (($49.98, $49.00), (50.49%, 49.51%)). So, yes, if the goal is to maximize relative wealth, the predator is being rational, especially if the total wealth of the game is small. Gustavo http://www.optimizelife.com
Re: Economics of rank vs. Economics of the most money
Concerning Robin's point about the details of the relative coonsumption models, Steven Landsburg made the same point in a review of one of Frank's books in The Independent Review http://www.independent.org/tii/content/pubs/review/TIR42Landsberg.html Here are a few excerpts But its hard to refute Franks story decisively, because his story keeps changing. First he says we want to consume more than our neighbors; then before long he says we want to earn more income than our neighbors. Those are different things, but Frank flits from one to the other as if they were the same. As for why we care about relative consumption (or relative income) in the first place, Frank is equally slippery. Are we psychologically hard-wired to care about relative position for its own sake? Or do we care about relative position because it helps us compete for goodssuch as matesthat are distributed outside the economic marketplace? Either hypothesis could be the germ of a respectable theory, and each of them probably contains an element of truth, but they are surely distinct hypotheses, with distinct implications; and its not always clear which one Frank has in mind. Frank is at his most incoherent when he asks the question of Why now?... (I actually think this is a little hard on Frank who is working on new territory. Perhaps a kinder response would be that models need to be carefuly distinguished and appropriately tested.) Alex -- Dr. Alexander Tabarrok Vice President and Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621-1428 Tel. 510-632-1366, FAX: 510-568-6040 Email: [EMAIL PROTECTED]
RE: Economics of rank vs. Economics of the most money
Eric wrote: Since the amount of money in the economy here was fixed, paying 2 to 25 cents to reduce another person's wealth by one dollar sounds like a pretty good investment decision to me, in effect raising one's own wealth by between 75 and 98 cents. Is this right? Gustavo replied: There's something wrong with your math. Let the state of the game be defined by ((Absolute wealth of Player1, Absolute wealth of Player2), (Relative wealth of Player1, Relative wealth of Player2 )) So at t0, the state of the game is (($50, $50), (50%, 50%)) After the predatory move, this state of the game is about (($49.98, $49.00), (50.49%, 49.51%)). So, yes, if the goal is to maximize relative wealth, the predator is being rational, especially if the total wealth of the game is small. Gustavo, I'm not sure I understand how my math was wrong, but it's likely since I am mathematically impaired. However, I think our points are the same: In a game with a fixed amount of money to go around, any decrease in someone else's amount is de facto an increase in your amount. The experiment sets up a mercantilist world, where impoverish your neighbor is equivalent to make yourself richer. That as a matter of history the mercantilists proposed policies aimed at maximizing their share of a fixed amount of wealth resembling the irrational actions of the subjects of this experiments is evidence of the consistency with which the mercantilists worked out the implications of the assumption that the amount of wealth in the world was fixed in advance. Does this accurately describe the experiment in question, and explain why the subjects' seemingly irrational actions were really rational? Plus, on this view, we don't have to come up with some alternate theory to explain why people are both irrational and cruel. Eric McDaniel Graduate Student, University of Tulsa
