I thought of one more positional-goods related policy: limiting the number of hours in a work week. In other words, forced spending on leisure, which as this survey indicates is non-positional: Do You Enjoy Having More Than Others? Survey Evidence of Positional Goods http://www.handels.gu.se/epc/archive/2855/01/gunwpe0100.pdf In a personal reply Robin suggested that the lack of heavier regulation on positional goods may have to do with issues he wrote about in this article: http://hanson.gmu.edu/fairgene.html. While not disagreeing with that, I suggest another reason may be that if we didn't have to spend money on positional goods, the most productive among us might choose to work 1/2 or even 1/10 the number of hours we do currently. A majority of voters would lose because of reduction of income redistribution and positive externalities from science and art.
On Sun, Nov 21, 2004 at 07:27:32AM -0500, Robin Hanson wrote: I was at a workshop this weekend where we discussed the possibility of regulating human genetic enhancements, and it was suggested that positional goods were a valid reason for regulation. It might make sense, for example, to tax the act of enhancing your kids to be taller than other folks' kids. That seems similar to wearing high heels, which according to this page: http://podiatry.curtin.edu.au/sump.html, was regulated in 1430 Venice but in the modern age only during national emergencies. Some schools do have dress codes that forbid high heels. I think dress codes are enacted at least partly for positional reasons. Many positional goods are positional because they are used to attract mates. Perhaps banning polygamy was done partly for positional reasons? I can't think of anything else besides these rather weak examples. It's a bit puzzling why positional goods are not more heavily regulated.
According to page 18 of http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/divid.pdf, for tax reasons, the average price drop of a stock on the ex-dividend day is only 90% of the dividend. Microsoft has declared a $3 per share special dividend, with the ex-dividend day being November 15, 2004 (see http://www.microsoft.com/msft/FAQ/faqdividend.mspx#Question9). This is about 10% of the share price. So if you have a tax-exempt (e.g., retirement) brokerage account, you can buy Microsoft stock one day before the ex-dividend day, then sell it on the ex-dividend day, and receive a 1% return (10% of the 10% dividend). I'm curious how commonly known this was. Did anyone else know about this trick before reading this post? Are there other investment tricks like this?
On Wed, Oct 20, 2004 at 02:13:23AM -0400, Robert A. Book wrote: I think what you want is the Banzhaf Power Index, developed by Banzhaf (surprise!) in the 1960s. I forwarded your post to a friend of mine who's done some work on this, and discovered he's giving a talk on this very topic on Friday at the GWU math department. His summary, with a link to a more detailed web page, is below. I read his web page quickly, but did not find it particularly relevant. The Banzhaf Power Index is apparently about figuring out how much power each voter has in a block voting system, where everyone is not equal in the sense that your vote has a different probability of influencing the election depending on where you live. But he starts off by assuming that every voter has an independent .5 probability of voting for each candidate. That makes the analysis useless for the purpose of computing the expected utility of voting, because it ignores all of the relevant information that we actually have about the likely outcome of the election, such as the IEM market data.
On Tue, Oct 19, 2004 at 11:32:16AM -0700, Peter C. McCluskey wrote: I think it's harder than this to adequately model p(x), because it acts differently in close races because the incentive for the losing side to cheat is highest when it's most likely to change the result. Yes, to be more realistic, we need to compute the probability that my vote discourages the non-preferred candidate from cheating, or encourages the preferred candidate to cheat. I think it can be argued that after taking this into account, the probability of my vote deciding the outcome is still close to p(0), where p is the probability function for the actual vote without cheating (presumably with a normal distribution), not the final certified result. What I really want is something which would quantify the probability my vote will affect what interest groups future candidates pander to. I suspect this is higher than the chance of affecting the identity of the winner. The probability of that is zero, because election results are not broken down by interest groups. (Am I missing something?) I'd think that politicans instead decide which groups to pander to based on their own polling.
In other words, what you're suggesting is that for some, lotteries and voting are like candy, pornography, birth control, or narcotics, i.e., a legitimate way (in some cultures) for a person to deliberately subvert his own genetic programming and obtain pleasure that he doesn't deserve. Ok, I can buy that, but I still think there must be a large fraction of lottery players and voters who don't know, even intellectually, that their chances of winning or changing the election outcome are tiny. But it doesn't look like enough data exist to settle the matter either way. On Wed, Sep 01, 2004 at 10:07:00PM -0400, Robert A. Book wrote: Whenever I ask seemingly intelligent lottery players why they play, the answer is usually something along the lines of I know they chances of winning are tiny, but for a dollar I get to dream of winning for a whole week. In other words, they (may) know the probability is extremely small, but that extremely small probability has a utility value beyond value the chance of dollars that goes with it. This is analogous to the entertainment value of playing Las Vegas style gambling games like cards, roulette, and slot machines. Something similar may apply to voting -- everyone knows the chances of an election being decided by a single vote are miniscule, but they get some satisfaction from participating in the process, and maybe even from knowing that they made the total for their candidate in their county printed in the newspaper the next day from 138,298 to 138,299. --Robert Book
On Tue, Aug 31, 2004 at 08:25:16PM -0500, Jeffrey Rous wrote: When people ask me why I vote, my standard answer is because I can. Voting simply reminds me that we have something special going here in the free world. I do a decent job of learning about the candidates and issues not because I think my single vote matters, but because, overall, voting does matter and I get a kick out of being part of the process. Maybe you know that your vote doesn't matter and still vote anyway, but I bet there is a high positive correlation among the general population between the belief that one's vote matters, and willingness to vote. Using ourselves for anecdotes in this case is a bad idea. We as a self-selected group of armchair economists already know that the probability that one's vote will make a difference in the outcome is tiny, so of course anybody who still votes will be voting for other reasons.
On Tue, Aug 31, 2004 at 07:50:08PM -0400, [EMAIL PROTECTED] wrote: I've been discussing with my undergradute students the rationality of voting. What about the possibility that many people do not deal well with with small probabilities, and mistakenly think that their votes matter? Why have economists latched onto the idea of expressive voting, when a much simpler explanation is that most apparently irrational voting really is irrational? Of course expressive voting preserves the assumption of rationality, but there is still the problem of participation in lotteries with negative expected payoffs. Is that just to be ignored, or will someone come up with a theory of expressive lottery ticket purchase?
Does anyone know if there is a correlation between a person's willingness to buy lottery tickets, and his willingness to vote in large elections (where the chances of any vote being pivotal is tiny)? A simple explanation for both of these phenomena, where people choose to do things with apparently negative expected payoff, is misunderstanding or miscalculation of probabilities. This theory would predict a positive correlation. I'm curious if anyone has done a survey or experiment to test this.
On Wed, Mar 24, 2004 at 10:54:25AM -0500, Stephen Miller wrote: I'm confused. How does one decide whether the younger version's preferences are more right than the elder's? When considering whether or not to return stolen goods to its original owner, how does one decide whether the original owner's preferences are more right than the thief's? In this case, the elder (mentally ill) version is an interloper who has stolen the younger version's body, so involuntary treatment just returns the body back to its rightful owner. Economically, this can be justified by the argument that people would be more likely to invest in the future if we reduce their risk of losing that investment to someone with radically different preferences.
On Thu, Mar 11, 2004 at 01:44:42PM -0500, Bryan Caplan wrote: My new paper on the economics of mental illness, entitled The Economics of Szasz can now be downloaded from my webpage at: http://www.gmu.edu/departments/economics/bcaplan/szaszjhe.doc The paper makes the point that what psychology views as mental diseases in many cases can be interpreted simply as extreme or unusual preferences, and in those cases involuntary psychiatric treatment can not be justified as a benefit for the patient. This makes sense to me, but perhaps involuntary psychiatric treatment can still be justified as a benefit for the younger version of the patient (i.e., before he became sick) who presumably had more normal preferences, and who would have prefered that he be given treatment to reverse any radical preference changes. Unlike with intra-family externality, the Coasean argument doesn't seem to apply here -- how would you negotiate side payments with your past self?
Here's a funny comic strip about using game theory for dating: http://www.otherpeoplesstories.com/061.html You might also want to check out the blog it was based on: http://www.livejournal.com/users/shiga/
On Sun, Nov 30, 2003 at 11:18:21AM -0500, Robin Hanson wrote: That and the difficulty of creating intelligence. It can't be the latter, because the intelligence that already exist was not selected for. Consider again the fact that Jews have an average IQ that is about one standard deviation higher than non-Jewish whites. This clearly shows that the potential for higher intelligence is already in our gene pool. How would you explain why the IQ distribution of the general population does not look more like that of Jews? (BTW, imagine what that would be like. America would have 13 times the number of Nobel-level (by our standards) scientists as it actually does.) I argue that (a) can be an equilibrium. We are rather smart in some areas, but the mechanisms in us that allow that are not up to the task of faking being dumb in other areas - we are actually dumb in those other areas. This is/was an equilibrium because people who tried to fake often got caught. I don't disagree that this occurs to some degree. But there must be a limit to how smart you can be in one area and still be dumb in another. I suggest we have already reached it, because otherwise the facts are hard to explain.
On Wed, Nov 26, 2003 at 04:47:17PM -0500, Robin Hanson wrote: There certainly do seem to be some situations in which it can pay not be seen as too clever by half. But of course there are many other situations in which being clever pays well. So unless the first set of situations are more important than the second, it seems unlikely that evolution makes us dumb in general on purpose. Perhaps the first set of situations is more important than you think. For example, could the Holocaust (and anti-semitism in general) fall into that category, given that Jews have a higher average IQ than gentiles? (116 vs 100, according to http://www.lagriffedulion.f2s.com/ashkenaz.htm.) The question instead is whether evolution was able to identify the particular topic areas where we were better off being dumber, so as to tailor our minds to be dumber mainly in those areas. I'd argue no, at least beyond a certain degree, because if you have sufficient general intelligence, you can apply it to any area but still fake being dumb in particular areas. The only way to convince others of actually being dumb in those areas is to be dumb in general. Yet most educated people actually seem to understand physics better than economics. Do you have any evidence for this? At least personally I find economics easier to understand than, say, string theory, or even electromagnetism.
Given that there is significant existing variation in human intelligence, it's curious that we are not all much smarter than we actually are. Besides the well-known costs of higher intelligence (e.g., more energy use, bigger heads causing more difficult births), it seems that being smart can be a disadvantage when playing some non-zero-sum games. Here is one example. How often do these games occur in real life, I wonder? Consider an infinitely repeated game with 2n players, where in each round all players are randomly matched against each other in n seperate prisoner's dillema stage games. After each round is finished, the outcomes are recorded and published. One plausible outcome of this game is for everyone to follow this strategy (let's call it A): Initially mark all players as good. If anyone defects against a player who is marked as good, mark him as bad. Play cooperate against good players, defect against bad players. Now suppose in each stage game, there is probability p that the outcome is not made public. Also assume that n is large enough so that we can disregard the possibility that two players might face each other again in the future and remember a previous non-published outcome. Now depending on p, the discount factor, and the actual payoffs, it can still be an equilibrium for everyone to follow strategy A. For example, suppose the payoffs are 2,2/3,-10/-10,3/0,0, and p=0.5. If a player deviates from the above strategy and plays defect against a good player, he gains 1 utility (compared to strategy A) for the current round, but has a probability of 0.5 of losing 2 utility in each future round. Now further suppose that the random number generator used to decide whether each outcome is published or not is only pseudorandom, and there are some smart players who are able to recognize the pattern and predict whether a given stage game's outcome will be published. And suppose it's public knowledge who these smart players are. In this third game, its no longer an equilibrium for everyone to follow strategy A, because a smart player should always play defect in any round in which he predicts the outcome won't be published. The normal players can follow strategy A, or they can follow a modified strategy (B) which starts by marking all smart players as bad, in which case the smart players should also start by marking all normal players as bad. In either case the total surplus is less than if there were no smart players. But with some game parameters, only the latter is an equilibria, in which case smart players actually end up worse off than normal players. (Note that even when the first outcome is an equlibrium, it is not coalition-proof. I.e., the normal players have an incentive to collectively switch to strategy B.) For example, consider the above payoffs again. When a normal player faces a smart player, he knows there is .5 probability that the smart player will defect. If he deviates from strategy A to play defect, there is .5 probability that he gains 10 utility, and .5 probability that he gains 1 utility in the current round and loses no more than 2 utilities in each future round. Therefore depending on the time discount factor he may have an incentive to play defect.
On Mon, Aug 18, 2003 at 05:28:34PM -0400, Bryan Caplan wrote: One idea he did not explore: Maybe there is no inter-stellar travel because the benefits almost never exceed the costs. It takes years to get anywhere, and at best you find some unused natural resources. If Julian Simon's observation about declining resource scarcity holds, then as inter-stellar travel gets cheaper with technological progress, it also gets less beneficial because resources are getting cheaper at a faster rate. Given that the amount of natural resources in the solar system is finite, I don't see how resources could continue to get cheaper forever. The reason natural resources are getting cheaper is that the cost of mining resources is droping, right? But suppose the cost of mining were to drop to zero and no inter-stellar travel occurs. Then shouldn't the prices of natural resources rise at a rate equal to the interest rate until they're all used up?
James Surowiecki has an article in the New Yorker (available at http://www.newyorker.com/talk/content/?030818ta_talk_surowiecki) arguing in favor of child tax credits, on the grounds that raising children produces positive externalities. My question is, has anyone done a study that quantifies how much social benefit (or cost?) is produced by raising a child? Another question is that the child himself captures most of the benefits external to the parents, so why not fund most of the subsidy out of the child's future income, rather than from general tax revenues?
On Fri, Aug 22, 2003 at 10:50:35AM -0700, Fred Foldvary wrote: However, the earth is not a closed system, as we continually get energy from the sun, so even if we use up some resources, solar radiation will supply energy, and technologicalp progress will make ever more efficient use of it. The total amount of energy within the solar system is limited, so it's not possible to recycle resources indefinitely. Or to think of it another way, the ultimate resource is negentropy (i.e., maximium entropy minus current entropy) which is finite and must be used up to do anything at all, including to recycle other resources. Technological progress that allow more efficient use of resources in the future will not cause prices to drop on average, because the progress should already be expected and taken into account in current market prices. Only progress that lowers the cost of *mining* will cause price drops, but these can't continue forever because the cost of mining can't drop below zero.