Disqus - Latest Comments for conchis

Re: The Nation as Unit of Analysis

conchis — Sun, 12 Feb 2006 09:26:39 -0000

Of course, Jacobs was arguing in the other direction, no? For cities, rather than (super-)nations as the primary (if not the only) unit of analysis.

Re: Growth and Economic Folk Morality

conchis — Mon, 27 Feb 2006 13:11:31 -0000

I'm being pedantic, but the statement that:

"utility just is a measure of the satisfaction of an agent’s preferences, and it is a logical consequence of the definition of terms that an increase in income leads to the choice of a more preferred combination of goods, thereby increasing utility"

isn't quite true. By allowing for regret, it's possible to specify preferences such that more choice leads to less preference satisfaction (a la Barry Schwartz - though I personally think he pushes this idea rather too far.)

Re: If You Would Like to Fund an Interesting Study, Call Me!

conchis — Mon, 03 Apr 2006 09:00:12 -0000

Excellent idea.

I do have one nagging qualm about this general line of argument, however. I think it's important to distinguish between two sorts of paternalist argument. The first is a general argument, which says roughly:

(G) People are poor decision-makers, so government should intervene to help them make those decisions better.

This argument, as you've noted previously, pretty clearly falls foul of the nirvana fallacy.*

There is however, a more specific arugment that is less susceptible to this sort of problem.

(S) People are poor decision-makers in the following specific way, X, so government should do Y to help them make those decisions better.

The validity of (S) depends solely on whether Y actually remedies X - not whether bureacrats are comparatively better at making decisions than individuals and markets. (Although this clearly depends on Y being specific enough that it doesn't leave much to the discretion of bureaucrats.) The quality of governmental decision-making is obviously relevant to whether they'll actually implement Y (and (S)-type arguments may be dangerous if they tend to lead to counterproductive Y* interventions). However, that seems to me to be a rather separate point. (S) itself doesn't seem to be directly affected by the nirvana fallacy at all (except perhaps to the extent that our own reasoning about whether Y remedies X is affected by biases).

* I can't remember whether you mentioned it, but I believe Harold Demsetz coined the term "nirvana fallacy" in 1969 to refer to what you call the "fallacy of asymmetric idealization". I just like his term better. :)

Re: I’m Baffled by Taxes as Truces in Positional Races

conchis — Thu, 13 Jul 2006 20:40:51 -0000

I take it you've read Layard's "Rethinking Public Economics: The Implications of Rivalry and Habit"? Did you understand the maths? If so it should serve to answer your question fairly straightforwardly. Layard uses a subtractive form for consumption reference effects, embedded in a Cobb-Douglas utility function - which I'm not sure is the best way of doing it, but it probably still captures the essence of things.

The most intuitive way to think about it is simply as an externality: my consumption harms you by reducing your satisfaction with what you have; but I don't take that cost into account when choosing how much to work and consume. The tax is a standard Pigouvian one, intended to internalise this externality.

The reason I think you're ending up with a different intuition is essentially Glen's: the utility function assumed by Layard, Frank etc. (and supported by the data) is one in which both absolute and relative income matter. On the other hand, you seem to be assuming that only rank matters (though to be honest, it's a little difficult to tell exactly what you're assuming. I think this is definitely a situation where the maths is useful in enforcing clarity). If it were the case that only rank mattered, there would be no externality at the margin - and the tax (which affects marginal incentives) wouldn't necessarily have the desired effect. But that's a rather implausible case to have to make.

Re: The Status of the Politics of Status

conchis — Mon, 23 Oct 2006 13:16:28 -0000

Hi Will,

While the point you make is undoubtedly valid up to a point, I wonder whether you place too much faith in it's actual potential to get us out of the income-status game. Whatever the theoretical possibilities for entering into a preferred set of status races that one is best able to succeed in, and despite obvious anecdotal examples of people who do this to great effect, the statistical eveidence tends to suggest that this isn't what the majority of people, on average, actually do.

The interesting question then becomes why not? To what extent can people really choose the status races they enter into? Does it require a certain level of self-awareness that many people lack? Is having systematically differnt values from one's peers in some sense psychologically costly? etc. And what can we do to improve situation?

Re: What is “Economic Insecurity” and Why Should We Care?

conchis — Wed, 25 Oct 2006 06:19:19 -0000

ed,

I'd go so far as to say that it's not so much debatable as just plain wrong. On what grounds should we dismiss the very real anxieties people feel about their economic situation - even if they are based on misperceptions? Depressed people are often deluded, but that doesn't mean that we don't care they're depressed.

The distinction between real and perceived insecurity is important, but not so much because the latter doesn't matter, as because it suggests that improving real security isn't the only way of trying to make people less anxious.

Re: Bounded vs. Unbounded

conchis — Fri, 02 Feb 2007 11:51:14 -0000

It strikes me that there are at least reasons why you might not think this is a huge problem (as opposed to merely a problem). Haven't entirely decided what I think of them yet.

(1) You're willing to assume that happiness is in fact bounded, or that we can be "fully satisfied" with our lives. Clearly that's not a testable assumption from the data, but it's not a hugely implausible one either. (And people certainly seem to make sense of the "fully satisfied" category when it's presented.) I think van Praag has argued for this explicitly, though perhaps not especially convincingly.

(2) As a matter of empirical fact, you think the distribution of responses is sufficiently far from the flatline that you don't think it's really making that much of a difference to your conclusions at this point in time. If there are people whose happiness flatlines below the highest category/ies, despite large increases in income, for example, this would suggest that it's not boundedness driving the "money doesn't buy happiness" result.

(3) You have sufficiently strong prioritarian tendencies that, even if there are people who are flatlining, you attitude to any particular distribution of happiness isn't going to be much affected by it. (Though this is clearly a limited defence, and wouldn't apply to other attempted uses of the survey data.)

P.S. "If growth is ongoing, and self-reported happiness rises with growth — even excruciatingly slowly — then it is just a logical necessity that there is some time in the future when everybody hits the ceiling of the scale." This is being pedantic (and is irrelevant to the issue with happiness surveys) but with a continuous scale, it's entirely possible to asymptote to the upper bound without ever reaching it.

Re: Happiness and the Ideological Mediation of Adaptation

conchis — Fri, 08 Jun 2007 09:03:28 -0000

Of course this also significantly undercuts Layard's case for taxing the negative internality that arises from adaptation. If those on the right are typically the ones earning the big bucks, and those on the left are typically the ones who give up that sort of thing for more prestigious jobs or whatever, then that suggests that, by and large people actually are aware of the things that will make them happy in the long run, and may be properly taking account of whatever internalities exist already.

Re: Joe Sixpack on Taxes

conchis — Fri, 07 Sep 2007 17:24:31 -0000

Hang on, what? If Joe Sixpack doesn't care about maximising government revenue, then why bother telling great big lies about it? I don't get it.

Re: Moral Duties in Contexts of Partial Compliance

conchis — Sun, 24 Feb 2008 14:19:10 -0000

On "the irrelevance of any individual’s choice to the aggregate demand"...

(a) I'm not sure I buy actually buy the empirical claim here. Neither a small effect nor a small probability of a small effect is actually a zero effect. It's just a small effect.

(b) More importantly, it's kind of hard to even think about getting other people to make some sort of sacrifice like this if you're not willing to make it yourself. The greatest benefit of being vegetarian/carbon neutral or whatever (assuming you buy the initial reasoning) is that you might prompt other people to follow your lead. Your own contribution will necessarily be minimal, but that's not necessarily the point.

Re: Moral Duties in Contexts of Partial Compliance

conchis — Tue, 26 Feb 2008 16:46:44 -0000

Will, You're obviously right on (b) but I still don't buy (a), at least not at your supposed level of certainty.

Of course there's noise, and of course its likely to be bigger than any change you induce. But that doesn't change the fact that you've still shifted the center around which the noise is distributed.

Assuming (plausibly) that supply changes at all in response to demand, it seems to me that such responses could either be continuous or have discontinuities. In the continuous case the effect of your action is obvious: small but not nonexistent. On the other hand, if there are discontinuities in response, this does indeed mean that most of the time your action will have no effect, but it also means that in a small proportion of cases it can have an effect if it helps make it over the discontinuity threshold: that is, you've got a small probability of a somewhat larger effect.

As I said before, neither a small effect nor a small probability of an effect is identical to no effect. Rather, no effect seems to me to be an asymptotic approximation that never applies in actual (finite) markets. By and large it may be a useful approximation, but I'm not convinced it is here, and I'm not sure you should be either.

Re: More Fun with Collective Action

conchis — Tue, 26 Feb 2008 17:11:15 -0000

"I question the opinion of anyone who thinks 2 x 1.3 = 4"

Which would be no-one. You get to 4-ish assuming 1.5 tanks per leg (which would be conservative, cos it's probably closer to 2). Next time try reading before mouthing off.

Re: Too Much Consumption? Let Me Decide.

conchis — Tue, 26 Feb 2008 17:16:42 -0000

Will, you know that the HDI includes income by definition don't you?

Re: Justifying the Prohibition of Markets in Sexual Services

conchis — Thu, 13 Mar 2008 13:20:32 -0000

"the claim that prostitution is, by its nature, a kind of self-harm is pretty clearly false."

It's also not the same claim as the one you quoted. The "by it's nature" is a significant modifier.

I'm generally agnostic about this whole thing, but it strikes me that the issue is whether the practice is, on average doing harm; not whether it does harm by it's nature.

There are also two different situations you might want to think about:

(1) situations of actual free choice: do people tend to make particularly bad decisions about this sort of thing, such that, on average they're producing more harm than good.

(2) situations of not actual free choice - sex slavery etc. there are well-meaning types who don't buy (1) at all but still think (2) is enough of a reason to try to do something. But maybe it's not as much of an issue in the US as Europe. I don't know.

Of course you've then got to deal with the question of whether you can then do anything useful to make the situation better, but I'm not sure you've really framed the question properly here.

Re: Krugman on Immigration and Inequality

conchis — Mon, 31 Mar 2008 12:42:55 -0000

I (perhaps wrongly) took part of Krugman's point to be that policy A would increase political inequality at the global level: people who previously could vote now can't.* To the extent that such political inequality is something that than an egalitarian might care about, it's conceivable that they could think that policy A is worse than policy B, all things considered.

Now, I don't personally buy this: individual choices to migrate seem to indicate pretty clearly which way they see the tradeoff between income and political rights; and I see little reason to second-guess them. But it seems possible at least, for an egalitarian to think this way.

*Yes, this depends on where the immigrants come from, but I think it's defensible as an empirical generalisation.

Re: Balancing Risks

conchis — Mon, 31 Mar 2008 13:19:48 -0000

I'm sympathetic to the thrust of this argument, but I have a couple of concerns:

(1) This sort of calculation was factored into the Stern report CBA calculations, and it didn't seem to affect the conclusions much. It'd be interesting to try to pinpoint the discrepancy.

(2) "global consumption is projected to grow from about $6,600 per person per year today to about $40,000 per person per year over the next century"

Who exactly is supposed to reap these gains would seem to matter greatly to whether a given sacrifice is worth it or not. The places likely to be worst hit by global warming strike me as also being those least likely to see any of that $33,400 increase, so we're not necessarily sacrificing for the benefit of those richer than us, as the argument presumes.*

(3) All this SWB stuff probably matters in terms of the trade-off between money and climate. Yes, I am aware that there may be no such trade-off in some areas, but in general I think such considerations suggest the cost estimate is too low.

* Maybe an optimal solution would involve little action now, with massive transfers to those countries worst affected by GW when it occurs, but I'm not sure which is the more politically more infeasible of (a) said massive transfers; and (b) cutting back emissions.

Re: Economic Nationalism Alert

conchis — Thu, 03 Apr 2008 15:48:56 -0000

Will, I'm curious why you assume Baker is against more visas. He might be, but he certainly doesn't say so himself, and from his previous writings on similar issues, I'm not convinced he would be.

I mean, I know you've got a thing going at the moment about the "left" not caring about foreigners, but you've got be careful that the people you're criticizing actually think this way, because it's certainly not true of all of the left.

Re: Economic Nationalism Alert

conchis — Thu, 03 Apr 2008 15:50:13 -0000

whoops. should have read the next post before commenting. sorry! damn feedreader.

Re: Maybe Money Does Buy Happiness After All

conchis — Thu, 17 Apr 2008 14:04:04 -0000

Upon seeing a flat trend in average happiness over time as average income rises, you’d think the right thing to do would be to ask what is wrong with THAT measure. A ceiling effect? Scale renorming as expectations rise? But no. The measure that suggests income growth really does us no good, that must be right. So let’s hold that fixed and then try to explain away the significance of the strong within-country correlation by making up ill-supported just-so stories about zero-sum status races.

Sorry Will, but this is just crap. I'm as glad as anyone else that improved data are now giving us a better picture of what's going on here, and as frustrated as anyone else that a lot of the holes in the Easterlin result haven't gotten as much attention as they deserve. But just because the beliefs conducive to your political views are now being vindicated, doesn't mean it was obvious all along that you were right and they were wrong, or that the theories that were developed to explain the paradox are as silly as you seem to imply.

Comparison effects and adaptation were perfectly legitimate as potential explanations of the Easterlin result. So, if you're going to start throwing stones about people ignoring legitimate hypotheses on the basis of political convenience, you might want to step outside that glass house first. In fact, there is still very good individual-level evidence for comparison effects (the evidence for adaptation strikes me as more ambiguous). Just because such effects don't render money irrelevant to SWB, doesn't mean they're not important.

Moreover, to the extent that the "new" results are based simply on better data, they seem to give little credence to your "ceiling effect" or "scale renorming" hypotheses --- which would suggest that your gloating is even less justified. You might have been right, but not for any reason you deserve credit for.

P.S. Apologies for the snarky tone, but it's no worse than yours in this post.

Re: Maybe Money Does Buy Happiness After All

conchis — Thu, 17 Apr 2008 14:14:03 -0000

Anon,

The short answer is yes, sort of. Income (earning money) appears to have a distinct effect from wealth (having money), or consumption (spending money/having stuff). But it's not entirely clear whether this effect is because people get self-esteem from the act of earning or because, to the extent that individuals' current income is a signal of their future income, it provides them with a sense of security about their futures. Probably a little of both.

Re: The Quotable Cowen

conchis — Thu, 24 Apr 2008 11:33:09 -0000

The Sci Am article you link to is rubbish, but I'm puzzled by the "English teachers" reference. The blurb at the bottom states, that the author, "Robert Nadeau teaches environmental science and public policy at George Mason University."

Re: The Quotable Cowen

conchis — Thu, 24 Apr 2008 13:06:16 -0000

Thanks! The misleading blurb makes it even worse.

Re: Inequality of Capability?

conchis — Thu, 22 May 2008 13:40:10 -0000

"I’m not clear on the source of Kenworthy’s preference for thinking about what people can do with their money (capability) over what they do do with it (consumption), since it seems to me to come to pretty much the same thing."

Sen argues extensively to the contrary in his work developing the capability approach. Pretty much anything of his in the area is likely to give the flavor of the argument. His most commonly-used example is the intuitive difference between someone who is starving because they can't afford to eat, and someone who chooses to fast, though they have the means to do so. While the two have the same consumption, we are unlikely to consider them equally well-off, and Sen argues that the reason for this is that the faster has greater capabilities. (FWIW, I'm not sure this particular example necessarily demonstrates the point, but I nonetheless find it fairly plausible more generally.)

Re: Inequality of Capability?

conchis — Thu, 22 May 2008 13:41:20 -0000

whoops, should have read, "chooses to fast, though they have the means to eat".

Re: Inequality of Capability?

conchis — Fri, 23 May 2008 08:10:27 -0000

mk, I half agree with your analysis of the fasting example (which is why I mentioned that I wasn't convinced it demonstrates Sen's point).

Nonetheless, it still seems plausible to me (and consistent with what limited evidence there is) that the size of individuals' choice sets has an effect on "utility", independently of the specific choice made. Being constrained in our choice sets is typically unpleasant and often quite stressful, even if we are constrained only to pick the option that we would otherwise have picked anyway.*

Imagine that the would be faster were actually unable to feed herself. She might be able to rationalise her not eating as politically righteous in exactly the same way as if she had chosen to fast (at least, let us suppose she can) - and yet she might still feel worse off because she also values the size of her choice set and resents not having the ability to choose. It's then no longer the case that her utility is determined solely by her chosen bundle of goods: it's determined both by the chosen bundle, and the choice set from which that bundle was chosen.

* Of course, sometimes being constrained in our choice sets can reduce decision stress, but that doesn't detract from the point that unchosen options may be important in themselves.

Re: Layard Bait and Switch

conchis — Thu, 19 Jun 2008 13:44:01 -0000

If you happen to care about this any more (I just stumbled across this post while trying to google something else), the point you're making is probably half-correct. While it's fair enough that you were confused by this, Layard's argument is actually pretty reasonable if you understand the math.

Mathematically, the crucial assumption for Layard's argument to hold is that other people's income increases the marginal utility of my consumption. Technically, you're correct to say that this is distinct from the "pollution" argument, because the latter requires only that others' income decrease my utility - it doesn't necessarily have anything to say about the marginal utility of my own consumption. However, it turns out that in the most of the standard ways of parameterising the utility function, the "pollution" assumption does in fact imply that my marginal utility of consumption increases. Indeed, it's more the case that you have to make special assumptions about the form of the utility function to avoid this implication, than to generate it - which is why (even if it's not completely transparent) Layard isn't being utterly ridiculous here.

Also, FWIW in these standard formulations, income is the pollution, so I don't quite know why you're taking such issue with that. Again, it's possible to argue for alternative formulations, but the standard one is far from obviously implausible.

Re: Coasean Morality

conchis — Mon, 29 Sep 2008 11:43:40 -0000

Wow. That paper really is astoundingly bad.

Re: Stimulus and Ideology: What’s the Score

conchis — Sun, 25 Jan 2009 17:35:09 -0000

Not sure about the classification of Acemoglu as "Con". From the linked piece:

"These concerns are not a sufficient reason for rejecting the stimulus plan, but rather a call to consider its implications for long-run growth. Decisive action on the crisis is necessary; not just soften the blow of the recession but also to avoid a backlash that could be deeply harmful to long-run growth...

...A comprehensive stimulus plan, even with all of its imperfections, is probably the best way of fighting these dangers. Nevertheless, the details of the stimulus plan should be designed so as to cause minimal disruption to the process of reallocation and innovation."

It's possible, of course that he's he's written something critical of the details elsewhere.

Re: More Danish Freedom

conchis — Thu, 05 Mar 2009 12:57:24 -0000

Original source here: http://www.henleyglobal.com/citizenship/visa-re.... The US is beaten out by Finland, Ireland and Portugal as well.

Re: Waxman-Markey

conchis — Thu, 21 May 2009 17:49:04 -0000

Will, not to quarrel with your main point, but I'd be interested to know whether you think Manzi's 1. and 2. are applying the right welfare standards: in the first case US taxpayers, rather than global residents; and in the second focusing on consumption/economic welfare (haven't read the context, so don't know exactly what this is supposed to include or not).

Not sure whether this would change the analysis much.