economism

Economists and Voting

It is the time of year when economists like to remind the unwashed that voting is a waste of time. A classic of the genre appeared seven years ago, in the form of  “Why Vote?,” by Stephen J. Dubner and Steven D. Levitt (of Freakonomics fame). Here are some relevant passages:

The odds that your vote will actually affect the outcome of a given election are very, very, very slim. This was documented by the economists Casey Mulligan and Charles Hunter, who analyzed more than 56,000 Congressional and state-legislative elections since 1898. For all the attention paid in the media to close elections, it turns out that they are exceedingly rare. The median margin of victory in the Congressional elections was 22 percent; in the state-legislature elections, it was 25 percent. Even in the closest elections, it is almost never the case that a single vote is pivotal. Of the more than 40,000 elections for state legislator that Mulligan and Hunter analyzed, comprising nearly 1 billion votes, only 7 elections were decided by a single vote, with 2 others tied. Of the more than 16,000 Congressional elections, in which many more people vote, only one election in the past 100 years – a 1910 race in Buffalo – was decided by a single vote….

Still, people do continue to vote, in the millions. Why? Here are three possibilities:

1. Perhaps we are just not very bright and therefore wrongly believe that our votes will affect the outcome.

2. Perhaps we vote in the same spirit in which we buy lottery tickets. After all, your chances of winning a lottery and of affecting an election are pretty similar. From a financial perspective, playing the lottery is a bad investment. But it’s fun and relatively cheap: for the price of a ticket, you buy the right to fantasize how you’d spend the winnings – much as you get to fantasize that your vote will have some impact on policy.

3. Perhaps we have been socialized into the voting-as-civic-duty idea, believing that it’s a good thing for society if people vote, even if it’s not particularly good for the individual. And thus we feel guilty for not voting. [The New York Times Magazine, November 6, 2005]

In true economistic fashion, Dubner and Levitt omit a key reason for voting: It makes a person feel good. Even if one’s vote will not change the outcome of an election, one attains a degree of satisfaction from taking an official (even if secret) stand in favor of or in opposition to a certain candidate, bond issue, or other item on a ballot.

Dubner and Levitt (and their ilk) seem to inhabit a world in which a thing is not worth doing unless the payoff can be measured with some precision and compared with other, similarly quantifiable, uses of one’s time and money. I doubt they govern their own lives accordingly. If they do, they must be missing out on a lot of life’s pleasures: sex and ice cream, to name only two.

Their article continues on a different tack:

But wait a minute, you say. If everyone thought about voting the way economists do, we might have no elections at all. No voter goes to the polls actually believing that her single vote will affect the outcome, does she? And isn’t it cruel to even suggest that her vote is not worth casting?

This is indeed a slippery slope – the seemingly meaningless behavior of an individual, which, in aggregate, becomes quite meaningful. Here’s a similar example in reverse. Imagine that you and your 8-year-old daughter are taking a walk through a botanical garden when she suddenly pulls a bright blossom off a tree.

“You shouldn’t do that,” you find yourself saying.

“Why not?” she asks.

“Well,” you reason, “because if everyone picked one, there wouldn’t be any flowers left at all.”

“Yeah, but everybody isn’t picking them,” she says with a look. “Only me.”

Clever, what? Too clever by half. This argument overlooks the powerful effect of exemplary behavior — where “exemplary,” as used here, does not imply “laudable.” By Dubner and Levitt’s account, allowing a vandal to deface a public building would not encourage other vandals to do the same thing, and would not lead to the widespread defacement of buildings and other anti-social acts. (I refer, of course, to James Q. Wilson’s widely accepted Broken Windows Theory, which Levitt and Dubner tried to cast doubt on in Freakonomics. They wrongly suggested that the onset of legalized abortion was instrumental in the reduction of crime rates.)

Dubner and Levitt’s argument also overlooks the key fact that when economists preach against voting, they are not just preaching to themselves. Dubner and Levitt’s sermon appeared in the pages of one of the country’s most widely read and influential publications. It was not addressed to an individual, but to thousands and thousands of individuals. And I doubt that they would have objected if the article had appeared in every newspaper and magazine in the country. In effect, the Dubner-Levitt argument is not just an argument that the marginal vote makes little difference — it is advice to millions of Americans that they should abstain from voting.

In that respect, Levitt and Dubner are guilty of paternalism as well as economism. Thus the many links to posts about paternalism in the following list of related posts:
The Rationality Fallacy
Libertarian Paternalism
A Libertarian Paternalist’s Dream World
The Short Answer to Libertarian Paternalism
Second-Guessing, Paternalism, Parentalism, and Choice
Another Thought about Libertarian Paternalism
Back-Door Paternalism
Another Voice Against the New Paternalism
Slippery Paternalists
A Further Note about “Libertarian” Paternalism
Apropos Paternalism
Beware of Libertarian Paternalists
Externalities and Statism
Extreme Economism
Irrational Rationality
Not-So-Random Thoughts (III) (third item)
Obesity and Statism

Not-So-Random Thoughts (III)

Apropos Science

In the vein of “Something from Nothing?” there is this:

[Stephen] Meyer also argued [in a a recent talk at the University Club in D.C.] that biological evolutionary theory, which “attempts to explain how new forms of life evolved from simpler pre-existing forms,” faces formidable difficulties. In particular, the modern version of Darwin’s theory, neo-Darwinism, also has an information problem.

Mutations, or copying errors in the DNA, are analogous to copying errors in digital code, and they supposedly provide the grist for natural selection. But, Meyer said: “What we know from all codes and languages is that when specificity of sequence is a condition of function, random changes degrade function much faster than they come up with something new.”…

The problem is comparable to opening a big combination lock. He asked the audience to imagine a bike lock with ten dials and ten digits per dial. Such a lock would have 10 billion possibilities with only one that works. But the protein alphabet has 20 possibilities at each site, and the average protein has about 300 amino acids in sequence….

Remember: Not just any old jumble of amino acids makes a protein. Chimps typing at keyboards will have to type for a very long time before they get an error-free, meaningful sentence of 150 characters. “We have a small needle in a huge haystack.” Neo-Darwinism has not solved this problem, Meyer said. “There’s a mathematical rigor to this which has not been a part of the so-called evolution-creation debate.”…

“[L]eading U.S. biologists, including evolutionary biologists, are saying we need a new theory of evolution,” Meyer said. Many increasingly criticize Darwinism, even if they don’t accept design. One is the cell biologist James Shapiro of the University of Chicago. His new book is Evolution: A View From the 21st Century. He’s “looking for a new evolutionary theory.” David Depew (Iowa) and Bruce Weber (Cal State) recently wrote in Biological Theory that Darwinism “can no longer serve as a general framework for evolutionary theory.” Such criticisms have mounted in the technical literature. (Tom Bethell, “Intelligent Design at the University Club,” American Spectator, May 2012)

And this:

[I]t is startling to realize that the entire brief for demoting human beings, and organisms in general, to meaningless scraps of molecular machinery — a demotion that fuels the long-running science-religion wars and that, as “shocking” revelation, supposedly stands on a par with Copernicus’s heliocentric proposal — rests on the vague conjunction of two scarcely creditable concepts: the randomness of mutations and the fitness of organisms. And, strangely, this shocking revelation has been sold to us in the context of a descriptive biological literature that, from the molecular level on up, remains almost nothing buta documentation of the meaningfully organized, goal-directed stories of living creatures.

Here, then, is what the advocates of evolutionary mindlessness and meaninglessness would have us overlook. We must overlook, first of all, the fact that organisms are masterful participants in, and revisers of, their own genomes, taking a leading position in the most intricate, subtle, and intentional genomic “dance” one could possibly imagine. And then we must overlook the way the organism responds intelligently, and in accord with its own purposes, to whatever it encounters in its environment, including the environment of its own body, and including what we may prefer to view as “accidents.” Then, too, we are asked to ignore not only the living, reproducing creatures whose intensely directed lives provide the only basis we have ever known for the dynamic processes of evolution, but also all the meaning of the larger environment in which these creatures participate — an environment compounded of all the infinitely complex ecological interactions that play out in significant balances, imbalances, competition, cooperation, symbioses, and all the rest, yielding the marvelously varied and interwoven living communities we find in savannah and rainforest, desert and meadow, stream and ocean, mountain and valley. And then, finally, we must be sure to pay no heed to the fact that the fitness, against which we have assumed our notion of randomness could be defined, is one of the most obscure, ill-formed concepts in all of science.

Overlooking all this, we are supposed to see — somewhere — blind, mindless, random, purposeless automatisms at the ultimate explanatory root of all genetic variation leading to evolutionary change. (Stephen L. Talbott, “Evolution and the Illusion of Randomness,” The New Atlantis, Fall 2011)

My point is not to suggest that that the writers are correct in their conjectures. Rather, the force of their conjectures shows that supposedly “settled” science is (a) always far from settled (on big questions, at least) and (b) necessarily incomplete because it can never reach ultimate truths.

Trayvon, George, and Barack

Recent revelations about the case of Trayvon Martin and George Zimmerman suggest the following:

  • Martin was acting suspiciously and smelled of marijuana.
  • Zimmerman was rightly concerned about Martin’s behavior, given the history of break-ins in Zimmerman’s neighborhood.
  • Martin attacked Zimmerman, had him on the ground, was punching his face, and had broken his nose.
  • Zimmerman shot Martin in self-defense.

Whether the encounter was “ultimately avoidable,” as a police report asserts, is beside the point.  Zimmerman acted in self-defense, and the case against him should be dismissed. The special prosecutor should be admonished by the court for having succumbed to media and mob pressure in bringing a charge of second-degree murder against Zimmerman.

What we have here is the same old story: Black “victim”–>media frenzy to blame whites (or a “white Hispanic”), without benefit of all relevant facts–>facts exonerate whites. To paraphrase Shakespeare: The first thing we should do after the revolution is kill all the pundits (along with the lawyers).

Obama famously said, “”If I had a son, he would look like Trayvon.” Given the thuggish similarity between Trayvon and Obama (small sample here), it is more accurate to say that if Obama had a son, he would be like Trayvon.

Creepy People

Exhibit A is Richard Thaler, a self-proclaimed libertarian who is nothing of the kind. Thaler defends the individual mandate that is at the heart of Obamacare (by implication, at least), when he attacks the “slippery slope” argument against it. Annon Simon nails Thaler:

Richard Thaler’s NYT piece from a few days ago, Slippery-Slope Logic, Applied to Health Care, takes conservatives to task for relying on a “slippery slope” fallacy to argue that Obamacare’s individual mandate should be invalidated. Thaler believes that the hypothetical broccoli mandate — used by opponents of Obamacare to show that upholding the mandate would require the Court to acknowledge congressional authority to do all sorts of other things — would never be adopted by Congress or upheld by a federal court. This simplistic view of the Obamacare litigation obscures legitimate concerns over the amount of power that the Obama administration is claiming for the federal government. It also ignores the way creative judges can use previous cases as building blocks to justify outcomes that were perhaps unimaginable when those building blocks were initially formed….

[N]ot all slippery-slope claims are fallacious. The Supreme Court’s decisions are often informed by precedent, and, as every law student learned when studying the Court’s privacy cases, a decision today could be used by a judge ten years from now to justify outcomes no one had in mind.

In 1965, the Supreme Court in Griswold v. Connecticut, referencing penumbras and emanations, recognized a right to privacy in marriage that mandated striking down an anti-contraception law.

Seven years later, in Eisenstadt v. Baird, this right expanded to individual privacy, because after all, a marriage is made of individuals, and “[i]f the right of privacy means anything, it is the right of the individual . . . to be free from unwarranted governmental intrusion into matters so fundamentally affecting a person as the decision whether to bear or beget a child.”

By 1973 in Roe v. Wade, this precedent, which had started out as a right recognized in marriage, had mutated into a right to abortion that no one could really trace to any specific textual provision in the Constitution. Slippery slope anyone?

This also happened in Lawrence v. Texas in 2003, where the Supreme Court struck down an anti-sodomy law. The Court explained that the case did not involve gay marriage, and Justice O’Connor’s concurrence went further, distinguishing gay marriage from the case at hand. Despite those pronouncements, later decisions enshrining gay marriage as a constitutionally protected right have relied upon Lawrence. For instance, Goodridge v. Department of Public Health (Mass. 2003) cited Lawrence 9 times, Varnum v. Brien (Iowa 2009) cited Lawrence 4 times, and Perry v. Brown (N.D. Cal, 2010) cited Lawrence 9 times.

However the Court ultimately rules, there is no question that this case will serve as a major inflection point in our nation’s debate about the size and scope of the federal government. I hope it serves to clarify the limits on congressional power, and not as another stepping stone on the path away from limited, constitutional government. (“The Supreme Court’s Slippery Slope,” National Review Online, May 17, 2012)

Simon could have mentioned Wickard v. Filburn (1942), in which the Supreme Court brought purely private, intrastate activity within the reach of Congress’s power to regulate interstate commerce. The downward slope from Wickard v. Filburn to today’s intrusive regulatory regime has been been not merely slippery but precipitous.

Then there is Brian Leiter, some of whose statist musings I have addressed in the past. It seems that Leiter has taken to defending the idiotic Elizabeth Warren for her convenient adoption of a Native American identity. Todd Zywicki tears a new one for Leiter:

I was out of town most of last week and I wasn’t planning on blogging any more on the increasingly bizarre saga of Elizabeth Warren’s claim to Native American ancestry, which as of the current moment appears to be entirely unsubstantiated.  But I was surprised to see Brian Leiter’s post doubling-down in his defense of Warren–and calling me a “Stalinist” to boot (although I confess it is not clear why or how he is using that term).  So I hope you will indulge me while I respond.

First, let me say again what I expressed at the outset–I have known from highly-credible sources for a decade that in the past Warren identified herself as a Native American in order to put herself in a position to benefit from hiring preferences (I am certain that Brian knows this now too).  She was quite outspoken about it at times in the past and, as her current defenses have suggested, she believed that she was entitled to claim it.  So there would have been no reason for her to not identify as such and in fact she was apparently quite unapologetic about it at the time….

Second, Brian seems to believe for some reason that the issue here is whether Warren actually benefited from a hiring preference.  Of course it is not (as my post makes eminently clear).  The issue I raised is whether Warren made assertions as part of the law school hiring process in order to put herself in a position to benefit from a hiring preference for which she had no foundation….

Third, regardless of why she did it, Warren herself actually had no verifiable basis for her self-identification as Native American.  At the very least her initial claim was grossly reckless and with no objective foundation–it appears that she herself has never had any foundation for the claim beyond “family lore” and her “high cheekbones.”… Now it turns out that the New England Historical Genealogical Society, which had been the source for the widely-reported claim that she might be 1/32 Cherokee, has rescinded its earlier conclusion and now says “We have no proof that Elizabeth Warren’s great great great grandmother O.C. Sarah Smith either is or is not of Cherokee descent.”  The story adds, “Their announcement came in the wake of an official report from an Oklahoma county clerk that said a document purporting to prove Warren’s Cherokee roots — her great great great grandmother’s marriage license application — does not exist.”  A Cherokee genealogist has similarly stated that she can find no evidence to support Warren’s claim.  At this point her claim appears to be entirely unsupported as an objective matter and it appears that she herself had no basis for it originally.

Fourth, Brian’s post also states the obvious–that there is plenty of bad blood between Elizabeth and myself.  But, of course, the only reason that this issue is interesting and relevant today is because Warren is running for the U.S. Senate and is the most prominent law professor in America at this moment.

So, I guess I’ll conclude by asking the obvious question: if a very prominent conservative law professor (say, for example, John Yoo) had misrepresented himself throughout his professorial career in the manner that Elizabeth Warren has would Brian still consider it to be “the non-issue du jour“?  Really?

I’m not sure what a “Stalinist” is.  But I would think that ignoring a prominent person’s misdeeds just because you like her politics, and attacking the messenger instead, just might fit the bill. (“New England Genealogical Historical Society Rescinds Conclusion that Elizabeth Warren Might Be Cherokee,” The Volokh Conspiracy, May 17, 2012)

For another insight into Leiter’s character, read this and weep not for him.

Tea Party Sell-Outs

Business as usual in Washington:

This week the Club for Growth released a study of votes cast in 2011 by the 87 Republicans elected to the House in November 2010. The Club found that “In many cases, the rhetoric of the so-called “Tea Party” freshmen simply didn’t match their records.” Particularly disconcerting is the fact that so many GOP newcomers cast votes against spending cuts.

The study comes on the heels of three telling votes taken last week in the House that should have been slam-dunks for members who possess the slightest regard for limited government and free markets. Alas, only 26 of the 87 members of the “Tea Party class” voted to defund both the Economic Development Administration and the president’s new Advanced Manufacturing Technology Consortia program (see my previous discussion of these votes here) and against reauthorizing the Export-Import Bank (see my colleague Sallie James’s excoriation of that vote here).

I assembled the following table, which shows how each of the 87 freshman voted. The 26 who voted for liberty in all three cases are highlighted. Only 49 percent voted to defund the EDA. Only 56 percent voted to defund a new corporate welfare program requested by the Obama administration. And only a dismal 44 percent voted against reauthorizing “Boeing’s bank.” That’s pathetic. (Tad DeHaven, “Freshman Republicans Switch from Tea to Kool-Aid,” Cato@Liberty, May 17, 2012)

Lesson: Never trust a politician who seeks a position of power, unless that person earns trust by divesting the position of power.

PCness

Just a few of the recent outbreaks of PCness that enraged me:

Michigan Mayor Calls Pro-Lifers ‘Forces of Darkness’” (reported by LifeNews.com on May 11, 2012)

US Class Suspended for Its View on Islam” (reported by CourierMail.com.au, May 11, 2012)

House Democrats Politicize Trayvon Martin” (posted at Powerline, May 8, 2012)

Chronicle of Higher Education Fires Blogger for Questioning Seriousness of Black Studies Depts.” (posted at Reason.com/hit & run, May 8, 2012)

Technocracy, Externalities, and Statism

From a review of Robert Frank’s The Darwin Economy:

In many ways, economics is the discipline best suited to the technocratic mindset. This has nothing to do with its traditional subject matter. It is not about debating how to produce goods and services or how to distribute them. Instead, it relates to how economics has emerged as an approach that distances itself from democratic politics and provides little room for human agency.

Anyone who has done a high-school course in economics is likely to have learned the basics of its technocratic approach from the start. Students have long been taught that economics is a ‘positive science’ – one based on facts rather than values. Politicians are entitled to their preferences, so the argument went, but economists are supposed to give them impartial advice based on an objective examination of the facts.

More recently this approach has been taken even further. The supposedly objective role of the technocrat-economist has become supreme, while the role of politics has been sidelined….

The starting point of The Darwin Economy is what economists call the collective action problem: the divergence between individual and collective interests. A simple example is a fishermen fishing in a lake. For each individual, it might be rational to catch as many fish as possible, but if all fishermen follow the same path the lake will eventually be empty. It is therefore deemed necessary to find ways to negotiate this tension between individual and group interests.

Those who have followed the discussion of behavioural economics will recognise that this is an alternative way of viewing humans as irrational. Behavioural economists focus on individuals behaving in supposedly irrational ways. For example, they argue that people often do not invest enough to secure themselves a reasonable pension. For Frank, in contrast, individuals may behave rationally but the net result of group behaviour can still be irrational….

…From Frank’s premises, any activity considered harmful by experts could be deemed illegitimate and subjected to punitive measures….

…[I]t is … wrong to assume that there is no more scope for economic growth to be beneficial. Even in the West, there is a long way to go before scarcity is limited. This is not just a question of individuals having as many consumer goods as they desire – although that has a role. It also means having the resources to provide as many airports, art galleries, hospitals, power stations, roads, schools, universities and other facilities as are needed. There is still ample scope for absolute improvements in living standards…. (Daniel Ben-ami, “Delving into the Mind of the Technocrat,” The Spiked Review of Books, February 2012)

There is much to disagree with in the review, but the quoted material is right on. It leads me to quote myself:

…[L]ife is full of externalities — positive and negative. They often emanate from the same event, and cannot be separated. State action that attempts to undo negative externalities usually results in the negation or curtailment of positive ones. In terms of the preceding example, state action often is aimed at forcing the attractive woman to be less attractive, thus depriving quietly appreciative men of a positive externality, rather than penalizing the crude man if his actions cross the line from mere rudeness to assault.

The main argument against externalities is that they somehow result in something other than a “social optimum.” This argument is pure, economistic hokum. It rests on the unsupportable belief in a social-welfare function, which requires the balancing (by an omniscient being, I suppose) of the happiness and unhappiness that results from every action that affects another person, either directly or indirectly….

A believer in externalities might respond by saying that they are of “economic” importance only as they are imposed on bystanders as a spillover from economic transactions, as in the case of emissions from a power plant that can cause lung damage in susceptible persons. Such a reply is of a kind that only an omniscient being could make with impunity. What privileges an economistic thinker to say that the line of demarcation between relevant and irrelevant acts should be drawn in a certain place? The authors of campus speech codes evidently prefer to draw the line in such a way as to penalize the behavior of the crude man in the above example. Who is the economistic thinker to say that the authors of campus speech codes have it wrong? And who is the legalistic thinker to say that speech should be regulated by deferring to the “feelings” that it arouses in persons who may hear or read it?

Despite the intricacies that I have sketched, negative externalities are singled out for attention and rectification, to the detriment of social and economic intercourse. Remove the negative externalities of electric-power generation and you make more costly (and even inaccessible) a (perhaps the) key factor in America’s economic growth in the past century. Try to limit the supposed negative externality of human activity known as “greenhouse gases” and you limit the ability of humans to cope with that externality (if it exists) through invention, innovation, and entrepreneurship. Limit the supposed negative externality of “offensive” speech and you quickly limit the range of ideas that may be expressed in political discourse. Limit the supposed externalities of suburban sprawl and you, in effect, sentence people to suffer the crime, filth, crowding, contentiousness, heat-island effects, and other externalities of urban living.

The real problem is not externalities but economistic and legalistic reactions to them….

The main result of rationalistic thinking — because it yields vote-worthy slogans and empty promises to fix this and that “problem” — is the aggrandizement of the state, to the detriment of civil society.

The fundamental error of rationalists is to believe that “problems” call for collective action, and to identify collective action with state action. They lack the insight and imagination to understand that the social beings whose voluntary, cooperative efforts are responsible for mankind’s vast material progress are perfectly capable of adapting to and solving “problems,” and that the intrusions of the state simply complicate matters, when not making them worse. True collective action is found in voluntary social and economic intercourse, the complex, information-rich content of which rationalists cannot fathom. They are as useless as a blind man who is shouting directions to an Indy 500 driver….

Theodore Dalrymple

If you do not know of Theodore Dalrymple, you should. His book, In Praise of Prejudice: The Necessity of Preconceived Ideas, inspired  “On Liberty,” the first post at this blog. Without further ado, I commend these recent items by and about Dalrymple:

Rotting from the Head Down” (an article by Dalrymple about the social collapse of Britain, City Journal, March 8, 2012)

Symposium: Why Do Progressives Love Criminals?” (Dalrymple and others, FrontPageMag.com, March 9, 2012)

Doctors Should Not Vote for Industrial Action,” a strike, in American parlance (a post by Dalrymple, The Social Affairs Unit, March 22, 2012)

The third item ends with this:

The fact is that there has never been, is never, and never will be any industrial action over the manifold failures of the public service to provide what it is supposed to provide. Whoever heard of teachers going on strike because a fifth of our children emerge from 11 years of compulsory education unable to read fluently, despite large increases in expenditure on education?

If the doctors vote for industrial action, they will enter a downward spiral of public mistrust of their motives. They should think twice before doing so.

Amen.

The Higher-Eduction Bubble

The title of a post at The Right Coast tells the tale: “Under 25 College Educated More Unemployed than Non-college Educated for First Time.” As I wrote here,

When I entered college [in 1958], I was among the 28 percent of high-school graduates then attending college. It was evident to me that about half of my college classmates didn’t belong in an institution of higher learning. Despite that, the college-enrollment rate among high-school graduates has since doubled.

(Also see this.)

American taxpayers should be up in arms over the subsidization of an industry that wastes their money on the useless education of masses of indeducable persons. Then there is the fact that taxpayers are forced to subsidize the enemies of liberty who populate university faculties.

The news about unemployment among college grads may hasten the bursting of the higher-ed bubble. It cannot happen too soon.

Irrational Rationality

Economists have given “rationality” a bad name. Mario Rizzo explains:

[T]he axioms of rational choice were supposed to shed light on how people actually made choices. Then a sleight of hand occurred. It was claimed that they shed light on how rational individuals would choose – without addressing the issue of whether people were in fact rational in the sense of the axioms. Finally, it was alleged – in the face of empirical evidence that people often did not choose rationally – that the axioms defined the norms of choice. They told us how rational individuals should choose. More than that. Since being rational is taken as “good,” they show us how people should behave – full stop….

The behavioralists may well be correct that people do not act in accordance with … rationality axioms. But they are surely wrong in claiming that they ought to behave in this way. The problem is not with deficient individuals. It is a problem of deficient rationality standards.

It is an old story. Pseudo-scientific economists, suffering from physics envy, strive to reduce the complexity of human behavior to simple-minded metrics, according to which they judge human rationality. When humans fail to hew to the simple-minded preferences of economistic thinkers, it is evident (to those thinkers) that humans must be nudged toward “doing the right thing.”

When economists cross the line from theorizing about economic behavior to judging it, they put themselves on the same low plain as “liberals.” The latter, at least, are honest about wanting their own way … just because … and do not resort to cheap, pseudo-scientific tricks. They simply enforce their preferences through statutes and regulations. Why “nudge” when you can coerce?

Related posts:
Why I Don’t Hang Around with Economists
The Rationality Fallacy
Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
Inventing “Liberalism”
Utilitarianism, “Liberalism,” and Omniscience
Utilitarianism vs. Liberty
Beware of Libertarian Paternalists
Landsburg Is Half-Right
Negative Rights, Social Norms, and the Constitution
Rights, Liberty, the Golden Rule, and the Legitimate State
The Mind of a Paternalist
Accountants of the Soul
Physics Envy
Rawls Meets Bentham
Enough of “Social Welfare”
The Case of the Purblind Economist
The Arrogance of (Some) Economists
Extreme Economism

Extreme Economism

Economism is a theory

that regards economics as the main factor in society, ignoring or reducing to simplistic economic terms other factors such as culture, nationality, etc. (definition 1.a, here)

The “etc.” encompasses family and friendship, in the eyes of the economistic economists who advise the giving of cash instead of items that the recipient is meant to enjoy. Economistic economists are the kind who mistake wealth-maximization for rational behavior.

What is irrational behavior? Whatever does not lead to the accumulation of wealth, in the view of these money-besotted economists. In that respect they are much like leftists in their condemnation of behavior of which they disapprove. Maverick Philosopher captures the mindset:

Suppose one genuinely enjoys smoking and is willing to run the risk of disease and perhaps shorten one’s life by say five or ten years in order to secure certain benefits in the present. There is nothing irrational about such a course of action. One acts rationally — in one sense of ‘rational’ — if one chooses means conducive to the ends one has in view. If your end in view is to live as long as possible, then don’t smoke. If that is not your end, if you are willing to trade some highly uncertain future years of life for some certain pleasures here and now, and if you enjoy smoking, then smoke.

The epithet ‘irrational’ is attached with more justice to the fascists of the Left, the loon-brained tobacco wackos, who, in the grip of their misplaced moral enthusiasm, demonize the acolytes of the noble weed. The church of liberalism must have its demon, and his name is tobacco. I should also point out that smoking, like keeping and bearing arms, is a liberty issue. Is liberty a value? I’d say it is. Yet another reason to oppose the liberty-bashing loons of the Left and the abomination of Obamacare with its individual mandate….

Smoking and drinking can bring you to death’s door betimes. Ask Bogie who died at 56 of the synergistic effects of weed and hooch. Life’s a gamble. A crap shoot no matter how you slice it. Hear the Hitch:

Writing is what’s important to me, and anything that helps me do that — or enhances and prolongs and deepens and sometimes intensifies argument and conversation — is worth it to me. So I was knowingly taking a risk. I wouldn’t recommend it to others.

Exactly right.

(Bill Vallicella, “Cigarettes, Rationality, and Hitchens,” December 28, 2011)

Returning to economistic economists, I note that they are also the kind who write about gift-giving at Christmas in this vein:

I am not sure why people give each other store-bought gifts instead of cash, which is never the wrong size or color. Some say that we give gifts because it shows that we took the time to shop. But we could accomplish the same thing by giving the cash value of our shopping time, showing that we took the time to earn the money. (Steven Landsburg, The Armchair Economist, .pdf version here)

Similarly:

A potentially important microeconomic aspect of gift-giving is that gifts may be mismatched with the recipients’ preferences. In the standard microeconomic framework of consumer choice, the best a gift-giver can do with, say, $10 is to duplicate the choice that the recipient would have made. While it is possible for a giver to choose a gift which the recipient ultimately values above its price — for example, if the recipient is not perfectly informed — it is more likely that the gift will leave the recipient worse off than if she had made her own consumption choice with an equal amount of cash. In short, gift-giving is a potential source of deadweight loss….

Estimates in this paper indicate that between a tenth and a third of the value of holiday gifts is destroyed by gift-giving. Because average losses of at leas 10 percent hold for all gift price ranges in the sample, the lower-bound proportional loss estimates may be reasonably applied to other populations. While the generality of these results is not settled, the deadweight losses arising from holiday gift-giving may well be large: holiday expenditures in 1992 totaled $38 billion according to one estimate.

If between a tenth and a third of this spending was wasted, then the deadweight loss of 1992 holiday gift-giving was between $4 billion and $$13 billion. (Joel Waldfogel, “The Deadweight Loss of Christmas,” The American Economic Review, Volume 83, Issue 5 [December 1993])

A current estimate of the deadweight loss of holiday gift-giving is “$46-$152 billion worth of holiday wastage, potentially equivalent to an entire year’s worth of output from Iowa,” according to Matthew Yglesias (“Do Not Buy Dad a Tie,” Slate, December 20, 2011).

The foregoing analyses and estimates hinge on a model of gift-giving that assumes away (a) the value derived by the giver of a gift — the pleasure of giving. — and (b) the value derived from the recipient over and above any value that he derives from the gift itself — namely, appreciation for the gift-giver’s thoughtfulness and effort. Moreover, the conclusion that holiday gift-giving is wasteful rests on a false premise, namely, that the devaluation of gifts by some recipients negates the added value attributed to gifts by other recipients. In other words, the condemnation of holiday gift-giving on economistic grounds manifests a belief in a social-welfare function, wherein A’s unhappiness can be weighed against B’s happiness. Once again, we see a strong resemblance between economistic economists and leftists. (In fact, I have written before about Landsburg’s misguided embrace of the social-welfare function.)

But let us take economistic economist’s view of the world and see where it leads. Imagine five persons who are mutually acquainted or related, and assume that they have taken the advice to give each other cash. Part A of the following table depicts the result of their exchanges of cash. Everyone gives everyone else some amount of money, but the amounts vary in total and detail from person to person.

Now, an economistic economist would look at the result and consider it irrational because there were 10 instances in which reciprocal gifts of cash exactly offset each other (e.g., A gave B $10 and B gave A $10). That would lead the economistic economist to suggest that the trouble and expense of giving offsetting gifts should be eliminated. The result, shown in Part B, yields the same bottom line for each person, but only 10 gifts of cash are given.

But wait, there are still unnecessary exchanges; for example, A gives C $10 and C, in effect, give $5 of that back to A. So, the next step, shown in Part C, is to reduce exchanges to their net amounts; for example A gives C $5 and C gives A nothing. This further reduces the trouble and expense of gift-giving because the number of transactions has been halved again — from 10 to 5.

A. Initial exchanges — 20 gifts:

Givers

A

B

    C

D

E

Receivers

A

10

5

10

15

B

10

5

5

15

C

10

5

15

10

D

10

15

15

5

E

10

20

15

5

Given

40

50

40

35

45

Received

40

35

40

45

50

Net

0

-15

0

10

5

*******  ************** **** ***** ********* ********* *********
B. After eliminating identical exchanges — 10 gifts:

Givers

A

B

C

D

E

Receivers

A

5

15

B

5

15

C

10

10

D

15

E

10

20

15

Given

20

35

20

5

40

Received

20

20

20

15

45

Net

0

-15

0

10

5

 ******* *************** **** ***** ********* ********* *********
C. After reducing exchanges to net amounts — 5 gifts:

Givers

A

B

C

D

E

Receivers

A

5

B

C

5

D

10

E

5

5

Given

5

15

5

0

5

Received

5

0

5

10

10

Net

0

-15

0

10

5

In the beginning, before the exchanges of cash depicted in Part A, there was an occasion that was filled with anticipation and much happiness. The “logic” of economism has reduced it to a cold, joyless exercise in computation. Bah, humbug!

Finally, I must note that — in my experience — most economists are economistic. This is from a post that I wrote more than seven years ago:

The idea of going to lunch with colleagues is to have some laughs, some good conversation (not about economics), and a few beers to help you coast through the afternoon. With economists, however, lunch always went something like this: Carping at the waiter about what’s not on the menu, followed by carping at the waiter about whether he brought the right orders to the table, followed by carefully dissecting the bill to ensure that everyone pays for precisely what he ordered, followed by computing the tip down to the last red cent instead of rounding up to the nearest dollar out of consideration for the beleaguered waiter. I’d rather have lunch with undertakers.

*   *   *

Related posts:
Why I Don’t Hang Around with Economists
The Rationality Fallacy
Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
Inventing “Liberalism”
Utilitarianism, “Liberalism,” and Omniscience
Utilitarianism vs. Liberty
Beware of Libertarian Paternalists
Landsburg Is Half-Right
Negative Rights, Social Norms, and the Constitution
Rights, Liberty, the Golden Rule, and the Legitimate State
The Mind of a Paternalist
Accountants of the Soul
Rawls Meets Bentham
Enough of “Social Welfare”
The Case of the Purblind Economist
The Arrogance of (Some) Economists