My wife is probably not the only person out there who is far more terrified of flying in an airplane than she is driving in a car. Now some of this terror has to do with a fear of heights or being locked in an enclosed space, and there is no “right” or “wrong” feeling to have about those sorts of things. I tend to feel them too. But if your concern about flying is that you’re not really in the mood to meet your maker, and you therefore prefer to drive in cars, I’d suggest that you are irrational. Of course this is not news to most of you – over 30,000 Americans per year perish in automobile accidents and more than an order of magnitude more are injured in car accidents. Per passenger mile traveled and making all of the demographic and other adjustments you could possibly want to make, there simply is no way to come to a conclusion that driving is safer than flying.
We’re not here of course to debate whether fears of flying, in spite of the accident data, are irrational. Not at all. But let’s consider a typical (i.e. my wife) response to this sort of commentary. “Yeah, yeah, I get that, but at least when I am in a car I AM DRIVING AND IN CONTROL, and in a plane I am at the mercy of the pilot … or a computer … and gravity!” Again I respect that. We have a human tendency to desire control, which manifests itself in all kinds of other emotions. This need for control leads most of us (probably me included) to infer desires, intentions and goals when none exist. It may result in folks thinking that anything that is sufficiently complex and hard to understand MUST have been designed either all or in part, by some smart being or group of beings. But of course economics teaches us (as does bio, chemistry, physics, etc.) that complex phenomena do not have to have a designer, in fact it is highly unlikely that they have a planner. The distribution of income is one such example. It is a simple seeming idea. Think about it. Different people have different incomes, and the relationship each has to the others is something that concerns folks. Income comes from jobs, inherited wealth or pure luck. Some people have better jobs. Some people are less lucky than others. What’s so complex about that?
Well … what’s so complex is that the distribution of income is not actually chosen or designed. It emerged. And it emerged not just from thousands of different decisions any particular person makes, but it emerges from a lifetime of different decisions (and flips of the coin) that billions of people make – we’re talking pentillions of scenarios here. And while many of the decisions we all make are conscious, the outcome of all of these pentillions of decisions, each interacting with one another, is a distribution of income that no one could have predicted with much certainty at the outset. No one chose the distribution of income, despite the rhetoric of Team Reebok and Team Nike. No one. And given the complex origins of the distribution of income, and the myriad unforeseen (and foreseen) ways that billions of people will respond to different incentives, it is virtually impossible to do too much to the distribution of income. It is virtually (not entirely) beyond our control. Yet our predisposition to want control, or to see design where none such design exists, makes it extremely difficult for us to accept this idea.
As a result, the tendency to want control, and the tendency to see design or want design where none exists, naturally leads to a suspicion of many emergent phenomenon, but particularly of what emerges in a “market” when millions of self-interested buyers and sellers are just trying to do the best that they can for themselves. So perhaps economists ought to spend a lot more time helping people get over their fear of flying instead of teaching about the way incentives impact behavior. People may simply not be cut out to “get it.” Or for those that get it, it may seem so obvious that they nonetheless overlook how interesting or impressive the entire thing is. In future writing we will say more about these emergent phenomena. One major criticism I have of “folks on my side” (I HATE having to talk like that) is that they often suggest indirectly perhaps that anything that emerges cannot be tweaked, or that anything that emerges must be “good.” But that is not at all the key insight about markets or what I am talking about above. And indeed, I believe that in many instances market “supporters” do more to harm the “cause” of markets than its opponents do. But that’s for another day.