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Well, is that fair?

In our measures of welfare in economics, we pay careful attention to the impacts an exchange has not just on those parties who are involved in the exchange, but also to third parties who may be receiving benefits or incurring costs as a result of Person A exchanging with Person B.

What economics tends to not do is to consider the preferences of Person C, who is not impacted by the transaction, in our measures of welfare. This is not to say that most of policy ignores Person C, in fact it is my belief that a good chunk of policy considers the feelings of Person C almost to the exclusion of A and B. Consider kidney markets. Again, I do not wish to get into the details here, just an illustration. By allowing the sale of kidneys, we will impact the well-being of potential donors of kidneys and potential recipients of kidneys. But there are tens of millions of people whose lives will not in any material way be impacted by the sale of kidneys outside of their objecting to living in a world where kidneys are handled in any way other than making people wait in line for them. Whatever their arguments are, good or bad, I do not care. What I care about is the obvious fact that those arguments receive weighting in our “society’s” welfare functional and in fact kidney law is predicated on satisfying those preferences.

And when you see some criticisms of market transactions or efficiency measures of economists, we inevitably come across an appeal to, or an appeal from, third parties who do not have standing in the transaction (remember, we already model out externalities, so my focus here is on people beyond that scope). Perhaps a way to incorporate these preferences legitimately into welfare analysis is to argue that the policies we enact today may impact the values and costs that non-participants may receive in the future – but then this can be very generalized to any situation.

What I find interesting is that the voices and opinions and preferences of only SOME portion of Persons C tend to be included when we are deciding thinks like legalizing drugs, or relaxing zoning restrictions, or expanding school choice and such. While it seems like the argument, “I just can’t imagine living in a world where the government does not provide “free” quality schooling to every boy and girl” actually gets considered, how often does the opposite sentiment get considered and used to enact policy? For example, some non-affected third parties may absolutely delight to be alive in a world where zoning restrictions were relaxed, they may have extremely strong moral feelings in favor of legalizing kidney compensation, and  so on. Not only is it socially uncouth to express positive preferences for these sorts of things, serious discussions of these and other policies rarely, if ever, openly consider that there are millions of people who share those preferences. It’s the morally opposed that are more “vocal” than the “morally supportive” … I wonder why. Perhaps it’s a case of the status quo bias, but I suspect something else is going on.

When I Was 30

When my dad was 30, it was the year I was born, he was having the 5th of his 6th kids, and he was completing his 10th year of full-time work (he put himself through college while working).  He had been married for 9 years.

When I was 30, I was just finishing my PhD in Economics, and had only recently been married, no kids, but a bunch of pets.

Chetty is comparing income at age 30 for a cohort born after WW2, and a cohort born just after me, so not unlike my dad and me. And maybe this is part of Cowen’s complacency story, but my dad had no choice but to earn as much as possible. I’ve clearly chosen not to.


I encourage you all to go to this (I’ll sadly be tied up, but this is a super program):


Pardon my weekend thought. The post title tends to come off as more curmudgeony than I want it to, but my thinking is this. Suppose we move heaven and earth for the next several decades to make sure that every single person in the United States gets the very best and most equal education. In fact, suppose the science and delivery of education improves so much that every child who gets schooling reaches her maximum possible potential.

There are, nonetheless, already differences in IQ, or “g” or “intelligence” or “cognitive aptitude” or whatever you want to call it. Once we recognize this, ask the question about from where the high performing students will come in this world? In today’s world. there is a serious likelihood that high achievers are high achievers because they have more resources, sort into better peer groups, and so on. But if we end up equalizing “resources” and we also recognize that there will nonetheless some students who do better than others, from which group would future high achievers be coming? The answer would seem to be that in our future the “best and the brightest” would be coming from the actual “best and the brightest” and not just the prettiest and the richest. The implication here is rather startling – if we are finding outcomes to be highly heritable, that is most likely evidence that kids are not getting advantages from their parents.

Go figure.

The tough part of this idea is that it leaves us in a world where ANY possible outcome is subject to straw-man demagoguery.

From Coyote:

Several years ago I was uninvited from co-chairing an effort on gay marriage because others in the group did not like my stances on unrelated issues like education choice.

NYS Parent Teachers association joins the ranks of the climate deniers.

At the end of 2016, the NYS-PTA passed a resolution that aims to remove genetically modified organisms (GMOs) and genetically engineered (GE) foods from school cafeterias throughout the state.
Resolutions adopted in November will:

• Support mandatory labeling of GMO and GE foods.

• Support regulations barring pesticide-tolerant GMOs and GE foods from use in food and beverages provided by school meal programs and vending services.

• Encourage schools to avoid the use of foods and beverages that contain pesticide-tolerant GMOs and GE foods until such regulations are in effect.

• Encourage education of parents and community members on the health and environmental effects of pesticide-tolerant GMOs and GE food products.

And in this nice Op-Ed from the Buffalo News:

The last resolution is incredibly ironic as it includes the concept of increasing education, while simultaneously promoting false beliefs that are not founded in science. If done correctly, that class would be very short. It might go something like this:

“Welcome class. There are no known negative health effects from GMOs, despite that myth being propagated by certain people.

“The scientific community widely agrees on and supports the use of GMOs for many reasons, one of which is that there is not a single case of any known negative health effects. If you don’t believe me, please read the letter sent to Greenpeace, signed by over 100 Nobel laureates, stating that GMOs are safe. Class dismissed.”

That is of course the opinion of a molecular biology PhD – and I am merely passing along the ideas for you here.

Ban Plants!

A very misunderstood idea is that “organic” foods are grown without pesticides. This is patently untrue. Organic foods are grown with “approved” pesticides – generally those that have a biological origin. Of course, this does not mean that these pesticides are worse, or better, than “unnaturally” produced chemical pesticides (aren’t biological pesticides also chemicals? Oh, ignore my semantics … that’s too scientific)?

But let’s think about this a little bit more. Did you ever wonder why certain foods taste the way they do, particularly on the bitter side? Did you ever wonder why ANY plants exist at all, if the worry is that pests and animals will just eat them all? Well of course plants are clever creatures too, and they obviously make their OWN protection. And this protection can be quite poisonous. Think about a common food – cassava, which is one of the most important staple crops on Earth. Cassava needs serious preparation before being allowed for human consumption – it has cyanide in it. Yes, the stuff that we put in the little pills we send up with the astronauts. Cyanide! And of course, many poorer regions of the world rely on cassava – and since the cassava requires extensive cooking to get rid of the cyanide, we put enormous pressure on poorer areas to find enough fuel to do it. So, we are “allowing” poor countries to deforest and rely on unsustainable biomass practices to cook their foods, and we “allow” them to eat dangerous and poison foods. Yet, our “first-world” sensibilities (mostly European, but increasingly in America) deny these very same people access to biotechnology that could make their farming and eating lives far safer and more sustainable.

In any case, if we are serious about “healthy” foods and keeping poisons out of our fields, farms and bodies, I think the obvious conclusion is to ban plants. Think about it. If we had banned plants, then it is possible that Alexander Supertramp would have survived his excursion up into the Alaskan Wilderness, instead of having the unfortunate luck of likely ingesting canavanine, an antimetabolite that is likely stored in the seeds of the organic, natural, local, wild potatoes he ingested, which was developed by many leguminous species to ward off predators.


“But that’s NOT what we are talking about!”

What ARE we talking about then?

Among the peeviest of my pet peeves is watching car commercials. Thankfully I don’t have to watch too many as I have largely substituted away from almost all forms of advertising. But think about all of these local car commercials that advertise amazing lease deals:

“Just $199 for a Ford F-150 Extended Cab, for 36 month lease!”

“Now get your Ford Escape for only $99”

“Drive a Kia for $149 per month”

And on and on.

And anyone who knows anything about basic financing, and cars, realizes these are about as close to being lies as you can get without actually telling lies.

In the fine print, of course you will see something like, “lease terms based on 36 month lease, with minimum $3,999 plus first month’s payment, plus taxes, title and registration due at signing.”

Well, hell … my house is valued at about $180,000. If I sold it to you, I would be willing to finance it for you personally for the measly sum of $10 per month for 5 years. I would do this so long as you paid me $179,400 today (ignore discounting and investing).

So, yeah, my house can be had for the incredible lease rate of $10 per month – but that is only true in about the most meaningless way possible.

HOW the HECK do regulators not put a stop to this? Don’t we have some new Warren-esque powers embodied in the CFPB that is supposed to do something about it? An economic puzzle is why some car company doesn’t call out the fraud on their competitors and make profits by being more honest? Are people that behaviorally crippled? My best guess is that local politics and regulation is sort of a partially owned subsidiary of the automobile dealers, so it is cronyism plain as day.

Any other thoughts?

I would definitely favor some cracking down on this – free market be damned, if damned it need be (and I do not suspect this is a “free market” phenomenon).


If we truly wanted to reduce emissions from automobiles, and to save energy at the same time, we should hope to see a major swap. What would that be?

Well, we would want to see all of the Toyota Priuses adorned with the following bumper sticker:

Instead of the more typical ones you would find on them, such as:

Indeed, to complete the enviro-swap, we should certainly want to see all of the Ford F-150s, Hummers, sports cars and such sport the latter sticker.

I wonder how many F-150s have Buy Local stickers on them?


Quite literally almost every single person involved in college athletics/kidney donations gets paid except the very people who are generating the lion’s share of value in the first place. Tell me an argument in favor of banning kidney sales and then insert “college athlete” and see how that sounds. Of course, neither the athlete nor donor could realize the value of their “production” if they did not also rely on the cooperation of many, many others, but that is true of ANY action in our modern interconnected world.

When you see a kidney donor, ask them how they feel about their amateur status. Better yet, ask the hundred thousand people waiting for one what they think of their amateur status. When you see a college athlete, particularly in the revenue sports at schools that generate revenues, ask them if they get deep satisfaction in their morally superior “donor” status.

Here is my new policy preference. I used to advocate for legalizing kidneys and having competitive labor markets determine athlete pay. But that makes me some kind of horrific person. But let’s try this one on for size – if we REALLY believe in the morality of organ donation and if we really believe the concept of amateurism ever existed in sports (it did not even exist for ancient Greek Olympians, who were well paid for their services, and the origin of amateur sports in college was as much an effort to keep the lower classes away from tarnishing the sports that only the rich could afford to do) … but again, if you REALLY believe in amateurism and altruism in organ markets – then let’s get behind a law that bans ANY funds or compensation from exchanging hands for ANYONE who is in ANY way involved in the processes. So, transplant surgeons and nurses and anesthesiologists and bed-sheet makers and orderlies and insurance company workers and government insurance workers and organ donor network employees, and coaches and trainers and gym supervisors and gym issue room attendants, referees, and anyone else should all be required to do what they do for no pay. I will get on board with your programs when you actually take your own programs seriously.


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