07/05/2014 § Leave a comment
Gary Becker passed on this week, so I did a mini-lecture in class yesterday on his contributions to economics (I managed to use Peaches Geldof as an example of a rational addict). I thought it was important to think about Becker because of the way he pushed economics in new areas. He used marginal analysis and specialisation — standard ideas — in new ways. It shows both the usefulness of a few simple economic ideas and the way late 20th century social sciences developed.
Crooked Timber has had a couple of good posts, one about Becker and Foucault and one linking to a good post on Becker’s contributions and shortcomings. Reading ‘Becker on Ewald on Foucault on Becker’, I wondered how Lacan would react to it. Foucault, apparently, was taken with the way that Becker thought about people making decisions. Foucault showed how law created crimes and doctors created diseases, by the way they deployed power. But Becker had people making decisions within each of the categories created. So, within the family, clearly a site of power relations, men and women were making strategic decision to maximise utility subject to constraints, balance marginal costs with marginal benefits. So, there was agency.
But I’m not convince that either Foucault or Becker had it right. First, if we take Foucauldian analysis seriously, then the power is creating the categories and determining individuals’ positions in the structure. How is it that individuals still have some residual liberty to make their own decisions? That would mean either that the power relations are not fully defined, or that there is some slippage between expectations and actual behaviour.
Becker, similarly, promoted universal explanations. The article I know best is ‘De gustibus non est disputandum‘, and don’t agree with it that tastes and preferences do not vary significantly across people. In fact, my research (and others) in food choices show that people do have different preferences and those preferences do affect spending. This issue is similar to Thomas Piketty’s endnote in Capital in the 21st century, that Becker didn’t let data get in the way of theorising.
Which brings me to Lacan. Lacan provides a motive force for difference and decisions — this is the analysis that Copjec offers in Read my desire. The Foucauldian analysis fails because of the impossibility of ‘saying it all’: the law cannot fully establish all the required categories. The act of creating categories creates its own excess; the act of neoliberal analysis creates its own outside-the-analysis. Becker fails because of the impossibility of fully determining preferences and because of the idiosyncratic nature of desire and its impacts on behaviours. Becker seemed to move too quickly from the idea that people pursue that which they think will make them happy, to the idea that we know (he knew) what makes people happy.
27/01/2014 § Leave a comment
My family has a little place — a cabin, a crib, a bach — near Lake Dunstan in Central Otago. I can walk to the lake in 5 minutes and see it from the property if I stand in the right place. The area is beautiful in an arid, unforgiving way. The lake is warm as South Island lakes go, and supports a lot of boating and swimming in the summer months.
The lake is artificial, the result of the Clyde Dam, built in the early 1990s. Underneath the lake are the old Bannockburn bridge, parts of the town of Cromwell, farms, and a rapids called the Cromwell Gap. In an emotive piece in the December 2013 New Zealand Geographic, Dave Hansford quotes a kayaker who once shot the Cromwell Gap. The kayaker describes how rising to the challenge was a life-changing experience.
Fair enough — he got something out of the rivers as they were before the dam. But my family gets a lot out the lake as it is. So, in response to Hansford, here is my equally emotional (and deliberately parallel) response to the imagined destruction of the Clyde Dam:
Bill Kaye-Blake has lost a lot of water from his life, a whole hydro-lake’s worth of water. For him, it is — or was — a place he went to find tranquillity while reconnecting with his loved ones. Where currently thunders the dangerous Cromwell Gap, says the former Lincoln University student and lecturer and ardent advocate for lake recreation, “there was a thing called Lake Dunstan, and this is where the Clutha and Kawarau arms of the lake met. It used to be a tourist attraction, it was such a big wide lake. Now it’s fallen 80 metres in depth.
“We used to sit on the shingle beaches in the shade of willows and think, ‘how lovely that our children have a safe place to swim and grow to love the water’. It was a central experience in their growing up, in their Kiwi childhoods. There might be 10 to 20 motorboats lined up along the shore, with parents teaching kids how to kayak and swim and waterski. On a hot day, there would be hundreds of people enjoying the lake at the different swimming coves and boat ramps. But that experience is now no longer available to anybody. The last waterskier was in the year before they dynamited the dam.”
Change leads to winners and losers. Focusing on the negatives may get you published in New Zealand Geographic, but it is only half the story. Probably less than half.
30/04/2013 § 7 Comments
Slate blogger Matthew Yglesias has been getting flak for his post that appeared quickly after news of the factory collapse in Bangladesh. In it, he explained that economics was all about diff’rent strokes for diff’rent folks:
Bangladesh may or may not need tougher workplace safety rules, but it’s entirely appropriate for Bangladesh to have different—and, indeed, lower—workplace safety standards than the United States.
Reactions in Western corners of the internet have been fierce and occasionally funny:
Corey Robinson questions whether Yglesias is right about the collective preferences of Bangladeshis:
‘Hundreds of thousands of garment workers walked out of their factories in Bangladesh Thursday, police said, to protest the deaths of 200 people in a building collapse, in the latest tragedy to hit the sector.’
Would it not be easier for Matt Yglesias to dissolve the Bangladeshi people and elect another?
What happened in Bangladesh was the result of the safety standards that are currently in place not being enforced. As Kalpona Akter, executive director of the Bangladesh Center for Worker Solidarity, told Democracy Now!, Bangladesh “already has some rules and regulations for safety,” with which some politically powerful owners are not complying.
that should be about making a distinction between wages, which do not have to be the same everywhere, and workers’ rights, which should.
- preferences are only half the story. The other half is the choice space in which preference can be expressed. It is the combination of preferences and available options that lead to the choices made. Ascribing the choices to preferences alone gets the theory wrong; one can just as legitimately point to the limited options
- the market theory that Yglesias uses to underpin his ideas — that there are market transactions deciding the prices of garments and safety — assumes freely available and perfect information. A large economic literature then explores the impact of relaxing that assumption. But that’s the post-grad course, and Yglesias is stuck in 101. Here’s the thing: we could make it perfectly obvious to Western consumers how their garments were made, what the working conditions were. Then we could talk about a market solution. Let me put it another way: is Burger King going to launch a horse-burger because people were buying them before they found out what was in them?
- supply and demand do not exist outside the institutions that help shape the economy. An analysis that doesn’t account for politicians who can override police edicts and flout safety regulations is incomplete. We should recognise that, for example, agreements and regulations help set the conditions in which the market is operating. So, there are trade agreements around clothing that promote its production in poor countries, but much less international recognition of professional qualifications for doctors, lawyers, accountants, etc. (On that front, economics is like the Wild West — anyone can hang out a shingle.) It is at best disingenuous to throw your hands up and say
in a free society it’s good that different people are able to make different choices on the risk–reward spectrum.
In a free society, it’s also good that people can express different opinions. Even when they haven’t got a clue what they’re talking about.
19/03/2013 § 4 Comments
Andrew Dickson (othersideofweightloss) was emailing me about fat taxes and I realised I didn’t have a well thought-out opinion on them. Let me start by asking, what are we trying to accomplish?
User pays — This is the point of the tax on fat people that Gareth Morgan Investments suggested in 2005:
Government could publish a range of tolerance for body mass index and those who fall within that over the year (certified say six monthly, bit like a VIC for a car), would qualify for a lower rate of personal tax (higher rate of benefit).
The idea is that fat people make themselves fat, and their fatness costs the public health system money, which is contrary to user-pays, so we need a fat tax to correct this.
If we accept this idea — fat is like cigarettes and alcohol, two products for which we already have a cost recovery scheme — then we need to keep going. First, we need to understand the full lifecycle healthcare costs of fat people compared to other groups, a point that Eric Crampton also makes. The comparison with smoking and alcohol is instructive: dying early is not necessarily a drain on the healthcare system.
Secondly, user-pays cuts both ways. We are told that fat people are fat because they aren’t active enough. Therefore, they aren’t using a whole bunch of services that the skinny, fit people use. So, yes, we could charge more for their use of health services, but they also get a rebate for the things they don’t use: backcountry huts, footpaths, etc.
Cost to society — This is more than just the strict healthcare costs. Jim Mann, Professor in Human Nutrition and Medicine, wrote a 2004 piece for Diabetes New Zealand on How a Fat Tax Can Help Fight Obesity.
debilitating illness and premature death linked to obesity also cause losses to society in the form of lost economic contributions from those who are forced to curtail work or retire early, or die while still in the work force, as well as lost contributions that many retirees make as community leaders and volunteers….
Note that Mann isn’t talking about helping people get the best for themselves, to ‘nudge’ them into behaviours that will bring them higher longer-term welfare. No, Mann is specifically looking at it from the perspective of society, of what the group loses when an individual cannot participate. Because the group loses, it must change the individual’s behaviour. The logical next step is fining people for shirking and jailing them for laziness — where does it stop? And is fat a leading cause of not contributing? I’d have thought that being selfish was far higher on the list, and no one seems to be proposing a fine for that.
Improving individuals’ choices — This options sounds noble — we’re just helping people do what’s best for them. The immediate problem is defining the ‘what’s best’. Economists generally use a neat trick. They assume that what the individual chooses to do is optimal for them. Now, let’s be clear, it is just an assumption, and Joan Robinson showed the circular logic therein. But, what else are you going to assume? There are only two other choices: someone other than the individual (you, perhaps?) have a better sense of what’s best, or that time-inconsistency of preferences means that the individual at some other point in time would have chosen differently for the present.
Improving choices comes down to two things: improving information and/or overcoming time-inconsistent preferences. Given all the information shoved down our throats for decades (gratuitous foie gras reference), I find it difficult to believe that lack of it is causing 1 in 4 adults to be obese. It’s pretty simple — veggies and fruits >> fried stuff. The time-inconsistent preferences angle is more plausible and interesting. But again, given all the existing ways that people can motivate themselves to be less fat, how much more can people in the present be disciplined by their future selves?
So, why fat taxes? The explanations offered don’t really stack up. We have to look someplace other than economics to understand the motivations. Take your pick of explanations — Foucault and Lacan immediately come to mind — but that’s a topic for another day.
05/11/2012 § 5 Comments
Various colleagues and I have been trying for years to get research funded on the preferences of New Zealanders regarding the environment. Bits and pieces of work get done — notably, the public perception work by Huey, Cullen, and Kerr from Lincoln University (here’s a summary conference paper (pdf)). We have grander ambitions, though. We want to understand the rank ordering of different environmental attributes amongst different subpopulations, and the economic value of those attributes in comparison to other things of value. Methodologically, it wouldn’t break much new ground. That’s actually a strength. If we end up squabbling over method, that’s taking away from the content of the findings.
Why? Isn’t it obvious that we want clear air and clean water and biodiversity? Well, yes, it is. We also want health care and tertiary education and public transportation and wi-fi and rainbows and unicorns. Maybe not unicorns. But you get the drift.
Also, different subpopulations have different environmental preferences. Sometimes, the differences are stark, such as when a road project encounters a taniwha. More often, though, the differences are more subtle and the conflicts more subdued.
The Dominion Post reports on a just such a difference of opinion:
Millions of dollars pumped into cleaning Lake Taupo of excess nitrogen levels may be damaging the lake’s valuable trout-fishing industry by stripping the lake of valuable food sources for trout.
Anglers from Advocates of the Tongariro River say the acclaimed Lake Taupo fishery is in “crisis”, with catch numbers down and smaller fish being caught than before.
Nitrogen levels in Lake Taupo have been a concern for a while. Agriculture leads to nitrate leaching, and nitrogen levels in the lake are rising. The regional council has a plan for protecting the lake, and a considerable amount of scientific research has gone on. It turns out, though, that not everyone agrees. More precisely, people disagree about just how clean the lake should be.
Economics is particularly concerned with decisions at the margin. In this case, the question is whether to put the marginal dollar into reducing the nitrogen in Lake Taupo or to put it to some other use. Partly, this is a question of environmental science. It is also partly a question of personal preferences and social decision making.
What is frustrating for me (and other researchers) is that we don’t even have the data to start a decent analysis. We don’t have it because no one will pony up the money to pay for it. We know what the key questions are, we know how to do the work, and we know who can do it.
Without that research, decisions will continue to be haphazard: one part Ministry thinking, one part Environment Court decisions, one part newspaper articles, and several parts guesswork.