Jonathan Haidt Stole My Stolen Idea

Here I am, lying in bed, reading a book on moral psychology on a tablet like a modern man. And then this!

I find it ironic that liberals generally embrace Darwin and reject “intelligent design” as the explanation for design and adaptation in the natural world, but they don’t embrace Adam Smith as the explanation for design and adaptation in the economic world.  (Kindle Locations 5371-5375)


If I can appreciate the economics notion that order can emerge spontaneously “as the product human action but not of human design,” surely I can appreciate evolution’s notion that nature’s complexities can emerge without a designer (and vice versa). Yet many, even vaunted members of the scientific academy, accept one and not the other.

How righteous was Mr. Haidt's mind after he read my blog and decided to rip me off without giving me credit! Clearly his 'rider' is justifying his 'elephant' trampling propriety into dust!

Don't understand that last sentence?

Well you have to read the book to understand it!

And you should.




An Anti-Piracy Proposal

A new PSA to make movie pirates feel guilty has been released:

Clever how it plays on our natural sympathies towards boom operators, isn't it?

Problem is, the logic applies any time a movie is seen second-hand. Watch a DVD at a friend's house? So long, key grips! Friend loans you a movie? Goodbye, gaffers! Buy a used blu-ray? Y'all take care now, dialect coaches!

Imagine some rich guy has such a passion for movies that he regularly buys and broadcasts full-quality movies for free all across the world via multiple formats. Is he violating copyright law? Yes. Would this have longer-term consequences that were bad for the film industry (and possibly fans)? Yes. But is he acting immorally? Are the people who watch the movies engaging in theft?

And how about this doozy: if my willingness to pay for a given movie is $0.00, then I'm not putting anyone out of work by pirating because otherwise I'd just not see the movie. If that isn't a victimless crime, then anyone in the world who failed to see the movie is also complicit, which seems excessive.

Many people are not like me, however, and they'd be willing to pay $.50 or even $10 for a given ticket. But so long as that maximum willingness to pay is below the ticket price, they're not going to buy. The result for the studios is less revenue from unsold tickets, and less revenue from concessions for the theaters. This is a losing proposition for both the industry and for customers, but it's worse for the industry since some of those potential customers are going to see the movie anyway for free.

Movie theaters could respond by introducing demand pricing (and a quick google reveals I'm not the only one with this idea).  Instead of one price to rule them all, theaters could adjust prices to reflect people's willingness to pay, much as airlines and now even sports and music venues do*.  The average ticket price would happily decrease for movie-goers, and profits would happily increase for movie-makers. Further, since the marginal cost of a ticket is near zero,  theaters could actually give away unsold seats for free and still make some money on the popcorn**. How's that for an anti-piracy measure?

*After all, if you're going to copy stadium-style seating, it only makes sense to copy stadium-style pricing, right?

** Note: this would not work on me, for I am in my soul an economist.

Don't Clean Your Recyclables for the Environment's Sake

People recycle because they don't want to waste resources. Throw a yogurt tub in the trash instead of a colored bin, and you lose forever to a landfill whatever use could be gotten from that plastic.  But recycling itself also consumes resources, so how can you judge the trade-off? Such is the worry of a Mother Jones reader:

City recycling instructs you to put clean containers in the recycle bins. But I've become increasingly frustrated trying to get certain pet-food cans, yogurt containers, and margarine containers cleaned without using a lot of water. I feel that the water I use, the gas to heat the water, the dish soap, and the paper towels are wasting natural resources as well as costing me money. So how clean is clean enough?

The columnist ignores the question of resources, instead saying that 1) you don't have to get the containers squeaky clean, but 2) the cleaner they are, the more valuable they are, so "by providing clean recyclables, you can actually save your city (and ultimately, taxpayers) money."

By the logic of the second point, everyone should also not only be sorting and cleaning their recyclables, but also personally transporting them to the recycling center, perhaps stopping along the way to dive a dumpster or two for more revenue-generating recyclables.  Think of all the money you'd be saving taxpayers!

Ikea furniture is cheap, but the price can be misleading because you're performing the value-added process of building the furniture yourself. For some the labor and time involved is a trade-off worth making. For many people, however, it's better to pay a higher price for a typical piece pre-assembled by an expert.

Cleaning recyclables is also a value-adding process, and if your goal is to conserve resources, you want that process done as efficiently as possible. The single best way to ensure that efficiency is to pay the specialist to do the recycling for you. Don't waste any resources cleaning the yogurt tub, just throw it in the bin as is.* If a modern recycling facility can't turn a dirty yogurt tub into a valuable resource, then how in hades do you expect to do better in your kitchen!

* Prediction: As automated scanning and sorting technologies improve, and the economic value of recycling increases, sorting at the home will disappear entirely. Sci-fi writers and futurists feel free to include this prediction in your works.


The Real Real, Pounds and Pounds

This past week's This American Life podcast is called "The Invention of Money," tackling what host Ira Glass calls the "stoner-ish question" of what money is.

In the prologue, the discussion revolves around the confusion a reporter feels when during the peak of the financial crisis in 2008 he heard news reports of billions and trillions of dollars disappearing from the stock market. How could money just disappear, he wonders; where did it all go? His answer, which he receives from a businesswoman aunt, is that the money never existed because money is "fiction." Cue soundtrack from The Social Network.

The podcast proceeds from this conclusion, and while the episode is entertaining the content fell short for me as a result. The main mistake is to think of money in terms of a) only coins and bills, and b) only as a medium of exchange. The reason billions of dollars can disappear from the stock market is not because the physical currency was "fictional" but because money in this case is serving as a measurement of value (the economics term is the not-so-descriptive unit of account). And value, like beauty, is measured subjectively. If I intended to buy 5 pounds of potatoes but only went home with 3 pounds because the grocer's scale was off, it's fair to say 2 pounds of my potatoes have become fiction. If I go home with £5 of potatoes today and discover that I can only sell them for £3 tomorrow, however,  the two pound difference is reality.

In Act One, the fiction line is cast to Brazil, where its currency switch in 1994 to the real is framed as grand scheme that successfully duped the people into thinking the new money had value. This misses the real magic, which is something more akin to the food fight scene in Hook:

The real had value not because folks believed in a lie, but because they trusted the government and each other that the new currency could be used to exchange for things they wanted. When the people acted as though the bills and coins were money, they became so; the real became real.

Act Two, which is my favorite segment of the bunch (and not just because of the title), does a good job of explaining the Federal Reserve vis-à-vis the financial crisis. I especially liked how they avoided the typical journalist mistake by explaining that the Fed works with the money supply, and not interest rates directly. My quibble here is that they give listeners the impression that only a central bank can create money,  when in fact any bank in the world that loans out some of its deposits (i.e. fractional reserve banking) is doing the same thing, just on a smaller scale.

For the non-pedantic non-economists among you who nonetheless find interest in the inscrutable nature of money, do give it a listen. You may also enjoy revisiting this short but content-packed interview with Niall Ferguson on the Colbert Report from a couple of years ago.

Lot Price

Readers should know by now I love me some economics, but many of its practitioners in recent years have done their discipline a disservice by inflating its explanatory power to cover all decisions made by all people at all times.  My heart is thus sent a-flutter when simple standard economics can be applied appropriately to a problem and do some good. Take parking:

Yes! We've got  a supply of parking spaces, we've got demand for them, now use prices to match them up! Now, as Felix Salmon notes, there's  no reason the pricing couldn't be more dynamic and variable (which would help on the demand side), and as Matt Yglesias says, cities could leave parking space construction to the purview of private people  (which would help on the supply side). Nonetheless, an improvement over the status quo thanks to good economics.