Bryan Caplan Values His Body Far Too Cheaply
I was very much enjoying the latest skirmish between Tyler Cowen and Bryan Caplan–no matter who loses, I win–when I was astounded by this argument from Bryan, to drive home his point about how awful immigration restrictions are:
The obvious moral objection is that comparing slavery and immigration restrictions is absurd hyperbole. But it’s absurd hyperbole to call this apt comparison “absurd hyperbole.” Yes, enslaving a Haitian is plainly worse than forbidding him to accept a job offer anywhere on earth except Haiti. But they’re both dire harms. How would you react if the world’s laws barred you from every non-Haitian labor market on earth? With weeping and gnashing of teeth…
…Another helpful test: Suppose you had to choose between the following evils: (a) not being allowed to legally work anywhere but Haiti; or (b) being enslaved with probability X. What value of X makes you indifferent? My X=.33.
Say what?! All I need for my job is a good internet connection, which I imagine I could get in Haiti if I had to. And then on the weekends:
(BTW, I am quite aware of how awful certain parts of Haiti are.)
“What value of X makes you indifferent?”
None, because indifference analysis is incredibly nonsensical.
Well then, phrase the question as follows: what is the supremum (AKA least upper bound) of the set of all X such that you’d prefer (a) to (b)?
Changing the mathematical structure of the question doesn’t fix the problem with indifference analysis. As is basing any sort of decision off of stated preferences. Such idle thought is not logically grounded analysis, but mere fancy disguised as “science”.
Just to clarify, are you saying that the idea of an indifference point is nonsense, or that it’s nonsense to ask someone about it, or to believe you can actually estimate it with any certainty before faced with the actual decision?
Try this, Ken B., to understand the standard Rothbardian view on indifference analysis.
Tabarrok shows this is nonsense: http://mises.org/journals/rae/pdf/rae5_2_5.pdf
Bob, have you read Bryan Caplan’s blurb on “Why I Am Not an Austrian”, particularly section 2.2 on indifference analysis?
It just seems like an odd bone for Austrians to pick, since indifference analysis does not inherently support government intervention.
And I think the Austrian dismissal of the concept of “indifference” is unwarranted.
For one: I was indifferent between whether I put on white or gray underwear this morning. I happened to pick the white because it was at the top of the drawer, but would have picked gray had it been on top instead.
Also, even where strict indifference doesn’t hold, approximate indifference is good enough.
Take exchange, for instance: yes, strictly speaking, I might not be purely “indifferent” when evaluating any purchase. But suppose I have the following preference ranking:
(1st) $5.01
(2nd) ham sandwich
(3rd) $4.99
Nothing is lost by saying that I am indifferent between $5.00 and a ham sandwich.
The other benefit of indifference analysis, and utility analysis more generally, is that it allows us to get a sense of how much one good is preferred to another. And yes, while “utils” don’t exist and there is no truly precise way to measure this, there is a very real sense in which my preference for not getting stabbed in the eye with a fork is *much* greater than my preference for vanilla ice cream, whereas my preference for coffee ice cream is only a little bit greater than my preference for vanilla. Even though utility analysis is imperfect and a bit ad hoc, it at least attempts to grapple with this issue. And looking just at willingness to pay – even though it isn’t actually observable – or realized prices gives some sense, but happiness does not map 1:1 to wealth.
It didn’t “happen” to be on top of the drawer. You put it there earlier (assuming you live alone). Which was the outcome of another process of evaluation and tradeoff amongst preferences.
Nothing is lost saying you’re indifferent between $5 and a ham sandwich, until you realize you’re hungry, at which point a ham sandwich is more valuable than $5. You can’t construct utility scales in a vacuum.
“It just seems like an odd bone for Austrians to pick, since indifference analysis does not inherently support government intervention.”
Austrian economics does not advocate laissez-faire nor statism. Your comment insinuates that Austrianism qua Austrianism has an issue with state intervention.
“For one: I was indifferent between whether I put on white or gray underwear this morning. I happened to pick the white because it was at the top of the drawer, but would have picked gray had it been on top instead.”
You didn’t read the article posted by Murphy did you? Your challenge is directly considered.
http://mises.org/daily/2003/
Believe it or not, I didn’t really “see” the fundamental problem with Bryan’s (and thinkingotherthings) argument about indifference, until I read Gene Callahan’s response.
Merci.
He stills seem indifferent between the blocks of butter. And anyway, we use limits, extrapolations, and interpolations all over the place in thinking. I can imagine offering you piles of money for your teddy bear, and for some piles you’ll ‘act’ by taking ther money and for some you’ll ‘act’ by clutching the bear. The rest is left as an exercise for the reader.
That’s very different I think form Bryan Caplan tossing out 33% in his post.
“He stills seem indifferent between the blocks of butter.”
But that isn’t a part of his preferred description of the matter. You’re focusing on the physical movement of the person’s body and ignoring the mental aspect of things.
If he chooses just any old pound of butter, it’s not because he is indifferent between all the pounds of butter, it’s because he is “different” between one pound of butter and the money he sells it for.
If instead the pounds of butter are a part of his preferred description, then he would indeed be choosing “this” pound of butter over “that” pound of butter and displaying difference, not indifference.
The tricky part is that most of the time, when we go to the grocery store for example, we are choosing which butter to buy based on things other than “buying butter” without qualification. We choose location of the butter stick in the fridge, we choose according to if there are big dents in the sticks, and so forth.
I realise this post is all in good fun and I’m being “that guy,” but: it’s cheating a little bit to assume that the prohibition on working anywhere but Haiti would allow for living in Haiti and telecommuting to a job with a US firm.
valueprax,
It didn’t “happen” to be on top of the drawer. You put it there earlier (assuming you live alone). Which was the outcome of another process of evaluation and tradeoff amongst preferences
No, it wasn’t a process of evaluating tradeoffs. They came out of the dryer machine in a random order and I paid no attention to the order in which I stuffed them back in my drawer.
Nothing is lost saying you’re indifferent between $5 and a ham sandwich, until you realize you’re hungry, at which point a ham sandwich is more valuable than $5. You can’t construct utility scales in a vacuum.
Ugh. Change my numbers by 1 cent. So now my preference ranking – not in a vacuum, but say at a given point in time – is:
(1) $5.01
(2) Ham sandwich
(3) $5.00
So here, strictly speaking, I value the ham sandwich more than $5.00, but not as much as $5.01. So I’m roughly indifferent between a ham sandwich and $5.005. It’s useful, for getting a measure of how much I value something, to be able to use this type of indifference analysis (and in this case say that I value the ham sandwich at $5.00, at this particular point in time, given my particular circumstances). Show me an example where this leads to significant and wrong implications if you think excluding such analysis is so important.
You decided to make a tradeoff between spending time and attention to detail in ordering your socks, versus having that brain capacity and time free to think of other things.
So, you still had to make tradeoffs. Because everything you do in physical space involves tradeoffs between what you do and what you could’ve done instead. Always.
I guess I need to repeat myself: “You can’t construct utility scales in a vacuum.”
Value X over Y… for what? Valuing/utility doesn’t just happen. Valuing happens in relation to given ends.
You aren’t making sense. “I value $5.01 more than a ham sandwich”… for what? To what end?
I think you’ve managed to confuse yourself by creating a value scale with defined increments, for example, of $.01, and ignored all the other increments and things besides ham sandwiches that can come between the defined increments. So, you draw a scale with $5.01 and a ham sandwich and $4.99 and you conclude, gee, $5 is the next logical increment between $4.99 and $5.01, but by golly, there is a ham sandwich in its place! That must mean I am indifferent between a ham sandwich and $5!
No, first, you just have chosen not to place your $5 on your scale because if you did you’d have to put it above or below the ham sandwich and blow up your whole point.
Second, you still make the error I mentioned before which is you’re trying to examine utility in a vacuum.
If you’re about to put something into your mouth to eat, does it matter if it’s a ham sandwich or $5? What about if you’re about to put something in your wallet? Does it matter then, or are you truly indifferent?
“Yes, I’d like to deposit this ham sandwich into my checking account.”
“Sir?”
“Well, you see, I am indifferent between money and ham sandwiches, so in this particular instance I decided I wanted to make a deposit, but I was indifferent as to what I deposited. So here is my ham sandwich.”
“….SECURITY!!”