The Economics of Repugnance

Check out today's New York Times article "Economists Dissect the 'Yuck' Factor" by Patricia Cohen.

Here's the introduction:
You can kill a horse to make pet food in California, but not to feed a person. You can hoist a woman over your shoulder while running a 253-meter obstacle course in the Wife-Carrying World Championship in Finland, but you can’t hold a dwarf-tossing contest in France. You can donate a kidney to prevent a death and be hailed as a hero, but if you take any money for your life-saving offer in the United States, you’ll be jailed.

These prohibitions are not imposed because of concerns about health or safety or unfair practices, some economists say, but because people tend to find such activities repugnant. In other words, just hearing about them can cause a queasy sensation in the pit of your stomach.

People don’t pay enough attention to how repugnance affects decisions about what can be bought and sold, asserts Alvin Roth, an economist at Harvard University.

Interestingly, one of the conclusions is: Often introducing money into the exchange — putting it into the marketplace — is what people find repugnant. Mr. Bloom asserted that money is a relatively new invention in human existence and therefore “unnatural.”

Normative vs. Positive

I should add this to the list of false dichotomies. The distinction is a silly crutch, often used by economists to prevent discussion, or claim the rightness of their argument on "positive" grounds.

Tyler Cowen calls Dani Rodrik on the former:

Steven Landsburg writes:

Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?

Progressive taxation, some would say in response!

Tim Harford, however, nails it:

...people lose their jobs all the time for reasons that have nothing to do with foreign trade. I'd argue that they deserve some help. Why are jobs lost to foreign competition so privileged?

I am most interested in Dani Rodrik on the same, most of all when writes:

The question of how we should respond to a trade-induced change in income distribution is not one on which economists can offer any expertise. This is a question about ethics, values, and norms, none of which is part of an economist's training. Landsburg's take on this is as good as mine--which is as good as that of any person on the street.

Every now and then I feel a deep responsibility to rebut an argument. In my view anyone doing policy economics has an obligation to learn more about ethics -- much more -- than the guy in the street would know. Would someone doing experimental economics feel free of the obligation to learn some empirical psychology? Would someone doing trade feel free of the obligation to learn some trade law, some history, and some political science? No. What's the difference? Economists like to separate the "positive" and "normative" aspects of what they do, but this distinction has not much impressed the moral philosophers who have looked at it nor has it impressed Amartya Sen. The very decision to use economic tools emphasizes some considerations and excludes others. The final policy analysis is not just pure prediction but rather it is also an implicit presentation and weighting of both different kinds of information and different values. So if you are doing policy economics, it is imperative that you think about ethics at a very deep level, and read widely in ethics. You are doing ethics whether you like it or not! Furthermore I don't doubt that Dani already has a deeper understanding of ethics than the (often very crude) man in the street.

That said, I don't agree with the ethics Dani does discuss, noting that he must have felt he had some good reason to put forward the concerns he did and not others. (As a rule of thumb I'll note that those who profess the impassability of ethical terrain have just in fact traversed it.) I don't worry much about the procedural fairness if a poor country trades at better prices by paying its labor less or by polluting. Low wages are precisely the wages we want to see bid up, and if there is a concern for the losers I would not call the issue a procedural one but rather one of outcomes. And pollution can be a moral crime but attacking trade is not usually a good way to go after it. Tax the pollution, not the trade.

Dieting for Dollars

An economist explains his weight-loss plan.

How can economics help you loosing weight? Tuesday's, January 15, NPR's Talk of the Nation broadcast explained how. Specifically, Richard McKenzie an economics professor from UC-Irvine explained how he had entered into a contract with a friend to pay her $500 if he had not lost ten pounds after ten weeks. The broadcast was a follow up on McKenzie's recent article in the Wall Street Journal. The show was a lively discussion with the host and callers about dieting and economic principles.

GDP

Lisa talked about the Genuine Progress Indicator, here is more including an excellent graphic (Venn diagram) discussing the differences between alternative measures of welfare and output.

International Data

Here is a great quiz to help you identify and compare data across countries.