Downs and pre-existing conditions

Recent Washington Post and New York Times articles profiled the trend of Republican lawmakers and candidates in difficult elections to come out in support of coverage for pre-existing conditions. These include Josh Hawley, running for Senate in Missouri, who brought a lawsuit against the ACA and Dana Rohrabacher, running for re-election in CA-48 who voted for the AHCA (which would have effectively repealed the ACA and its mandate to cover pre-existing conditions). This dichotomy between past actions and current policies of these Republican politicians may point to political maneuvering with the aim of winning votes by (1) discouraging rational voting or (2) by changing policy positions.

In Downs’ The Statics and Dynamics of Party Ideologies, the author describes how in a two party system, parties have an incentive to be ambiguous about their platforms, in order to discourage rational voting. This is because when voters perceive both parties as having similar platforms, voters have a more difficult time determining actual policy differentiation, and thus often make decisions based on other factors. Further, liberal voters may interpret a candidate’s stance in favor of coverage for pre-existing conditions as closer to their own policy preference (more regulation of healthcare) while conservatives may take a candidate’s past actions into account when considering the candidate (support for pre-existing conditions but not increased regulation on the whole), thus widening the candidate’s net of appeal along the spectrum. When Republicans attempt to make their positions on healthcare more similar to the position of Democrats by coming out in support of pre-existing conditions, it makes voters choose their candidates based on different issues or personal qualities, or candidate preferences.

Similarly, Downs notes the tendency of parties to change their policy platforms in order to appeal to more voters. In a two party system with a central mode (a third of Americans identify as moderate), this may lead to parties shifting some policies towards the center. Indeed, three quarters of Americans believe insurance companies should not have a right to deny coverage based on pre-existing conditions. This number includes 75% of independents and 58% of Republicans. Because of this, there is less danger of alienation of extreme voters if republicans were to move left (more government regulation) on healthcare.

Nobody votes, together

In majoritarian two-party elections, rather than tallying the total votes received by either candidate, we could consider the margin by which one candidate surpasses the other. In that sense, you can look at each vote up to that margin as “cancelling out” a vote for the other party. For example, consider an election between two candidates, A and B, where I am dead set on voting for candidate B while my roommate is a fervent supporter of candidate A. For whatever reason, we might both choose to shoulder the costs associated with voting for our preferred candidate. The issue with this arrangement is that we essentially cancel each other’s votes out — the election would have the same outcome if we both abstained. Knowing this, I could propose that we both stay home and watch a movie together, avoiding the costs while still achieving the same outcome.

Expanding this logic to a macro level, elections can be thought of as a prisoner’s dilemma between two blocs of voters (e.g. Democrats and Republicans). If every voter in the smaller constituency matches up with voters in the larger constituency and mutually agree to abstain, we arrive at a cooperative equilibrium that arrives at the same electoral result, while avoiding a majority of the costs. Note that from the cooperative cell, each has an incentive to unilaterally defect — so abstention contracts must be enforceable, otherwise the game will reach a Nash equilibrium at (Defect, Defect), even if everyone would be made better off by mutual abstention.

With the power of the internet, an arrangement like this could actually be feasible (similar to vote trading) by matching strangers with opposing politics (though enforceability would be a problem). In the case where the only benefits derived from voting are from the probability of determining the outcome, the costs associated with voting are significant, and abstention contracts are enforceable, “mutual abstention” could minimize needless costs imposed on voters (and minimize the total number of votes cast). In the extreme case with full participation and information, every election would be won 1 vote to 0, decided by the only person to cast a ballot.

Game Day Externalities

Last Friday, I drove home from McDonald’s at 11pm to find no parking by my apartment. Our apartment parking lot does not require a permit, but I almost never had any trouble finding a spot in the past year I’ve had my car at school. I drove up and down JPA to look for a spot (which there was none) and ended up parking in the Student Health lot, a fifteen minute walk from my apartment.

You see, last Saturday was a football game day, and on game days, street parking is not allowed on one side of JPA. I would say this is a negative production externality because it is the university that hosts these games and creates these policies, considering only their marginal private costs of reserving half of JPA without considering the marginal social costs of the inconvenience to all the residents on JPA. Every home game day, people who normally park on the street due to parking lot overflows must find parking elsewhere, or else get towed.

There are also negative consumption externalities that result from all the spectators that come support UVA football, considering only their marginal private benefit of enjoying the sport and spirit and not the marginal social benefit that accounts for the marginal damage that arise to those that live by the stadium. The increased number of people in town create traffic and noise that affects people like me, who don't watch the games and just want to be able to carry out their regular Saturday routine each week. Every game day, I debate whether or not it is worth trying to leave Grounds to get some groceries or study at a cafe because I know it will take much longer to get there and back. Sometimes, I can’t even get back to my apartment without a piece of mail proving my residence there! This isn’t a unique experience; DukeToday published an article warning people of the traffic for one of their games earlier this season. This article even discusses the increased danger of driving on college football game days due to the increased traffic and drinking.

Unfortunately, there is a lack of property rights in this situation that deems many solutions impractical. Neither the visitors nor the tenants own the roads in Charlottesville in order to internalize these negative externalities on parking and traffic. I've decided that although I recognize these externalities that negatively affect me, this is something I can deal with for the handful of home games left in my college career.

Hoos Driving, Hoos Riding, Hoos Clubbing?

Many UVA students are aware of the Facebook Group, "Hoos Driving, Hoos Riding." I personally am a member of the general group as well as the "NOVA" specific group. In a nutshell, they are forums where members of the group may post to either ask for a ride or announce that they are willing to drive on a specific date/time/place - it's a market for informal ridesharing. Once users match themselves accordingly by either looking through the posts themselves or having helpful friends "tag" them in comment sections, the two parties agree upon a time and place, and upon a "price." The price is typically compensation paid to the driver, usually for gas.

While there are many aspects to pick at here, such as how users match themselves (are certain posts more attractive than others?) or how price can be negotiated (on long weekends, are the drivers able to charge higher prices and still have riders?) I'd like to focus on entry into the market in the first place. I rarely post to ask for a ride and never announce when I could offer a ride: I usually exhaust all possible avenues where I could ask a friend for a ride when I am in need, with the full intention of paying them for gas, whereas I will offer a ride casually to a friend and expect no compensation in return. When considering the amount of people who are constantly looking for a ride to northern Virginia and the price I could charge, my non-announcement is not rational. Why would I rather not enter the ride market and gain money than remain silent and potentially drive someone who I don't let pay me nearly as much as the prices in the Facebook Group?

Personally, I enjoy having company in the car when I drive the 2 hours back to NOVA, but I would much rather have a friend that I am comfortable making conversation with for two hours. Essentially, this would mean that I am valuing the friend and their company at the price that I could post for in the group. If we frame it as in Buchanan's Club Theory, we see that for me, the optimal number of ride sharers is based not only on the physical number of people, but also on my emotional proximity to them. My utility in using this ridesharing situation increases as I have a friend in the car (either riding or driving) and decreases as it gets too crowded. Perhaps the "membership fee" into this club is friendship itself, and everyone who is connected in the Facebook Group feels this to different degrees - after all, we're all Hoos, which is an exclusive club in itself.

Is It Rational To Eat Dessert On A Diet? The Economic Perspective

Economists know that there is an optimal level of a bad thing, and that the optimal level is not necessarily zero. This phenomenon is most often mentioned in the context of negative production externalities, for example, where there is a rational level of pollution that is greater than zero. Last week, however, we examined this economic understanding as it applies to voting and political information, an area in which there are not obvious negative production externalities. We discovered that individuals are rationally ignorant about many political issues. The rational level of ignorance for different subjects is found by graphing their marginal cost and benefit curves and calculating where the curves intersect, or where the costs of ignorance equal the benefits.

The economic inference of the rationality of a non-zero level of a “bad thing” applies in a myriad of everyday situations. One such arena is dieting. Eating sweets on a diet is generally considered to be irrational -- why behave in a way that works against your goal of losing weight? According to our economic principle, however, this behavior, of completely cutting out “bad foods” is likely a mistake.

Looking at the rough graph above, we can see that the marginal benefit of eating a small amount of dessert per week while on a diet is relatively large and the costs, or overall harm to the weight-loss process, are relatively low. Therefore, there is an optimal amount of dessert to eat per week while on a diet. While dietitians would likely have to calculate the exact number of calories where the costs and benefits of dessert meet, the economic theory suggests that it is rational to eat some amount of dessert while on a diet. Luckily, diet science agrees with the economic perspective, so go ahead, enjoy that piece of cake!