Fraternity Freeriding

 I was having a discussion this weekend with the Treasurer of my fraternity and he was explaining to me what a problem it is to get everyone to pay their dues. According to him, dues collection is always a burden and there has not been a semester in which he has seen every member pay their dues. Some members never contribute, meaning as a whole we do not have the amount of money we should have in proportion to our members. Therefore the quality of philanthropic events, social events, and meals is of a lower quality than it should be. 

It was immediately obvious to me that people were just free riding. As the number in the group grows there is less and less of a reason for individuals to contribute.  The events, meal plan, etc will still go on as planned without the individual incurring a personal cost. It is difficult to exclude anyone from the enjoyment of these resources as because everyone is considered a friend and it is seen as wrong to deny a friend entrance to a social event or meal and so people can free ride. It is also non-rival meaning one person paying their dues does not inhibit another member's ability to pay their dues. Our dues as a whole then are underproduced because of this free riding problem. 

The Intelligence Community Lacks Intelligence

Being from Northern Virginia, I have several family members who have worked for the government and one in particular has worked for the intelligence community (IC). He, unfortunately, is dumbfounded by how unintelligent said community is. He has reported back that the IC as a whole, because of their classified nature, gets away with some shady business. He has been repeatedly frustrated and annoyed with the "busy work" that his team is assigned to because it demonstrates the inefficiency that continues to persist in that particular bureaucracy. He would admit that the IC's work, for the most part, is very important. However, these agencies lack proper oversight due to their secretive nature, satisfying Niskanen's model almost perfectly. Not only will these bureaucracies seek to maximize the budget, they are also monopoly suppliers of their respective information, and the true cost schedule is only known by the executives within a particular agency because of the classified nature of their jobs. These IC agencies will then seek to push Congress's surplus to 0 even though each bureaucracy is not using their resources effectively, as my family member has seen firsthand. 

This is not a new problem. The IC budget has proven to go unchecked even by Congressmen/women who create them. As it is spelled out in the jurisdiction for the Senate Appropriations Committee, these committees are influenced not only by their own self-interests ideologically (as Weingast/Moran might argue), but they also might hear out their constituencies, the public, and the President's requests for any budgetary changes. Yet, because the output for the IC is ambiguous and mostly classified, the public and even many high-ranking government officials do not even know how inefficient these bureaucracies are, and they may be arguing for unneeded increases in their spending abilities. With consistently increasing budgets and my family member's astute observations, I would be cautious -- just as the Liberty Lobby was back in 1982 -- to trust that the funds being allocated are being utilized to their fullest extent.  

Why the Shy Trump Voter Might Not Be a Myth

 As I followed the last two elections I noticed (and I'm sure a lot of other people noticed) that the majority of the prediction polls underestimated the amount of the popular vote and electoral votes that Trump would receive. One of the hypothesis set forth to explain this is the existence of the 'shy Trump voter'. These are people who are reluctant to openly state their political ideology or candidate preferences.

When it comes to expressing your political opinions there are some costs that you can incur. Family, friends, and even strangers may judge you. This could result in marginalization, slandering, or exclusion. Because of this the cost to expressing political ideology could outweigh the potential benefits for Trump voters as in the past 4-6 years Republican voters or Trump supporters have been labeled as racist, sexist, homophobic, and hateful. 

As Caplan explains; when the price of behaving ideologically rises then the amount of ideological behavior falls. Furthermore, we know that that the point at which the cost of behaving ideologically is the lowest is in the voting booth. This is because each individual vote has an extremely low probability of affecting the election thus there is a low cost to the rest of society if the voter behaves ideologically. I believe there is another reason why the cost is lowest here and it is because the cost to the individual is lowest. They can express themself openly without the fear of judgement or repercussions from other people. Because of this the prediction polls, especially those held over the phone where the respondent could be overheard, did not correctly assess the support for Trump. One article states that Republican voters were 6% less likely to say they supported Trump when interviewed over the phone versus online thus adding credibility to the claim that shy Trump voters exist. The result was that the results of the election were wildly different from the predictions since voters could behave ideologically in the booth but not in society.

Covid and Ideological Costs

I remember being in middle school and going shopping with my mom at the grocery store or the bookstore and her specifically avoiding products that said “Made in China”. I never really got the full picture on why she did this but I did understand that steering clear of Chinese goods meant paying a higher price. My mom was exhibiting one of the four economic biases discussed by Kaplan, anti-foreign bias. She added her disdain for goods that were made in China into her utility function which meant that when she was able to make purchases of goods made in the US/locally, her utility increased. 

We discussed in class how there are different levels of cost associated with acting ideologically. In a normal world, her costs are relatively low if the price difference is not significant between the two options. However, I have witnessed Covid increase the cost for my mom to act in line with her ideals. And, according to this article, she may not be alone. Many people are looking to cut spending because of loss of income or uncertainty due to the pandemic. Americans are looking to cheaper products as they lose their jobs or their wages are cut. Along with this, my mom has been much more careful about going out to regular stores because we live with my grandmother. This means sacrificing normal products for ones that can be shipped to our home - often the substitutes being made in China. Because of an increasing cost to act in line with her ideologies, she has ironically probably cut down on her spending.

Social Media Regulation through the Bureaucracy

Since the 2016 election, the CEOs of major tech companies Google, Twitter, and Facebook have been reporting consistently to the Senate Judiciary Committee over issues regarding censorship and misinformation on their platforms. The main legislative reform that has been proposed at these hearings is reform of Section 230 of the Communications Decency Act which protects social media platforms from legal liability for things posted on their platform. However, just last month, the chair of the Federal Communications Commission Ajit Pai issued a statement stating he was considering issuing an interpretation of Section 230 to address the concerns of government officials. This statement and the actions of Congress in regards to regulating big tech companies shows the conflict between the congressional dominance and autonomous agent theories

The FCC is reliant on Congress for its budget. Although Pai has not been specific on what his interpretation would be, the prevailing sentiment on both sides of Congress is for some sort of Section 230 reform. The fact that Pai as a lone bureaucrat has the power to change the interpretation of Section 230 and hasn't shows that he is under congressional control in waiting for a more specific recommendation to come down from Congress. However, the fact that he is indeed coming out in support of the specific policy solution proposed by Congress, general Section 230 reform, shows that he is indeed acting as an autonomous agent seeking to maximize his bureaucracy's budget by agreeing with the people who approve his budget. I would argue in this situation Congress is exerting more control than the bureaucratic agent, but it will be interesting to see who determines how these social media companies are regulated. 

Supreme Court Nominations Fly By

         When Brett Kavanaugh was nominated to the United States Supreme Court in 2018, I wasn’t sure he would get confirmed. His confirmation hearings were contentious to say the least, and there seemed to be a lot of pushback from the media, Democrats, and even some conservatives. When Amy Coney Barrett was nominated this year, there was also quite a bit of opposition. Although Kavanaugh had squeaked by, I had thought to myself: “would Amy Coney Barrett also make it through the confirmation hearing process?”

I should have known better. Of course! “Since 1789, 42 presidents have nominated 163 people to serve on the Supreme Court. Of those who were nominated, 126 were confirmed and seven declined to serve. Only 11 people who faced the Senate were not confirmed to the Supreme Court, and only one was rejected from serving as chief justice.” In over 200 years, only 11 rejections! Given the effectiveness of the incentive system in place, the pre-screening process for US Supreme Court nominations, prior to their Senate confirmation hearing, is incredibly robust. Thus, we seldom see a nomination rejected by the Senate. Put another way, a US Supreme Court nomination will rarely be put forth by the president if they are not extremely confident that the candidate will be confirmed by the Senate. As Weingast and Moran wrote, “the more effective the incentive system, the less often we should observe sanctions in the form of congressional attention through hearings and investigations” (pg.769). US Supreme Court nominations are a prime example of their paper in action.

 

Will the Covid-19 Vaccine Be a Public Good?

It has come out recently that Pfizer's Covid-19 vaccine is 95% effective and is awaiting approval. Naturally, the question of how the vaccine will be distributed has come up. Pfizer has reached a deal with the US government to produce enough doses of the vaccine for about 12.5 million Americans for free by the end of this year. These will go to healthcare workers and vulnerable populations. For the general public, the vaccine should be available next year and will also be paid for with taxpayer dollars.

In order to determine whether something is a public good, we need to see if it is infeasible to exclude people from it, and whether it is rivaled in consumption (meaning utility goes down as more people consume the good). The CDC states on their website that vaccination providers will be able to charge a fee for administering the vaccine, but this fee will be reimbursed by a patient's health insurance. If a patient has no insurance, the Health Resources and Services Administration’s Provider Relief Fund will cover it. Since there will be no cost to anyone for the vaccine, it is infeasible to exclude anyone from it. Once the vaccine is widely available, it will also be non-rivaled in consumption, because one more person receiving a vaccine has no negative effect on the next person receiving the vaccine. Since the vaccine will meet both of these criteria, it will be a pure public good.

Slack and Presidential Candidates

In The Myth of the Rational Voter, Caplan points out an interesting shirking phenomenon that can be exemplified by events during this election cycle. Caplan explains that elections constrain representatives only as much as voters care about a certain issue. If voters care deeply about an issue and it is interesting to them, politicians have almost no slack. If voters don't care about an issue, or find it boring, politicians have some amount of slack. During this presidential election there were certain policy spaces where the candidates had little slack and certain areas where they had a lot, and these were very different depending on the political party that the candidate represented.

One key divisive policy space was the handling of COVID-19, with 82% of Biden supporters saying this was very important to their vote in the 2020 election and only 32% of Trump supports saying the same thing. This means that Biden was held significantly more accountable and enjoyed less "wiggle room" in regards to his plans for COVID, while Trump had significant slack. This can be evidenced by the fact that many regard Trump's handling of the pandemic as going back and forth between approaches. For example, his indecision about the usage and importance of mask wearing. Meanwhile, Biden has held unchanging and staunch views on his approach to COVID, saying that he will implement a national mask mandate if he is elected. Biden's stance here strongly mirrors what his electorate has been demanding. Trump can occupy a more moderate stance on COVID policies because his electorate does not overwhelmingly demand a certain strong response. 

Another space where Biden and Trump experienced significantly different levels of political slack was the policy approach to crime. 74% of Trump supporters sited this was very important to their vote, while 46% of Biden supporters said so. Again, we can see this difference in slack reflected in the candidates' policy focus. Trump has held extremely vocal and cohesive views on "being tough on crime," as evidenced by his policy choices, such as full support for increased police rights. Meanwhile, Biden occupies a more moderate stance - for example, calling for investigations into police misconduct, but not for the police defunding that so many voters called for. 

The Miracle of Aggregation and the Wisdom of Crowds

I wouldn’t say I’ve ever been the biggest fan of group work. Yet, a few weeks ago, I took an economics exam that proved to be an incredible testament to the power of group work. A few friends and I joined forces to study together over the three days that preceded the exam. When we first began studying, we each understood an alarmingly inadequate amount of the test material. Yet, by the end of the three days, we’d developed a strong comprehension of the material, and every one of us passed the exam with scores well above the class average. I considered the desperate condition in which we’d started, and the miracle it was that we actually performed well on the test. It reminded me of a miracle that I’d learned about in my Public Choice class: the miracle of aggregation.

In politics, the Miracle of Aggregation states that the votes of many uninformed voters will ultimately offset one another and the result of the election will be swayed by the informed voters, thus resulting in a socially preferred outcome. Much like how an ignorant voter would have been unlikely to choose the optimal outcome by themselves, if my friends and I had taken the test without having studied together, we likely would have failed. The miracle of aggregation is also considered a strong example of a phenomenon called the “Wisdom of Crowds,” which suggests that, collectively, large groups of people are smarter than individual experts. My friends and I were essentially able to build off of each other's ignorance in order to obtain a concrete and correct understanding of difficult economic concepts. And so, thanks to the miracle of aggregation and the wisdom of crowds, I performed well on a difficult exam, and can now say I’ve had a positive experience with group work.

Betting Markets v Pollsters in Forecasting the 2020 Election

Leading up to the 2020 election, countless streams of polls reported candidates’ respective leads. When it came to election day, many of the highly trusted polls systematically underpredicted the presence of Republican voters. For example, Biden was polling +8 percentage points over Trump in Michigan, but when it came to election day, he won the state by a much smaller margin. Alternatively, betting markets proved to be fairly accurate election forecasting metrics. Trump carried Texas by a fairly large margin, a state where betting markets were bullish for Trump, and many polls considered it a tossup. Additionally, Trump handily won Florida, a state pollsters expected to go Blue but bettors gave to Trump. How could polling ‘experts’ consistently get it wrong, but the betting market get it right?

 

Given no systemic bias in the sample, a large enough sample size, and some knowledgeable voters, polls and betting markets should on average predict election outcomes correctly. The repeated underprediction of Republican representation points to significant systematic bias present in the polling system. Whether poll respondents were lying or disproportionally democratic, polling errors were not purely random and undermined the election forecasting process. On the other hand, gamblers put their real money behind a political candidate. With real losses/gains on the line, bettors have incentive to be rationally knowledgeable and back the candidate that they truly believe will win, regardless of their preferences. In fact the marginal cost for a bettor is much higher than it is for a poll respondent, who might let their ideological ideas influence their response. While there were outliers in the betting market (guy that bet 5 Million on Trump), for the most part, random errors cancel out and the proportion of respondents that are well informed dominate the political betting market. With the betting markets better eliminating systematic bias and creating disincentives to be ignorant, they produce a result suggestive of the Miracle of Aggregation and prove to be a better forecasting method than polls.

The Prisoner's Dilemma Behind The Two-Party System

This weekend I was thinking about how the Republican party is in a bind due to Trump’s refusal to concede the election, with Republicans like Mitt Romney admonishing Trump’s actions, while others like Lindsey Graham vehemently stand by Trump. In casual discussion, one of my roommates asked me what I think the odds are that the Republican party splits. This division would seemingly split the party into a group of more moderate Republicans that want to go back to the pre-Trump Republican party, and a group of Trumpers who focus on pure political power and divisive politics. When contemplating this question, I realized that this might be a good example of a Prisoner’s Dilemma problem in politics.

We’ve seen the Republican party become divided in views/strategies of the two aforementioned groups, but we’ve also seen the democratic party stretching between super-progressive democratic socialists like Bernie Sanders, and more moderate democrats such as President-elect Joe Biden. In this article using Gallup poll data, the author explained that only 38% of Americans feel that the two parties do an adequate job, so a majority of people would support more parties. If both the Republican and Democratic parties split into more moderate and extreme subsets, everyone would feel better represented by their candidate of choice. I don’t believe this would happen though, because if one party splits, the other party instantly benefits from not splitting their party, and keeping a larger number in the caucus than both of the individual opposing parties, and can more-easily win a presidential election. If both parties were to split, both democrats and republicans would be better off than they are now, but if only one party split then the other will hold off and benefit from still being larger. Due to this, the parties are stuck in a dominant strategy prisoner's dilemma, where they don’t reach Pareto efficiency. To simplify, if both parties remain one they have utilities of (10,10). If they both split, they reach Pareto efficient utilities of (20,20). If one party splits but the other doesn’t, they have utilities of (5, 40), respectively. 

Logrolling with Friends

This past summer I went backpacking in Colorado. On the last night of a 4-day hike, my friend Charlie asked me if he could have my freeze-dried lasagna in exchange for his freeze-dried risotto (an objectively worse meal). I initially thought to say no, but I realized that I could give up lasagna (the food I slightly preferred) and trade this favor for something in return that I really prefer. I asked Charlie if he would be willing to clean up the food & cooking area in exchange for the trade in food. He accepted. I did Charlie the favor of eating the worse food and he did me the favor of cleaning up.

As I continued thinking about this moment, I realized that I logroll with friends all the time. Back in Charlottesville, if Charlie cooks dinner, I do more of the dishes. If my other housemate John cleans the bathroom, I take out the trash. We exchange favors all the time without talking about it. Splitting up housework isn’t always easy, but it’s worked well in our house and we exchange favors without even discussing them. Since each favor is: 1. relatively contemporaneous (actions & benefits are immediately noticeable) & 2. held to the customary contract of friendship, there isn’t much favor shirking, two potential problems that Weingast & Marshall foresaw with logrolling. Since these favor trades rarely (if ever) impose costs on others outside of the exchange (there are no negative externalities) and we trade when our benefits exceed costs, I have found logrolling to be a great tool to achieve allocative efficiency.

The Balcony Dilemma

Recently, my friend Bella asked me whether it is worth it to pay an extra $10 rent for the balcony I immediately replied  “I would even give up $50 because the marginal utility of balcony is very high for me”. I think everyone would be willing to bear the $10 cost because the MC of living in an apartment without a balcony outweighs this cost considerably.

Bella is moving to an apartment with her three other friends. She and two of her friends easily agreed to pay the extra ten bucks for the apartment. However, one of her friends, Caroline, refused to pay that cost which makes the situation complicated. This group of four people is really good friends so the MC of excluding Caroline and moving to a three-bedroom apartment is highly costly. Therefore, this is not an option. 

When Bella asked me how to resolve this situation, Coase’s theory came to my mind. When I asked her how much she would be willing to pay to get the balcony, I got the answer of “as far as $20”. Thus the situation would be easily solved if Bella would be willing to cover Caroline’s balcony fee as well. Unfortunately, this situation was not that simple. The reason why Caroline didn’t agree to move to an apartment with a balcony was stemming from her fear of heights which is much more costly than the $10 fee. As a result, the MC of Caroline is higher than the MB of Bella and her two friends. Hence, they end up moving to an apartment without a balcony and bear the cost caused by Caroline out of their love for her (which may not be valued by any currency). 

Avoiding externalities during Thanksgiving

 Thanksgiving is a very traditional holiday. Most people typically celebrate it the same way every year, and for a majority of Americans that means traveling to visit family. This year, there are significant externalities to travel regarding the pandemic. A large number of college students around the nation like myself, will be heading home for Thanksgiving, and many of them will not return to school until late January or February. However, the tight window for travel from essentially today to next Wednesday presents an enormous opportunity to spread COVID-19 which will present negative externalities for every American for the foreseeable future. To avoid this externality, and personal harm, many families (especially older members) are choosing not to gather this year.

This is not the only avoided externality that occurs as a result of not gathering for the November holiday. Every year, millions of Americans suffer during Thanksgiving because one or more of their extended relatives is vegan. Creating an edible and enjoyable Thanksgiving meal is a near impossible task for anyone who has a vegan in their family. Now, don't get me wrong, I have absolutely no problem with people choosing to follow a rigorous diet of any form. However, in order to make family feel comfortable around each other during the festive meal, lots of families want to make sure that everyone eats the same thing. This results in significantly less enjoyment of the meal for most non-vegans in the family who are forced to eat the food with no animal products. This year promises hope for those Americans, a year of meat, gravy and a proper pumpkin pie.

Biden's Struggles with Inefficient Bureaucracies, Barriers, and Trump

As we sit back and watch anything but a usual presidential election and transition happen, I started thinking more specifically about the repercussions of Trump not formally conceding the election. Biden and the rest of his transition team face a significant number of barriers to entry as they try to prepare for Biden taking office in January. For example, Biden and the rest of his transition-team are being locked out of crucial Covid-19 pandemic data and government agency contacts, leaving the Biden team with a major lack of crucial information and potentially an even more delayed response to the surging pandemic. Once again, inefficient federal bureaucracies are delaying key processes and getting in the way of what we need, when we need it.

Since a formal transition cannot begin until Trump concedes the election, Biden is not allowed to meet with any federal agencies, such as the Department of Health and Human Services, to start working on the country’s next steps. The initiation of the official transition itself is inefficient – the General Services Administration (GSA), which is led by a Trump appointee, has to sign off on the election and will not do so since Trump has not conceded. Time after time again bureaucracies are slowing down crucial processes. A major source of slack/insulation in this situation is that the bureaucracies that Biden wishes he could talk and work with right now are monopoly suppliers of information, as they are the only ones with the government specific insider information. This leaves Biden with no alternatives and these agencies with no incentive or reason to act differently, since there is no competition for efficiency or information. For now, we just have to wait and see how this transition plays out and hope that with time it doesn’t become even messier than it already is. 

A Public Choice Explanation for What's Up with the USPS

As we wrap up this semester, I thought it would be interesting to evaluate one issue using different methods and theories we've discussed over the past few months. Over the course of this semester, the USPS has gotten a lot of attention for its issues with funding and its public status. Despite being a massive bureaucracy (they employ over half a million people), the USPS has a big funding problem, causing some to reconsider its role as a government entity. 

The USPS and public choice first crossed my mind when we read Friedman, who argued that the USPS, a government monopoly, should be privatized to stimulate competition. Allowing new entrants into the mail delivery industry in his opinion would result in the industry being "revolutionized." However, I believe Friedman's thinking is narrow, as there are other benefits to the USPS that are very important. For example, having postal services as a public good benefits rural communities, who most likely would lose access to postal services under a private system because of the lack of profitability in those regions. 

The next time I though of the USPS was when we were discussing the Niskanen model in class a few weeks ago. Niskanen's model helped explain why USPS faces more budget issues than other government bureaucracy. Consumers elasticity of demand is fairly high for the USPS, as there are many substitutes. Higher elasticity results in less room for the senior bureaucrat to increase the budget. Moreover, during the past few decades, the elasticity of demand has gotten even more elastic, as new substitutes like Amazon, UPS, and e-mail have grown in popularity, making it so the USPS has even less power to expand their budget. This is because there is less sponsors surplus they can try to take when expanding the budget than more inelastic agencies, like Defense or Homeland Security.

A Free Rider Friendsgiving

Last year, a group of friends and I from several houses gathered for a "Friendsgiving" celebration at UVA. We had a Google sheet to sign up to bring different classic Thanksgiving dishes, and we had everything from turkey and cranberry sauce to sweet potato casserole to green beans to cider to pumpkin pie. Because of our number, we of course faced the classic economics problem: free-riding. No one discussed it then, but looking back now I can clearly see why several of us did not contribute. When there is a large number of people receiving a group benefit, individual members are incentivized not to contribute. By my estimation, there were about four people or so who brought nothing. I myself was added onto the signup sheet with two of my housemates without my knowledge, an easy opportunity not to help out. However, feeling it to be my obligation, I duly contributed to a wonderful evening.

To overcome this problem, the key is restricted benefits. Our hosts could have easily prevented anyone from entering who had no contribution to the meal, or made them pay to enter. But that is not how friends treat each other, and tempers could have flared. We did have enough food for everyone and all the food groups were covered, but this could have easily not been the case. In fact, it might have been better if we had had fewer people, since there would have been less temptation to free ride as each person would know Friendsgiving would not happen if they did not contribute. Instead, we had several free riders. And that was ok, because we loved them, and we were happy to show them grace.

(But also next time, pandemic permitting, I will be guarding the door.)

Some Interesting Benefits of Ranked-Choice Voting

During and after the election I monitored the results of Maine’s ranked-choice voting Senate race because, after we discussed it in class, I was interested in the effect it might have on the results. It was cool watching the news anchors on election night discuss Susan Collins’ need to obtain 50% of the vote so that the ranked-choice aspect of the election didn’t kick in. I’ll admit, I really wanted Susan Collins to miss the threshold so that we could see the effect of transferred votes, but unfortunately that didn’t happen. Since the election I have done some more reading and was interested to learn of a few more benefits to this different voting method. 

I found a cool opinion article in USA Today, written by Andrew Yang and Bill Weld, that discussed the effect ranked choice voting might have on campaign strategies. They said that due to a candidate’s goal of winning second-choice votes in addition to first-choice votes, that candidates would shy away from negative ads as to not sour the impressions of the opponents’ supporters. Ranked-choice voting then has the effect of more respectful and polite elections, something I believe all would appreciate especially in this day and age. Another interesting effect ranked choice voting has, according to an article on FairVote.org, is that it is more likely for women and minorities to not only run for office, but win their elections as well. One way ranked-choice voting can increase representation is due to the decreased effect of two similar candidates “splitting the vote”. Say for example (in an egregious oversimplification) that two women are on the ballot against one man: if almost all women support a female candidate, and most men support the male candidate, the female candidates might split supporters, but as long as the male candidate doesn’t win a simple majority, one of the women should gain the supporters of the other and the effect of this split is diminished greatly. Obviously this example is an oversimplification, but I thought the research data about how ranked-choice voting could directly lead to more representation was fascinating, and makes me curious about what other positive effects it could have.

How Uber and Lyft Flipped an Election

One of the most interesting amendments to appear on the ballot this November 3rd was Proposition 22 in California. Proposition 22 would change the law so that app-based transportation and delivery drivers could remain defined as independent contractors and adopt labor and wage policies specific to their line of work. This would allow Uber and Lyft to be exempt from the current California labor law, AB5 or the "gig worker bill," which requires companies that hire independent contractors to reclassify them as employees. Classification as an employee means that drivers would receive employer-sponsored benefits, but also retain less flexibility in their working choices. 

Six weeks prior to election day, the proposition had only garnered the support of about 39% of the constituency, with another 25% remaining undecided. However, on election day, a whopping 58% of voters supported the amendment - how did this massive surge in support occur? 

The approval of the proposition can be attributed solely to the efforts of Uber, Lyft, DoorDash, and other gig economy companies in a perfect representation of capture theory. Capture theory is Stigler's theory that regulation is acquired by an industry and is designed and operated primarily for its benefit. In this case the gig economy industry, lead by its key players, spent over $200M to acquire "yes" votes on the ballot for the initiative. They argued that as their businesses currently remain unprofitable, this exemption from having to pay for employee benefits is crucial to their future health. The firms employed TV and digital marketing in order to reach a wide range of constituents, and utilized in-app advertising to reach gig economy workers and customers. Additionally, Uber and Lyft threatened to leave California, raise prices, and/or cut jobs if they were required to reclassify their drivers as employees and modify their business model. This threat likely scared many voters into defaulting to the safe, status-quo vote of "yes." The most impressive results from their efforts were the significant numbers of drivers and minorities who supported the proposition. Going forward, this approved proposition will be operated and enforced to the benefit of Uber, Lyft, and other firms within the industry who will retain their market shares and current business models. 

Splitting Checks & Principal Agent Problems

 I was recently out to dinner with a group of my friends. We were having a great time until the check came. The restaurant informed us that in groups larger than 6 they just split the check evenly for as many people were in the group. Some members of my group were very angry because they had intentionally ordered cheaper items and were now having to pay for those who had opted for more expensive items. 

Splitting the check evenly raises an instance of the principal agent problem.  If looking from the viewpoint of someone on a budget (the principal) then the agent (the more affluent friend) did not have their interests aligned with the principal in terms of keeping spending low. This leads the friend trying to save money to have to pay a much higher price than the actual cost of their food. I myself am quite the eater so I feel like I am part of the problem, but I wish restaurants were able to split more evenly so I didn't feel as much guilt in these instances. 

It Was a Fun Idea in the Moment

 In class the other day I made a passing joke about holding out on signing Professor Coppock's release form. Professor Coppock responded with a thinly veiled comment that being a holdout 'might' affect my final grade come the end of the semester. This got me thinking about how things would actually play out if I decided to holdout on signing the form and whether or not it was really worth it. 

The first question to ask is what is there to gain. Several articles I have found estimate that authors of textbooks make 12% in royalties from sales. Professor Coppock is a co-author so let's assume he makes 6%. Each textbook of the third edition of Principle of Economics sells for $95. Professor Coppock has 1,000 students in ECON 2020 on average each semester. Therefore, we can assume he makes $5,700 from sales of his textbook each semester. As the release form stipulates that my likeness can be used in any subsequent versions of the textbook then it looks like Professor Coppock will be making a comfortable amount of money from the use of my face. I think he could spare a couple hundred dollars in compensation for me.

The easiest way to go about being a holdout in this situation is to simply refuse to sign the form. This would make most or all of the footage that Professor Coppock has unusable. I'm sure he would want to avoid this so it's hopeful that he would agree to any demands I make. However, Professor Coppock holds some power over me because he can disincentivize me by threatening me with a bad grade. If he did take that course of action then I could appeal to the University. Professor Coppock is undoubtedly more trusted and valued by the University than I am so they might side with him. My next step would be to call on my fellow students as witnesses as I'm sure some of them heard our exchange in class. But then my fellow students might be holdouts and ask for part of the money that I receive from Professor Coppock in exchange for testifying. Then this brings up issues of making them keep their word. If I give them the money before they testify then they might renege on our agreement ex post facto. That way they would get the money but still remain in the Professor's good graces. If they testified before I had to give them the money then I could just renege on our agreement. 

Ultimately the time, money, and effort that I would have to put into being a holdout far outweighs the benefits that I could receive. I guess I should've known better than to trifle with an expert in economics. 

Congressional Control and Scott Pruitt's EPA

 

The discussion of the competing theories of bureaucratic discretion and Congressional control made me want to find a modern example to see how each theory holds up. Given the prominence of the EPA as well as the controversy surrounding Scott Pruitt's tenure it seems like a compelling example. In 2017, Trump’s appointed EPA head, Scott Pruitt, began a drastic rollback of environmental protections that were pursued under the Obama administration. He loosened Obama-era fuel standards for cars and light-duty trucks, convinced Trump to exit the Paris Climate Accord, and repealed the Clean Power Plan.

The case of the EPA seems to confirm much of Weingast and Moran’s findings; both the Senate and the President exerted control as the principle in Pruitt’s one-year tenure. For instance, Pruitt’s decision to repeal the Clean Power Plan was prompted by an executive order from Trump. Additionally, his confirmation was no rubber stamp. Senate Democrats attempted to delay his confirmation vote by dragging out the debate. He was ultimately confirmed by a narrow 52-46 margin. Most surprisingly, Pruitt even advocated to restrict the budget of his own agency, arguing the EPA had become bloated. From the perspective of Niskanen, in which the agency head seeks to maximize their agency’s power, this choice is incomprehensible. Finally, when Pruitt’s tenure became mired in corruption scandals, the legislature exercised its ability to institute sanctions. Various oversight bodies launched a total of 15 investigations into his actions, including a Republican-led one from House Oversight committee. These ultimately led to Pruitt’s resignation in 2018. 

Principal-Agent Problem in Soccer

As a big soccer fan, I was thinking about why the best soccer players in the world would end up playing in Turkish teams later in their careers. Even though they get offers from much better leagues like Premier and La Liga they somehow end up getting retired in one of the teams in the Turkish League. 

This situation is a great example of the principal-agent problem stemming from different interests among coaches and players. Coaches (principal) transfer star players (agent) to their teams according to the players’ former stats and performances. Thus, the coaches don’t really make biased decisions because they receive adequate information regarding the transferred players. The main difference between what the European teams and Turkish teams offer star players is not the salary, it is the length of the contract. Turkish teams generally offer much more longer-term contracts to those players than European teams. Long-term contracts are very compelling offers especially for star players over 30 years since they can enjoy big salaries without worrying about getting fired if they show low performances. Hence, they don’t feel much economic pressure to perform which makes them more risk-averse. They don’t take risks which can lead to injury or hurt their stats because they act in their individual interests rather than in the principal’s interest.

How Primary Elections Are Cheating the Median Voter

 In Johnson’s “Voting, Rational Abstention, and Rational Ignorance” we learned that primary elections have the potential to prevent a single mode electorate and contribute to the ambiguity of candidate’s platforms. Individuals who are active voters in primary elections tend to be more partisan in their beliefs, or in terms related to the median voter theorem, on the far right or far left of the spectrum. Because these individuals are more inclined to participate, the candidates in the general election will most likely vehemently oppose one another on close to every issue. This forces voters in the middle to either abstain from voting or choose a candidate that represents the extreme.

More often than not, in districts where one party historically dominates, the general election is secondary to the battle in the primary. For example, Representative Alexandria Ocasio-Cortez’s (NY-14) win in the 2018 democratic primary essentially decided the general election, and her toughest battle was against the Democrat incumbent Joseph Crowley. When the real competition is in the primary, candidates are more likely to shift closer towards the ends of the electoral spectrum and therefore produce policies favored by their voting base who adhere to extreme ends of the spectrum. This of course only leads to further partisanship in congress with most candidates representing extreme ends of conservatism and liberalism leaving little room to compromise for the median, and moderate, American voter.

Maybe our p value isn't so low after all?

 When we've talked about p, or the probability that an individual vote is decisive, in class, we have reasoned that in most US elections, this value is minimal, effectively 0. However, the most recent presidential election has taught us otherwise. According to this article, Georgia is preparing to recount the state's votes by hand to verify the results. There may be a recount in my home state, Pennsylvania. President Trump has been pursuing legal actions in a number of states to fight the results of this election. 

Clearly, the presidential (along with some House and Senate elections) were incredibly close in a handful of states this year. If you live in one of these crucial swing states like I do, then your p value is larger than you think. Sure, you likely did not and will never single-handedly decide an election. However, this p is still much larger than the p value for those that live in "safe" states, like the now reliably blue Virginia. This was also true in 2016, when Trump won Wisconsin, Michigan, and Pennsylvania by the slimmest of margins. In that election, turnout was not very high- the electorate didn't really believe there was an incentive to vote! But in 2020, turnout was at historic levels. It may be because more people felt that their p was higher, more people wanted to perform their civic duty, or maybe there was just a lot more self interest and expressive voting in 2020. I suspect that the third option is true. But the slim margins of victory in crucial states in the last two presidential elections have definitely proved that, if you live in the right state, your p value is not 0. Your vote counts. 

Majority Rule Runoff Election Takes Center Stage

    The Congressional seat runoff in Georgia has come to the forefront now that the presidential election has been decided.  Democrats will have control of the White House come inauguration day, January 20th, 2021.  The next major battle in United States politics is over which political party will gain control of the Senate.  Georgia utilizes the rarely used majority rule, runoff election format to pick the Senate members from its state.  After the election, no candidate was able to meet the majority threshold.  Now, a runoff election will take place in January with the top two vote-getters going head to head.  After one candidate is elected, then another runoff will occur to elect the second winner.  A majority, runoff election has never had a larger impact on the decision making process in the United States.

    The Senate contains 100 seats, and currently, there are 48 Democrats and 50 Republicans in the Senate.  The two seats that are up for grabs in Georgia could be pivotal since control of the Senate is hanging in the balance.  If two Democratic candidates can secure the spots, then the Senate is split 50-50, and the Democrats will effectively have control over the Senate.  They will have control because in the case of ties the vice president, Democrat Kamala Harris, will cast the tie breaking vote.  If one Republican candidate is able to win either runoff, then the Republicans will retain control of the Senate. All eyes in the political world will be focused on the majority rule, runoff elections in Georgia for the next couple of months as the struggle for political power in the United States continues.

The Butterfly Ballot Incident

 Last week, Americans painstakingly checked their phones for days in hopes that the election results would finally come in. the last time citizens have been made to wait past election night was 2000, and it took over a month instead of a few days. The country waited on Florida's recount, as the margin was too close to call between Gore and Bush. Palm Beach County faced particular controversy in their recount process due to a design flaw in their ballot. The butterfly ballot design led to over 2,000 democratic voters democratic voters to mistakenly vote for the Reform party candidate, Pat Buchanan, leading to Bush's victory in a traditionally blue county. Since Bush won the state of Florida by less than 2,000 votes, and in turn the election, this design flaw in one county multiplied into a presidential election scandal.

Through our discussions of Condorcet's paradox (and our class constitutional convention results), we have explored the importance of voting rules for outcomes. In the Bush versus Gore election, if the voting rules had set forth a uniform ballot design instead of allowing Palm Beach County to choose the confusing butterfly layout, Al Gore would have won the election. Isn't it crazy to think that a simple design flaw in one county determined the presidency.

photo of butterfly ballot: 

The ballot was so confusing because the second hole punch was to vote for Pat Buchanan. A hasty voter could very easily mistakenly think that this second hole punch was for Al Gore.

 

 

Voting with your feet in the age of COVID

 Tiebout's Pure Theory of Local Expenditures paper makes a lot of assumptions -- some more unrealistic than others. Though the assumptions of perfect information, perfect mobility, and lack of externalities between localities (among others) remain unimproved by the Coronavirus pandemic, it's much easier to make a decision to move when you can continue telecommuting to your old job. In this article by the Kinder Institute,  authors suggest that for companies continuing the remote work model, employees could end up working from the location of their choosing. A poll from Gallup even found that most workers don't want to go back. This will affect recently graduated college alumni in particular, who are applying to jobs that aren't tied to a location at all. 

In a world where your job is in your computer, objections to Tiebout's occupational mobility assumptions are rendered useless. While not everyone will adopt the telecommuting model, many will take the opportunity to vote with their feet to a new location that better suits their preferences for the provision of public goods. 

SCOTUS: A Case for Term Limits Over Court Packing

Olson speculates that the free rider problem becomes more relevant in the context of large groups as opposed to smaller groups. By expanding the number of SCOTUS seats, the influence of each justice on the groups decision would be reduced and potentially lead to rational ignorance or lack of effort by a justice to assert their viewpoint as the decisiveness of their decision would be reduced. Really, the only consequence that justices face is scrutiny of the public eye. By keeping the SCOTUS smaller, this scrutiny is greater for each justice, thus encouraging them to make decisions more reflective of constitutional principles and the constituencies that led to their appointment in the first place.

 

Even with just nine justices, an analysis by Kalt and Zupan reveals a significant principal agent problem between the SCOTUS and the American people. Justices have lifelong appointments to the court and thus have few monitoring procedures in place to mitigate shirking of constituent ideologies. In fact, after their appointment, the market never meets again to assess whether a justice’s job is approved of. Since justices are approved by the Presidency and the Senate, there is an immense incentive for voters to remain rationally ignorant. If people have no incentive to acquire knowledge about a political candidate, they certainly have a smaller incentive to obtain knowledge about potential court appointees, and vote for politicians based on their preference for a particular judge. Knowledge surrounding when court seats will open and potential appointees, is extremely difficult, if not impossible to find. Lastly, justices essentially have perfect monopolies over their seats as the barriers to entry are extremely high, so high that the justice either has to be criminally convicted, resign or die to be replaced. Enacting term limits, with the potential to be reappointed, should reduce the principal agent problem. This would institute a performance review method to better align SCOTUS (agent) and American Peoples’ (principle) ideologies over time. Term Limits would also make SCOTUS appointments more predictable. Staggered term limits would ensure each Congress and Presidency gets a specific number of appointments, thus making the SCOTUS more of a prevalent issue to voters in Presidential and Senate elections. This should lead to judges whose ideologies better align with those of the people.

Liquor stores have captured the market for cold beer in Indiana

Previously in class, we have discussed Stigler’s capture theory, in which an industry will utilize its political power to try and acquire regulations that will benefit their economic profits. This often occurs through campaign donations and other types of “legal” (often illegal) bribes and favors to politicians that will convince the politician to act and vote in the industry’s interest.

Indiana has a law that has consistently been protected by state legislators, which restricts certain businesses from selling cold beer. The ability to sell cold beer in Indiana is exclusive to only liquor stores, while grocery and convenience stores are restricted to only selling warm beer. This is obviously very significant because anyone who would like to purchase a cold case of beer for day-of drinking must go to a liquor store in order to avoid waiting for the beer to cool in the fridge. Personally, I don’t think I’ve ever bought beer from a liquor store, so this seems sort of crazy to me, and I imagine grocery stores, especially, suffer the most economic consequences of this law. Liquor store owners in Indiana have donated large amounts of money to campaign funds in order to keep this bill in place, and as a result their profits must be much higher.

Shirking in the NHL

 The main idea of the capture theory is that representatives will serve the economic interests of their constituency which will get them reelected. The NHL provides a great example of the capture theory in action. Though the NHL carried out a successful, COVID-free postseason, scheduling the regular season is not as simple. Gary Bettman, the NHL commissioner since '93, has faced challenges throughout his tenure with the NHL such as labor lockouts, expanding the league, and now a national pandemic. Bettman has also proven to be a profit-maximizing commissioner, increasing NHL revenues since he started in this position. Bettman not only seeks to maximize utility for himself in raising revenues (and likely raising his salary in doing so), but also has to look out for the best interests of the teams he works for. 

In considering the COVID risks and struggles that come along with restarting the regular season, Bettman and his group of executives have devised several plans to best start the season. These options range from operating inside a few bubble-like hubs, traveling semi-normally (much like the NFL and MLB have), or even shutting down for the year. Bettman has to juggle which option not only expresses his social interests but also the economic interests of the teams he represents. Bettman has an incentive to shirk, thinking about his own utility by increasing profits by reopening all stadiums and having a near-normal season. Yet, Bettman is likely not to do so because his job hinges both on his economic success and his ability to appease majority of his teams. Bettman has a clear, yet challenging task: get the NHL back on track with as few COVID cases as possible. His executives and the teams coaches, players, and managers are likely to monitor his plans and be consulted with throughout this decision-making process. Additionally, Bettman has already received lots of feedback about the Edmonton and Toronto bubbles, and these "performance reviews" will likely affect the future of the 2020-2021 season. Finally, there are several, qualified executives who, I'm sure, would be ready and willing to take Bettman's place if this NHL season is a failure. Therefore, shirking will probably not be an issue, especially since Bettman has proven time and time again that he can withstand any challenge that comes his way. I'm sure that he will be successful in capturing both revenues and reelection with whatever plan he employs for this upcoming season. 

My Personal Nemesis

 Professor Coppock, I hear you loud and clear re the DMV. They're the worst. Or at least they're the worst bureaucracy in the US. I'll see your DMV and raise you the Nicaraguan National Police.

This bureaucracy suffers from both of the sources of slack that we discussed in class the other day. It is extremely difficult to measure what the 'output' of the police is and even harder to measure what the 'output' should be. Are the police working merely to maximize the number of arrests or the amount of material goods that they bring in through fines and confiscations. Are they working to minimize the number of wrongful arrests and trying to improve relations with the community? I would argue that the majority of the Nicaraguan Police force is working to satisfy the ends posed in question number one. This is done to satisfy the desires of their bosses but also to maximize their own power and utility. They are also a monopoly supplier as there are no neighborhood watches and no community support systems that people can go to instead of the police. Because of the this the police know that they don't have to be efficient or even helpful. You have to put up with them because they are your only choice.

I know for a fact that this is how the system works because I have had to deal with it personally. I was driving in Nicaragua and my car was hit by a drunk driver. The drunk driver bribed the police to file a report saying it was my fault. The police took my license meaning I had to sit in line for 5 hours at the precinct (while they allegedly were doing paperwork) and then bribe them $20 to get it back before I left the country the next day because there was no other system or institution for me to appeal to. The police won on all fronts because they got to move towards their quota for tickets, they got a bribe from the drunk driver, they got a bribe from me, and they got their regular paycheck for 'doing' their job. I guess you could also say that they won because they got to exercise power over me. Luckily I have only had to deal with this kind of thing once but it happens with such alarming frequency throughout the country that it is even mentioned on TripAdvisor reviews.

The system is so frustrating and corrupt that one time when my mother was wrongfully pulled over by the police she simply thrust her joined hands out the window and pleaded 'just take me to jail'. To her this was the easier alternative than having to deal with all of the inefficiencies and corruption of the Nicaraguan police bureaucracy.

The "Wrong" Coasian Solution

 In my last blog post, I explained that I provide the collective good of washing the dishes because my personal benefit exceeds my roommates. This allows my roommates to free-ride off of my provision of the collective good due to the group being a privileged group. However, this past week one of my roommates offered to pay me to keep doing the dishes. This shouldn't make sense, because he has the property right to use plates as he sees fit and his cost is greater than his benefit. If an outside observer doesn't look too closely at the situation, it would seem like this is not the result that Coase would expect. 

  This seems to be a misallocation of resources because he can free ride instead of paying me anything. However, roommates tend to have interdependent utility because their daily activities often involve interactions with each other. My roommate paying me raises his expected utility because now I am less likely to loudly rant about how no one does the dishes and am more likely to help him when he needs assistance. The amount he paid me represents a portion of his valuation of dishwashing. As a result, I now get some producer surplus from doing something that I am already inclined to do based on my own utility function.

My Experience with the Italian Consulate

Spring of second year I decided I was going to study in Milan, Italy for Fall Semester 2019.  Preparing for my journey, I needed an Italian Student Visa. I assumed this would be no problem, I had 3 months to make it happen. Turns out Italy is one of few European countries that requires an in person interview to obtain a student visa. So, the UVa study abroad office explained to me that there were four ways to get my visa:

1. Visit the Italian Consulate in Washington DC. Easy enough. I gave them a call to set up an appointment but unfortunately they only grant visas to DC or adjoining county residents. 
2. Visit the Italian Consulate in Philadelphia. I figured I could make a trip out of it, I've never been to Philadelphia. They said they would be glad to meet me but the next available appointment is in 4 months.
3. Visit the honorary Italian Consulate in Virginia Beach. I called to make an appointment- "sorry I’m very busy and don’t know when I can meet you- call back next week". 
4. Visit the honorary Italian Consulate in Charlotte, NC. I called to make an appointment but they can only meet with North Carolina residents or students.

After a couple more calls to the honorary consulate in Virginia Beach (my only option) he agreed to meet with me. I drove 5 hours just to meet with him and have him sign my application. The total meeting time was less than 5 minutes and provided me with no benefit that the other consulates could not have- but rules are rules. This reminded me of our class lesson on bureaucracy. These requirements and hoops I had to jump through to get a visa did not appear to add any value. They are a monopoly supplier- there is no competition for efficiency and no alternative source of information. I had to follow their rules and how they enforce them even though there are much more efficient ways to get this process done. Also, they were the only people I could contact to gain information on the process. Overall, this has lead to slack in the system with no incentive to fix- the consulate is going to get paid no matter what.  

A COVID Constitution

When students returned to Grounds in August and September, they knew that an unusual semester awaited them. With UVA moving classes completely online and establishing strict social distancing guidelines, everyone was contemplating how they (and their households) would approach the unprecedented circumstances.

Using this Wikihow as a guide, my roommates and I established a roommate agreement that everyone in the house would unanimously agree to adhere to. As Buchanan and Tullock explain in Chapter 6 of the Calculus of Consent, requiring unanimity would limit our external costs, which is exactly what we aimed to do. By hopefully increasing the degree of obligation we felt towards respecting the constitution, unanimity would also limit free-riding. Thus, in coming up with the components of our roommate agreement together, we ensured the creation of a constitution we would all agree to respect. Although this led to higher decision-making costs (i.e. the discussion, collaboration, and development of the agreement), we minimized the negative externalities that we would impose on one another if we had no set rules. An example of a negative externality we hoped to avoid would be bringing undue risk upon each other by not following social distancing guidelines and proceeding to share common areas in the house. The constitution stipulated that we maintain social distancing outside the house and that we keep our social circles small; limited to 4 people outside of the household and not including “risky” individuals. I believe the establishment of the roommate COVID constitution was well worth the decision-making costs involved because by establishing our expectations of one another, we greatly decreased the negative externalities we may have otherwise imposed on each other this semester.

Why I Voted

 After learning about rational abstention and the median voter theorem in class, I gave serious thought to not voting in this election. I'm someone who has voted in almost every yearly election since I became of age, save for when I was studying abroad. However, I figured that it would be nice to save time on not driving to the polling place and waiting in line. I consider myself a liberal, and since Virginia is a blue state, I didn't think that the odds of my vote deciding how Virginia would go would be very high. When I told my boyfriend that I was leaning towards not voting, he didn't really get it and said that if everyone decided to rationally abstain then the system wouldn't work. Instead of getting into an argument over this I just decided I'd go vote, and I waited in line for an hour. I decided that the temporal cost of voting was lower than the potential temporal cost of arguing and the emotional stress from arguing. I think this is a perfect example of how social pressure can cause rational people to vote even if they don't really think it'll make much of a difference in the outcome.

The voter turnout amongst 18-29 year-olds has increased by millions since the 2016 election. I believe that social pressure has a lot to do with this. Influencers and high-profile celebrities alike have used social media to encourage followers to vote, from giving information about registering and finding a polling place to outright stating which candidate they support. Young people have been holding their friends accountable for voting, and have used social media to make voting somewhat of a trend to give their peers a fear of missing out. In many cases, rational young people like me decided that the costs to them of voting in this election were less than the costs of the social consequences of not voting. 

Prisoner's Dilemma and the 2020 Election

    Throughout the past year, Democratic presidential candidates campaigned to be the candidate to go up against Donald Trump in this year’s election.  Bernie Sanders was a near lock to secure one of the top spots and all of the other candidates seemed to be fighting over who would be his main competitor.  Candidates such as Joe Biden, Amy Klobuchar, and Pete Buttigieg were facing a prisoner’s dilemma.  If each of these candidates pursued their individual goal of becoming the Democratic candidate, they would actually be helping Bernie Sanders.  They would split up the votes among them and leave Bernie Sanders with a clearer path to securing the candidacy.  The path to a Democratic candidate eventually being elected President of the United State in the 2020 election began by solving this prisoner’s dilemma.

Politics can be self-serving since each individual politician wants to help out his or her party, but usually not at the expense of their individual success.  Politicians working in tandem as opposed to looking after themselves is more the exception than the norm.  However, the Democratic party was able to have its candidates put aside their own interests and rally around one person who they thought had the best chance to secure the presidency, Joe Biden.  Since all of the candidates eventually dropped out and focused on helping the party instead of themselves, the optimum outcome was achieved.  If each acted selfishly, who knows how this election would have turned out or if Joe Biden would have even been the candidate at all?  The Democratic Party was able to solve its prisoner’s dilemma.  As a result, Joe Biden defeated Donald Trump this week to become the 46th President of the United States.

The Economics of Matchmaking

With the results of the UVA Marriage Pact recently released, there has been a lot of discussion about matches. The Marriage Pact says that it is difficult to meet people during coronavirus, and it wants to help that. I believe there were questions about whether you are single and how much you wanted to meet the person you would potentially be matched with, and these questions were clearly designed to get people to reveal their preferences.

Part of the difficulty of dating is that it can be hard to know what the other person wants, how interested they are, or even what they are really like. And it can be hard to know if you yourself are interested sometimes! Because of all this preference concealment and uncertainty, there is a tremendous amount of resource misallocation in dating. Time, money, thoughts, and decisions are used in ways that can ultimately end up without benefit to you if the relationship does not work out. You could argue that the goal of dating is getting rents similar to the rent policies Tullock describes in his paper on rent seeking. The economic rents here are the returns of a relationship, which are presumably greater than the opportunity costs of attaining them. But there are so many failed attempts at relationships, which are similar to Tullock's deadweight losses. I don’t think failed relationships or attempts at relationships are a complete loss, so the analogy breaks down there, but there are undeniably a lot of wasted resources because of preference concealment and uncertainty. The UVA Marriage Pact tried to overcome that with questions designed to reveal preferences. The thought was that people would want to answer honestly and their preferences would be revealed. Only time will tell whether the Marriage Pact has been successful for the participants. I would say if it helps anyone it will be worth it, because I too think the returns of relationships are greater than the opportunity cost of attainment. I wish everyone the best.

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Woodrow Wilson & George Stigler's Capture Theory

This week, in American Political Economy (PLAP 3400), the class discussed Woodrow Wilson's The New Freedom (1913). We compared Wilson to Theodore Roosevelt and learned about the latter's advocacy for increased government regulation in industry. I immediately thought of George Stigler and enjoyed seeing unexpected overlap between my courses. Stigler's criticism that regulation only leads to the survival of inefficient policies (as "virtue does not always command so high a price,") seemed to directly contradict some of the early-twentieth-century proposals that I read. In addition, having understood from class that one of Stigler's major contributions to public choice theory — the Capture Theory — was published in 1971 in "The Theory of Economic Regulation," I was surprised to see Wilson describe the exact same phenomenon over 50 years prior. 

Wilson wrote: "Our government has been for the past few years under the control of heads of great allied corporations with special interests. It has not controlled these interests and assigned them a proper place in the whole system of business; it has submitted itself to their control ... it is an intolerable thing that the government of the republic should have got so far out of the hands of the people; should have been captured by interests which are special and not general. In the train of capture follow the troops of scandals, wrongs, indecencies, with which our politics swarm."

While Roosevelt advocated regulation and Stigler encouraged domestic production instead, Wilson described yet another idea. According to my professor, Wilson supported "breaking up" large corporations — even using the phrase "Big Business" that is so familiar from progressive rhetoric in recent years. With Roosevelt's commitment to campaign finance reform and improving labor conditions alongside Wilson's shared promise to keep corporations in check — with a passionate declaration that "the old political formulas do not fit the present problems" — it occurred to me how little some policy debates have changed in over one hundred years. On the day prior to the general election, while some commentators lament what the titans of American history would think of our present political woes, I wonder if they would really be surprised in the slightest.     

Senators from dominantly Red or Blue states can better get away with voting on ideology

The discussion we had last Thursday about shirking in the US Senate led me to speculate what sort of factors play into the likelihood that a senator votes with ideology rather than the interests of their constituents. One factor we didn't discuss that occurred to me was that senators who are in firmly Republican states or firmly Democratic states would be less worried about losing reelection, so they may vote against their constituents interests (or "shirk") more often than senators in more contended states. In this blog I would like to assert that this factor is indeed significant when it comes to whether a senator will vote with or across party lines. 

I looked at FiveThirtyEight’s resource, Tracking Congress in the Age of Trump, and confirmed that Senators Rand Paul of Kentucky and Jerry Moran of Kansas are two of Republican senators who deviated most from legislation that Trump supported. In the 116th Congress, Rand Paul has only voted 63.6% in line with Trump’s position, and Jerry Moran only voted 64.1% in line with Trump’s position. Most notably, both of these Senators voted for S.J. Resolution 54 on 9/25/2019, which was an attempt to overturn President Trump’s emergency declaration for border wall funding, while 36 other GOP senators voted against it. Another significant vote was for S.J. Resolution 68 on 2/13/2020, which attempted to restrict President Trump from taking military action against Iran without congressional approval, which 44 other senators voted against. While both of these senators are from states that largely support President Trump and his policies, I believe the fact that these two senators are in states that haven’t had Democratic senators in decades gives them “longer leashes” that allow them to get away with voting against their constituents beliefs and preferences in favor of their own ideologies.

In the Defense of (some) Lobbyists

I am the daughter of a lobbyist so more often than not, my defenses of lobbying come off as biased and empty. It’s hard to make a solid case with all the damning evidence that exists. My case is not made in the defense of lobbyists that lobby for inefficient regulations or to support industries that harm consumers and the environment. But my dad lobbies for places like Special Olympics, Save the Children, Grand Valley State University (along with other schools), NAHC, and companies that work to clean Michigan rivers. 

In “The Theory of Economic Regulation”, Stigler discusses how the state can and does hurt industries or firms through “its power to prohibit or compel [and] to take or give money…” These actions taken by the state affect the allocation of resources - meaning they can move resources away from firms that were being used effectively. The lobbying my dad is doing for his clients is not to snag some regulation that will create barriers to entry or hurt competitors who produce substitutes. He works to ensure that his clients get the funding they deserve and need - this means talking with members of Congress to keep clients at QAE when they could potentially be forced to operate at lower levels of efficiency due to a poor allocation of resources (Q* < QAE). 

This article discusses slashes in budget faced by community health centers in the midst of Covid-19. Operating with the proper allocation of resources, efficiently, and to provide the most social benefit (QAE) would arguably not look like budget cuts in the middle of a global pandemic. In this case, I would categorize the efforts of a lobbyist for community health centers as less of the rent-seeking, sleazy, looking to increase my bottom line behavior and instead, an effort to ensure that resources are not misallocated and that we don’t move away from QAE. Sometimes lobbying is not about coal companies lobbying down green energy legislation or sugar industry lobbyists authoring reports about the inconclusive links between sugar and bad health or NRA lobbyists consistently back laws that weaken gun-control after tragedies like Sandy Hook and Marjory Stoneman. Sometimes - despite bad press - lobbying is about making sure community health centers across the country can stay afloat or granting funding to clean polluted rivers in Detroit or helping Save the Children continues to help underserved kids get a good education.