Saturday, November 21, 2020

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.

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