Variance in Voter Influence

In class, we discussed that there was a difference in the way voters influence policy between local and national governments. I think this can be explained economically by both the capture theory and a difference in rational ignorance. Since industries have more interest in national policies that affect them more broadly, they would "take" the influence from individual voters, and leave the voters to be more keen to helping with local policies. On the other hand, it is more rational for voters to know more about local issues than national issues that might not affect them as much. 

I think construal level theory would be more effective at explaining the difference in interest between local and national policies. Construal level is the way that the brain changes the focus on incoming information or filters out or in certain information. A construal level in this case would be linked to the psychological distance of the policies, meaning the distance one feels from them. A high construal level, or the national government, which seems like a large distance from voters, means there is a focus on desirability and exciting opportunities. In other words, voters are more likely to think broadly about policy options in terms of their general appeal, and thus know less about voting on them. A low construal level, or the local government, which seems like a small distance from voters, means there is a focus on feasibility and deliverable opportunities. In other words, voters are more likely to be more knowledgeable about the policies at hand. 

The Committee System: A brief history

The committee system implemented in the United States was modeled after the British Parliament. However, when our country was founded there were very few members in Congress, and there wasn't a need for division of labor between the different legislative processes. Originally, Congress relied primarily on the House and Senate chambers, and the bill was primarily created in and by the full chamber of Congress. The bill was then referred to select or ad hoc committees to iron out details. Sometimes even the details of the bill were decided by the entire chamber of Congress, and the ad hoc committee only performed clerical tasks. Once the ad hoc committee completed its duties, it was dissolved.

This system of creating legislation had its problems. Although ad hoc committees were flexible and responsive to the preferences of the entire House and Senate, this made them duplicative, slow, and time-consuming. As the House and Senate grew the number of ad hoc committees needed to pass legislation increased (in the Third Congress alone 350 ad hoc committees were created), and it became increasingly difficult to pass legislation. The first standing committee was created in 1789, and from there the committee system developed into the modern one we have today. Although the founding members of Congress likely weren’t thinking about it at the time, they were really creating a more efficient system by slowly getting rid of ad hoc committees, as a bill could be created without the consent of the entire Congress, saving time and allowing committee members to express areas in which they were preference outliers. 

That Screwed-up Agency (TSA)

Thursday night, 1 AM. After getting home from a Friendsgiving, I finally began packing for my flight home that was in about 7 hours. As I sluggishly attempted to choose which product was precious enough to be poured into my single 3.4 oz. travel container, I thought about the TSA. I had long been hearing claims that the TSA is mostly a waste of resources and a form of "security theater," whose main goal was to make people feel safe more than it actually prevents security threats. For example, according to the first article, when Homeland Security officials evaluated the agency by attempting to smuggle weapons and bombs 70 different times, they apparently succeeded 67 of those times.  

We all have our peeves with the TSA -- personally, it’s the “random extra security screenings” or the time they threw away the expensive 3.8 oz. moisturizer I’d accidentally packed. So articles like these once gave me hope that maybe they’d eventually loosen these restrictions, trim their inefficiencies, and focus resources on methods that work better. Our recent discussions in Public Choice regarding the Niskanen model of bureaucracies pretty much dashed that hope. The head of the Department of Homeland Security would maximize their utility by maximizing their budget, which results in an inefficient and inflated budget, operating where the marginal cost of their output is greater than the marginal benefit. In fact, if we consider that, much like with the police, the demand for outputs such as border security, the coast guard, and airport security is comparatively relatively inelastic, the potential inefficiencies could be even greater. Essentially, I think we’ll be taking our shoes off for the foreseeable future.  

Hate Changing your Clocks Twice a Year? Blame the Committee System

Ever wonder why we have this antiquated system of changing the clocks twice a year.  Daylights Saving Time was originally instituted during WWI by Germany to conserve fuel and was adopted in the U.S. two years later in 1918.  While changing time may have been useful then, the benefits are meager now and numerous studies have shown many negative consequences of it including increased car accidents, increased suicide rates and decreased worker productivity.

So the question remains, why do we continue following this disastrous tradition; why doesn't Congress do something about it?  Well many representatives have.  The Sunshine Protection Act (SPA) is a bill that if passed would make Daylight Saving Time permanent in the U.S.  The SPA has been introduced to both the House and Senate with bipartisan support in each new session of Congress since 2018.  However, the SPA has died in each houses commerce committee each time.  So why do the commerce committees not support this bill?  If I were to speculate I would say it's because the representatives on the commerce committees are preference outliers and come from states with large industries that benefit from the current system.  These representatives want to maximize their votes by not upsetting these industries and constituents of their states so they let the SPA die in committee every time they can.  Therefore unless there are significant changes in the composition of each houses commerce committee, I think it's safe to say the current system is here to stay.

Should we really let the FDA be captured?

        Biogen, a biotech company worth over $30 billion, just got FDA approval for a $56,000 Alzheimer’s drug that is not proven to be effective. When I read this, I was inundated by the stench of regulatory capture emanating from this approval. Not only does this affect those who need the drug, the average Medicare Part B (medically-necessary services) insurance premiums will rise by over 14%. Biogen might be the most recent offender, but this analysis has led me down a rabbit hole tattooed by a theme of capitalism not caring about virtue.

        What I find most stunning is that the FDA seems to see no immorality in having massive companies push through layers of internal dissension to get approval for drugs that are not fully studied or proven to be clearly effective. That seems wrong to me. Capture seems like a mostly-fair side effect of a free market system, but that doesn’t mean it should rear its head in every bureaucracy without anyone batting an eye. Normally regulatory capture deserves careful thought, but not diligent combat. In the case of the FDA, combat seems most appropriate. There’s a difference between the shipping industry seeking fixed-prices and individual companies within the biotech industry seeking barrier control. The latter deals with potentially life-saving medications that have real physiological impacts (on top of financial impacts) on a large portion of our population.

Everybody Hates the IRS

Before my dad retired, he was a senior executive at the IRS, and he reported to the Commissioner of the IRS. Part of his role involved reviewing the budget for his department so that he could present it to the Commissioner. This would then be incorporated into the final budget proposal. 

My dad noted that the IRS budget proposal was typically more than they actually needed. The budget-maximizing bureaucrat model would suggest that the Commissioner is misleading Congress about the true needs of the IRS. Congress is forced to accept their proposals. Though this may reflect the behavior of other agencies, this is not the case for the IRS. Congress typically rejects significant components of the IRS's proposal.

For the past decade, members of Congress have voted to decrease the size of the IRS. My dad complained that this has truly affected its operational capacity. The IRS has substantially cut their staff, and, as of 2017, I believe my dad still used Microsoft Office 2007 on his work laptop. Simply put, voters hate the IRS, and it is politically popular to decrease their budget. The Commissioner has learned to overestimate the proposal because he knows that Congress will only approve a fraction of the budget. The Commissioner hopes that enough will be left in the appropriations bill to keep the IRS functional. Therefore, a more appropriate assessment is that legislators will do what is necessary to be reelected.

Looking Forward: The Effects of Climate Change on Bureau Efficiency

This week we discussed how it is possible make comparisons across government agencies in regards to the legislature's demand for bureau output. Some agencies have marginal political benefits that are relatively elastic, while others are relatively inelastic; the more inelastic these marginal political benefits are, the more important the agency is, and the less efficient they can be. This is due in part to the take-it-or-leave-it nature of bureau proposals and the fact that bureaus are essentially monopolistic suppliers of their output. The elasticity of demand for agency output can also change over time. As Alex Tabarrok's seminar showed, a prime example was the relatively inelastic demand for CDC output during the pandemic which allowed for increased inefficiency. 

With this in mind, let's turn our attention to climate change and its impact on bureaus such as the Environmental Protection Agency. As we have all likely seen, the effects of climate change have become more prominent in recent years and are predicted to worsen unless significant changes are made. Thus, the marginal political benefits of environmental regulation will likely become more inelastic in the coming years. However, with a more inelastic demand comes the increased capability to shirk responsibility. So, as we near the point of irreversible damage to our climate and are in desperate need of the EPA's output, will we see a decrease in agency efficiency? Only time will tell.

Red meat: to subsidize or not to subsidize?

 We have spent some time theorizing the “why” of regulation. As we saw in class, Stigler’s “Capture Theory” provides an intuitive explanation: claiming that regulation is “acquired by the industry and is designed and operated primarily for it”. This somewhat scary idea, however, is walked back by Peltzman in his “Toward a More General Theory of Regulation”. What is clear from these works is that for-profit industries are incentivized to lobby their respective governments for industry control and/or economic support, but can only attain such if they are agreed to by vote-maximizing representatives.

Thus, a recently published article titled “Nearly all global farm subsidies harm people and planet – UN” especially peaked my interest as a public choice academic. This text lays out how the global climate change threat is being intensified by governments subsizdizing the production of red meat and dairy as well as the need to re-allocate resources towards more eco-friendly agriculture. According to a UN report discussed in the article, a stark 90% of the $540 billion in annual global support provided to farmers does more environmental harm than good. Further, an estimated $12 trillion in damage is done per year with the current level of regulation on a global basis, which greatly favors the environmentally-tolling production of meat and dairy (in terms of subsidies). 

An analysis of the effect this regulation has on total welfare across the impacted markets is necessary to determine the usefulness of these policies; we must consider whether the benefits these subsidized farmers are enjoying outweigh the costs. $12 trillion is no small number, so perhaps total welfare is being decreased as a result of regulation—as theorized by Peltzman. If this is the case, what will it take for these policies to change? And when? The answer lies in the attention the issue (or set of issues that this gets grouped in to) receives among voters and whether it will drive vote-maximizing representatives to alter their legislative course. 

Senior Bureaucrat Professor Coppock

I’m feeling oddly sentimental writing this final post, almost like I didn’t spend every week stress procrastinating them. Yes, it is possible to be super stressed about something yet still refuse to start it... I guess you know what they say about seeing the past in rose coloured glasses. 

Since Professor Coppock said he was a bureaucrat, the idea of the Public Choice Agency has stuck in my head. Let’s suspend reality. Do Profesor Coppock and the Public Choice blog post-producing agency hold up to the Traditional Model of Bureaucracy? Let’s assume blog posts are the agency’s output. Is the output hard to measure? How many are too many? How do we know the work is all of good quality. Even though Professor Coppock knows the measure of the output quality (four points hopefully, five if we are lucky), would others who are not a part of the agency know? How would one differentiate between a 3 and a 4 or even harder when it would be awarded a five? Is this class a monopoly supplier? Although I’m sure there’s another public choice class somewhere in the country making blog posts about issues, there is not another UVA public choice class writing them currently. Obviously, no other school compares to our economic prowess, so I would say we are a monopoly supplier on blog posts. Apart from Professor Coppock, there is no other alternative source on whether these posts are good or not *cue Professor Coppock screaming, “you can’t handle the truth.” Since these two assumptions regarding the monitoring problem hold up, I’m starting to believe that we just might be an agency. Let’s see, are we overproducing blog posts at a level that is not optimal in order to maximize? Of course not. Who wouldn’t want 150 so posts on public choice topics to read... Guess we aren’t an agency after all. 

The Principal-Agent Problem: I Am the Principal, the Agent, and the Problem

    My house of nine(!) people has begun to deal with the problems of shirking. All of us usually expect somebody else in the house to do the chores, which means none of the chores really get done. In contrast with the traditional (and highly time-consuming) methods of making a chore chart or having a house discussion about chore delegation, we simply get to the point where a house member can't bear the house being in shambles, so they text the group chat or members individually and delegate tasks that need to be done. 

    With this strategy, a task not being done can be blamed on an individual member, not the collective. This also leads to any one member of the house being a principal, agent, or both at any given time. The power structure is indiscernible in the house, with every member being under the will and in control of every other member. As a result of this, there is plenty of room for slack. No member owes anything to any other member so we can all misbehave, or shirk, without any real consequence. However, the social norm in place is to not redistribute tasks unless somebody offers to take the task from you because they desperately want it to be done. Whoever holds out longest, or cares the least, about any given task ends up doing the least amount of chores. 

    The industrial organization of our house does not have clear authority or any clear structure at all which leads to a lot of slack (me being a strong slacker myself). My public choice solution? Appoint a house representative unanimously to divvy up all the tasks however they wish with a month long term, with voting on the last day of every month for a new representative (or the same one if they do their job well). If someone doesn't do their task by the end of the month, they are disqualified from getting the position the next month. Sure, there might have to be stipulations to stop the representative from giving all the work to one person, among other issues, but I've run out of room to write about it so I'll just leave it to readers to work out the kinks.

The New Yorker and Selective Incentives

In class a few weeks ago, we discussed Olson’s theories about successful groups. We learned that it is easier for small groups to mobilize and overcome organizational problems, but there is a way for large groups to organize: selective incentives. Selective incentives are private goods or benefits given to people on the basis of whether they contribute to a collective good, thereby incentivizing people to join groups. They motivate members of latent groups to “act in a group oriented way”. 

 

This reminded me of the free tote bag that comes with a subscription to The New Yorker, which incentivizes many people to contribute to the collective good that is the magazine. Tote bags are really trendy right now, and some people even subscribe to the magazine for the bag alone. The bag can also have expressive value, and make people look educated or cultured. 

But I want it because it’s cute. Maybe I’ll subscribe.

Political Party Division on Committees

    In my social policy class, I am currently working on a project where you create a bill for a social issue that needs reform. Once you have selected a topic and the action needed, you must find how to best get your bill passed: finding a congressperson who will sponsor your bill. In class, we discussed the best strategy for getting the bill in the hands of the person who will best champion it. The most difficult part of this is deciding who on the committee would be best to go to. We asked ourselves questions such as "Is their state one that this issue is particularly problematic for?" and "What is their party?". When choosing a member, we were taught that party matters as you might need to choose a representative whose party doesn't usually vote for your issue to ensure that their base backs it. This is due to the immense amount of political division currently.     Looking at committees and voting through an economic lens produces a different picture regarding political parties. Weingast and Marshall state that committees align the two different parties because of their interest in the specific topic. However, we learned that party did not matter as representatives would shoot down helpful legislation to please their base. This begs the question, although they are both interested in the same topic, are they both on the committee to ensure that the other side does not negatively affect the issue due to having opposing views on it (in their eyes)? While theoretically, Weingast and Marshall are correct in assuming that since all members have a common interest, they must align on their views, in practice, the parties generally have very different views on the same issue. As we have previously have studied, political representatives are self-interested actors who will act to be re-elected. Although unlike my social policy professor suggests they might instead be acting for special interest groups rather than their constituents. Is the only answer that representatives will trade votes to get legislation they want to be passed in the future?

Amy Klobuchar and Tom Cotton as Preference Outliers

On November 5th, Senator Amy Klobuchar (Democrat - Minnesota) and Senator Tom Cotton (Republican - Arkansas), introduced bipartisan legislation that would "make it more difficult for dominant online platforms to make acquisitions that harm competition and eliminate consumer choice." Senator Klobuchar is the Chairwoman of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, and Tom Cotton is also a member of the subcommittee (which is part of the Senate Judiciary Committee). The bill is called The Platform Competition and Opportunity Act and targets large tech companies such as Amazon, Alphabet, and Google amongst others. The language of the bill, however, is very specific in regards to which companies it covers. It would apply only to acquirers with market capitalizations or net annual sales in excess of $600 billion, as calculated when the bill becomes law (via a 180-day trading average). 

What's interesting, is that this specific language excludes companies like Walmart and Target, which are headquartered in Minneapolis, MN, and Bentonville, AR, respectively. They are two of the fastest-growing e-commerce platforms in 2021 (26.4% growth and 12.5% growth respectively) and are two of the largest employers in each state (Walmart is the sole largest employer in AR). In this way, Senator Klobuchar and Senator Cotton are prime examples of "preference outliers" with regards to e-commerce platform regulation, as they are well-poised to reap the benefits of legislation that gives companies in their state a comparative advantage nationwide. It is also an example of assumption 1, that congresspeople represent politically responsive interests of their constituents, in this case, the companies that are massive employers in each state and likely spend money lobbying each candidate.

 

“Can You Send the Notes?” and the Class Before Thanksgiving

 I’m not sure if I’m going to class the Tuesday before Thanksgiving. For a variety of reasons, from traffic to family reasons to just wanting to spend a few days with Mom’s cooking, I’m still on the fence about my attendance. But will I get sent the notes for free? Well, if class notes are a public good, I will.

But are class notes a public good? Well, let’s run it through our two-pronged test of non-rival and non-excludable. I think most of us would agree that sharing class notes with a friend does not reduce our utility. Unless we are to get into a debate about how sharing notes with a friends could change a class curve at the end of the semester, I believe we can all get behind an unchanged utility function if our friend gets sent notes from class if they’re sick. Indeed, with this definition, some Samuelsonian economists might consider it a public good.

But what about excludability? In fact, it’s probably pretty easy to exclude me from notes from a day I missed. Even if I text a friend, they could ignore me or decline. They could charge me or even engage me in a bidding war for a picture of notes from Mr. Coppock’s lecture.

But what about socially? If a friend texted you, asking for notes from a day they were sick, would you really ask them their price? Would you ignore their text? I think not. Thus, I argue that class notes are socially non-excludable. Indeed, I can be quite dramatic. “my mom misses me dearly” “my dog wimpers each night I’m gone” “I haven’t seen my Gam Gam in years,” I could probably think of half a dozen excuses to miss class that would make you feel bad if you didn’t send me the notes. Thus, I would free ride off the attendance of others, and still gain some of the knowledge I would’ve gained from attending lecture. A classic example of a public good if you ask me.

So what’s the takeaway? Out of state kids – watch out. You have a text coming your way. I know you guys buy your flights for Tuesday evening just in case you have an exam. See you after Thanksgiving.

Environmental Voter Project and Rational Voting

The day before Election Day, I opened a letter in the mail from the Environmental Voter Project. I wasn’t quite sure what I was expecting, but it definitely wasn’t this letter. The Environmental Voter Project (EVP) believes that it’s easier and cheaper to guess who's an environmentalist and then convince them to vote than it is to convince a voter to start caring about the environment. First, they showed me my public voting record (where they listed me as not having voted in VA in 2019, even though I wasn’t even registered in this state), and then let me know that voter turnout on my street was predicted to be “Above Average” and that I should join my neighbors in casting a ballot. 

Largely due to Public Choice, my very initial reaction was, “Wow, they are trying really hard to add to my D factor!” To most, that would be a very strange sentence to blurt out, but in the context of Johnson’s theory of rational absenteeism, “D” references the idea of civic duty -- that there are some reasons beyond just your benefit for getting your candidate elected that encourages you to vote. Along with social duty, this variable can also include social pressure, utility for the act, and expressive voting. Using my record and my neighbors indicates they’re trying to increase social pressure on me. At the same time though, maybe this strategy can backfire. If my neighborhood is more likely to turn out than average that could also reduce the probability that my vote is decisive and thus reduce my likelihood to vote. It’s unclear whether this intervention should work or not based on theories of rational abstentionism. In terms of the evidence for either direction, EVP claims in their report that 730,000 of the 7.4 million non-voting and seldom-voting environmentalists they’ve contacted since the fall of 2015 are now consistent super-voters, which seems to indicate that their intervention does play a role. But that means only about 10% of those they've tried to reach become voters, and most of those people were contacted in the last 3 years, so it’s really hard to tell how consistent these “super-voters” truly are. 

Though it might be unclear which side the empirical evidence lands on, at the end of the day (though I was already planning on it), I did vote. Did this intervention subconsciously influence my D variable enough to offset the lower probability of my vote being decisive? 

The Paradox of Voting

 The Paradox of Voting claims that for the rational, self-maximizing individual, the cost of voting will outweigh the benefit. A voter will decide to vote if and only if PB - C > 0, and P is the probability that the individual's vote "matters", i.e. if it is decisive. Because it is so unlikely that the vote will change the results of the election, predicted benefit is extremely small and (any) costs of voting are larger. While in some cases an individual's vote is decisive, this model ignores many other reasons that one might have for voting. A better model is PB + D - C. In this equation, D other reasons to vote such as civic duty, utility derived from the act of voting, social pressure, and expressive value. D does not need to be multiplied by P, because the value derived by the voter does not depend on which candidate wins. 

Principle/Agent Comparison @ Internships

After learning about how to safeguard against the principle/agent problem, I thought back to two of my internships in which I was acting as an agent.  At my first internship, I was working for my ex-girlfriend's Dad, and I slacked off frequently.  I would play games on my phone, read the WSJ, and go on social media.  Looking back, it is somewhat hard to believe I got away doing all this.  But now, I realize why I was able to -- there were no safeguards to the principle/agent problem.  My boss did not monitor me, the output was random/not well-defined or results based, there were no incentives in my contract (hourly pay), and being his daughter's boyfriend, I wasn't exactly replaceable.  Sadly, my slacking was reigned in this past summer.  I interned for a commercial bank where safeguards were erected.  Specifically, my output was quantifiable, I reported to a manager, and alternates could be found easily.  The only time I was able to slack was when I worked virtually, which I think has the potential to be a post-covid problem for many companies.

The Lengths to Prevent Employee Shirking

 Since the transition to work from home in March of 2020, there have been plenty of concerns surrounding employee shirking. Historically combative practices against shirking include monitoring, shorter contracts/frequent check-ins, having a well-defined output, and choice alternatives. Clearly, in-office work is a more practical setting to monitor employee behavior and ensure regular supervisor check-ins. Therefore, companies have attempted to find methods to recreate that since going fully online. The toy-brand company, Mattel, required job applicants to have a distraction-free environment (with no children, pets, or noise), a secluded office space dedicated to work, and an uncompensated supply of office supplies. The company also required at-home visits. These visits were described as unplanned visits to the employee’s home by a supervisor. These practices give less slack in an environment typically associated with slack, discouraging workers from misbehaving without consequence. While I understand that this is in attempt to prevent employees shirking, the recent success of productivity at home makes such drastic measures seem unnecessary. Working at home may lead to supervisors assuming laziness in their employees, but the trend shows quite the opposite. Sending in supervisors to check in on employees – inspecting their work environment and productivity – seems like an invasion of privacy that wasn’t present during in-office work. There are much better methods for management to ensure employee productivity and success without a breaching of trust like open and frequent communication through online check-ins and clear expectations about the job position. Employees should not be put in a position where their supervisors enter their homes to guarantee work completion.

On Being a Private, Ideological Voter

 

In our discussion of the Kalt & Zupan article, we talked about the role of ideology in voting. Ideology, defined as a system of beliefs that impacts the way that you view various issues/policies, can cause both voters and their representatives to vote against their pure economic interests and in favor of the so-called “public” interest. Voters may choose to oppose a strip mining bill, even though it would reduce energy costs, because of the damaging and unsightly effects it would have on the environment. They are empowered to vote against their economic interests because the costs of their decisions are widely dispersed, and there is a low probability that their vote will affect the outcome of the decision. 

Citizens “voting” in private markets, on the other hand, will inevitably be the deciding vote of any individual decision and will likely bear the entire cost of their choice. These circumstances make it more likely that consumers will - for example - buy  Nike shoes despite deploring their manufacturing practices. When we discussed this, I realized that I am an outlier among citizens “voting” in private markets; I weigh  ideology more heavily than the average consumer likely does. I came to this conclusion because of my unwillingness to use Amazon. 

For many people, including my parents, Amazon has replaced running errands. It saves time and personal transportation costs, while often providing cheaper prices than alternatives. In this way, it is in my and others’ economic interests to use Amazon for our purchases. However, I believe that Amazon can be harmful to the communities it enters. It can easily overpower and decimate small businesses; it promotes rampant consumerism; and it uses wasteful packaging and transportation processes. According to the Institute for Local Self-Reliance, more than half of American voters believe Amazon’s size makes it so dangerous that it should be broken up.  However, because they bear the whole cost of pursuing more costly alternatives, many of these voters continue to use Amazon. If possible, I don’t - showing the utility I get from ideological “voting” is higher than the utility I would get from pursuing my economic interest in this case. 

Virginia’s Median Voter: A White Woman

Virginia’s gubernatorial election has just finished with Glenn Youngkin beating Terry McAuliffe by about 2.5 percentage points, a swing of over 10 points compared to the 2020 election.  One of the largest swings was with white women, (40% of the electorate) which swung in favor of Youngkin by 13 points.  White women have a history of being an unreliable group but education was the issue that drove them to Youngkin.  Education was the top issue for 24% of white women and 84% of white women thought parents should have a say in what their child school’s teaches, an opinion seemingly not held by McAuliffe.  That alongside Youngkin’s stance against the recent scandals in Loudon County effectively courted the group towards him during the last month in the campaign.

The Median Voter Model states that the median voter will determine which candidate will win the election by voting for the candidate who most closely matches their values.  Since Youngkin won the election, (assuming no abstentions) we can assume the median voter voted for Youngkin. Given the timing of the education scandals, the concurrent rise of support for Youngkin by white women for his stance on education, the large proportion of the electorate white women make up, and the unreliability of white women to vote for either party, it is safe to assume a white woman was the median voter this past election.

Pennsylvania state Supreme Court election

    During the new Pennsylvania state Supreme Court justice election, special interest groups have spent over 5 million dollars, potentially even 6, on campaign funding for the two candidates. One of the candidates, Brobson, has even been reprimanded by the bar association due to the nature of his attack ads on his opponent being so disparaging and false. This election is not unlike past campaigns, as previous campaigns have received up to 22 million dollars from special interest groups so that their candidate wins the justice position. This amount of spending on candidates is concerning. It takes away the court's integrity as the benefactors are not donating out of goodwill instead to obtain rulings that benefit them later. 

    The special interest groups in the Pennsylvania Supreme Court Justice election are self-interested actors who strive to capture regulation to benefit themselves. Special interests groups gaining too much power worried Olson. He believed that these groups being overly powerful would lead to the demise of the nation. Like Olson, the author of this article also believes that once special interest groups gain control of political or judicial systems, they lose their integrity. Individuals would be able to pay for outcomes in the courts they want, rather than the judicial process working. These groups are more effective than other parties (voters/citizens) as they can overcome organizational costs to achieve their goals. Unfortunately for Olson and the author, these special interest groups will continue to be more effective as they can place more pressure relative to the other groups (general voters/citizens).

The Prisoners Dilemma of Masking Up in Mem Gym

This past Sunday, I decided to dust off the 'halloweekend' cobwebs by going to Memorial Gym for a workout, and I saw something that made the Public Choice alarm bells in my head go off. 

As we all know, UVA has made the decision to continue the policy of forcing masks to be worn inside university buildings for the rest of the semester. This affects me most in classroom and gym settings, and without going into my personal feelings, the low COVID case count in the student population combined with the high rate of vaccination is leading many students to feel like the policy is unnecessary. I go into this because during my time in Mem gym, I noticed that around a third of the students working out were deliberately wearing masks improperly, and some were not wearing them at all and were not being asked to wear them properly by the staff. 

I feel that this situation is a prisoner's dilemma, where the use of policing has been effective, but the policing has begun to cease in the latter part of the semester. I feel that this is a prisoner's dilemma because the dominant strategy of individual exercisers leads to a non-pareto-optimal outcome for everyone in the gym. I see not wearing a mask over one's mouth and nose is a dominant strategy for exercise, because the restriction of breath makes exercise more difficult and/or less enjoyable for most people, and not wearing a mask is seen as better than this. However, gym-goers pursuing this dominant strategy all at once creates a non-pareto-optimal situation for everyone, which is creating a greater risk of COVID spread. (The article makes the point that masks are necessary for exercise, as well as that they are inconvenient for vigorous exercise)

The implications of what I observed on Sunday are that policing is necessary to achieve the pareto-optimal result of minimizing COVID spread, and that we consented to this policing by coming to school this year. Due to fatigue, and less COVID on grounds, however, the policing by gym staff has ceased, and the supposed pareto-optimal condition the policy aims to achieve has been lost. I have continued to comply with mask wearing, but if I am to face no consequences by pursuing my dominant strategy, I will gladly work out without my mask, and bring everyone farther from pareto-optimality. 

Dairy Farmers as an Interest Group

The phrase "got milk?" is well-known around just about every age group in the United States. Commercials, advertisements, radio announcements, and more all promoted drinking milk for stronger bones for years, and many of us can remember them vividly from our childhood. Further, milk is commonly promoted in school lunchrooms, with the federal government making changes allowing for fattier milks in cafeterias as recently as the Trump Administration. These instances signal the success of the dairy industry's interest groups, but which take on the size of these groups prevails in this instance?

The main distinction is that Olson would argue that the dairy industry must be small, as it would more easily overcome its organizational problems and succeed. On the other hand, Becker would assert that the industry must be large, as this plays a much larger role in his formula for success than Olson's. It turns out that Olson is more correct in this case. In recent history the amount of dairy farms has been steadily decreasing, with the number of dairy operations falling over 55% from 2003 to present. There are currently less than 32,000 left. This means that even with the size of this interest group getting smaller and smaller, their success is still prevalent across the U.S., which Olson would say is because of their smaller organizational costs.

The U.S. Beef Industry as and Intermediate Group

In 2018, four companies slaughtered around 85% of grain-fed cattle in the U.S. The big four processers are Cargill, Tyson Foods, JBS SA, and National Beefpacking Co. With these four firms controlling over 80% of beef slaughtering industry (it depends how you break down the meat industry, but almost any breakdown has these four firms as the dominant firms), they constitute an oligopy. Specifically, since there's no one large firm, they can be classified as an "intermediate" group. The lobbying patterns of the industry support this, with no one firm dominating lobbying, and Tyson Foods and JBS having spent the most and third-most on political lobbying in the general meatpacking industry in 2021. 

Lobbying across the past 20 years by the industry has also shaped a lot of the legislation with Tyson itself spending $25 million across that timeframe. The lobbying supported specific members of Congress who have voted against climate change legislation and cap-and-trade systems, both of which would force a reduction in meat production or capital investment in greener meat production, ultimately affecting bottom-line profits of the companies. Funnily enough, Clinton was even nicknamed "Chicken Man" becuase of Tyon's support for him during his presidential runs. These lobbing efforts by the oligopolistic industry work to capture favorable regulation for the meat industry. Both the oligopolistic industry structure and the lobbying patterns and efforts of the industry provide a strong example of Olson's "intermediate" groups and of the Stigler-Peltzman Model of Regulation. 

Who Has The Median Vote?

The Democracy Fund Voter Study Group has just released data on 2016 presidential election voters and their political stances from economic and social perspectives. This analyzes two categories of voter sentiments: economic and moral/identity issues. This presents a four-quadrant chart, divvying people up into populist, liberal, conservative, and libertarian political stances. The results of the chart for 2016 Trump voters was a spectrum on conservative moral/identity issues, but fairly centrist economic views.

Applying the Downsian theory of parties formulating policies in order to win elections rather than winning elections in order to formulate policies, Trump was able to transform his policies to appeal to historically populist voters. Trump was able to rally people behind him by transforming the GOP to appeal to its conservative voters who lean only center-right on economics. On the other hand, the Democratic party has not been able to win elections despite homogeneity among liberal voters because the party’s base is too far left to convince persuadable voters. The GOP in 2016 was able to optimally cater to the median voter while the Democratic party held strong among its base. As the country shifts left, the Democratic party is out of touch with median voter, hence it’s inability to win elections.

Facebook Regulation

 For the last several years, parties have called for Facebook and other social media conglomerates to be regulated due to egregious abuses of user data. This has resulted from a lack of supervision. As many representatives do not understand the technology and thus do not know its capabilities. A former Facebook employee turned whistleblower has explained to Congress and the public the actual abuses that need to be dealt with. The regulations being called for deal with the "power to request data from Facebook." These regulations are being suggested in hopes that Facebook must offer complete transparency to its user and regulators. Although Facebook has been the target of data privacy protection regulation, much of it has been done for the benefit of Facebook. For example, one law protects Facebook and other social media sites from being prosecuted over their users' posts. The article further discusses how regulation like section 230 lulls users into a false sense of security regarding their private data; however, it does very little in reality.

This article supports the catch theory and Peltzman model of regulation. A powerful firm such as Facebook was able to acquire regulation designed and operated primarily for its benefit: regulation that protects it from lawsuits regarding its users' views and tricks users into thinking it's being regulated. This shows Stigler's greatest fear: special interest groups becoming too powerful. However, the new regulation being pushed is against the interests of Facebook. This supports the Peltzman model as it is a walk-back of the Stigler theory on regulation. It shows that utility-maximizing representatives will create regulation when special interest groups (users and Facebook whistleblowers) demand it. Stigler previously only thought the demand was great enough when an industry giant was applying the pressure. However, in the Peltzman model, the total satiation point is pushed back due to the decreasing marginal benefit to politicians if they make their constituents unhappy. 

Voting in Fantasy Football Trades

Sitting with a pitiful record of 1-5, my fantasy football team doesn't have a great chance to make the playoffs.  However, I am still interested in my league because of our voting rules about trades.  In my league once a trade is agreed upon, the other teams have 2 days to review it and can vote to approve or veto.  If 4 of the 10 teams vote against the trade, it does not go through.  To me, this threshold seems to balance between decision making costs with external costs, especially since some teams never vote because they are less invested in the league (perhaps because they derive less utility from bragging rights or don't fear the punishment for the last place team).  For example, if one team wanted to trade Tom Brady for a practice squad player, our league could easily rally the numbers to veto and wouldn't need to waste time coming to an obvious decision.  On the other hand, if you make a trade, one or two people can't easily impose an external cost on you by denying it.

This past week was the first time a trade was rejected, and I was surprised.  In my eyes, the trade seemed fair and clearly those involved in the trade did, too, otherwise they would not have agreed in the first place (because trade creates value).  So, I stopped to consider why other teams might veto it.  I noticed that the teams who vetoed were the 4 teams who currently had spots in the playoffs.  It seems to me these four teams did not necessarily vote on if the trade was "fair," but more so on how the trade would potentially affect them.  Although morally questionable, I think voting in this way is completely rational, so I cannot blame the playoff teams for their actions.

Right to Repair and Capture Theory

Right to Repair is a movement that wants consumers to be able to have their products repaired by parties independent from the dealer or manufacturer of a product.  This movement has been growing in popularity in the tractor, medical equipment, and automobile industries, but I will focus on the consumer electronics industry.  To provide an example of the issue, let’s say your MacBook breaks and you need a new charging chip, instead of buying it online and repairing your MacBook yourself or having an independent repair shop do it, you must go to Apple to repair it.

Regulations were previously passed that allowed these practices often in the name of protecting consumers' data.  There is little merit to this claim however as there is little reason to doubt the trustworthiness of most independent repair shops.  Capture Theory on the other hand, offers a compelling reason why Apple pushed for these regulations.  The regulations are a form of entry control that allows Apple to have a monopoly on the repair of Apple devices which allow Apple to create durable rents.  Its clear the regulation are not pro-consumer however the costs are dispersed across everyone and often not large enough for most people to be too upset by. 

That said, there has been recent pushback recently as consumers have become less ignorant of the issue.  Using the objective function of elected representatives under the Stigler-Peltzman model of regulation, h has been increasing causing a decrease in M meaning elected representatives should be more hesitant in supporting the continuing existence of these regulations as their net votes from supporting the regulations decreases.  So far, the change in M has not been significant enough to alter the voting behavior of elected representatives but that could change if the current trend continues.

Government Regulation: The Cure for Negative Externalities of Drug Use?

     Rhode Island is instituting government controlled sites for the injection of illicit drugs. This is quite an interesting turn of events, instead of enforcing the existing laws, this state is changing its policies to effectively end the use of illicit drugs.

    Currently, drug use is countered with fines and prison time. This action has a very high negative externality for society, as the administrative costs and cost of imprisoning drug users is so high. Also, the use of these drugs has further amplified the HIV/Aids epidemic and crime, costing society even more. 

    As illicit drug use is still rampant, Rhode Island has realized its current policies are not working and are implementing a new way to curb drug use: safe injection sites. These locations will provide safe and clean access to drugs and work to slowly get those addicted off of the substances. This will lower prison and crime rates, as well as drug-related diseases as it will all occur under government regulation. This is an exciting new tactic and I hope it will work as it will greatly reduce negative externalities by reducing crime rates (the drugs are freely available and will not need to be purchased by addicts), and increasing healthy practices (clean needles and sanitized injection sites). 

I think this falls under government as a paternal figure when it comes to justifying government regulation, and as our current efforts have not worked, I am hopeful to see if these new practices will effectively put an end to illicit drug use. 

Example of Creating Social Pressure to Vote

     The other day I came across a very clever ad that well exemplifies social pressure as a cause for people practicing the irrational behavior of voting. Please the 10-second video add a watch here.

    This ad is powerful because it plays on human tribalistic tendencies of group association by creating two distinct groups: those who vote and thus care about the neighborhood and Larry who doesn't vote and thus does not care about the neighborhood. Larry is treated as an outcast being viewed with disdain for not performing the 'good group' behavior of voting. Furthermore when Larry attempts to defend himself by saying "but" he is cut off to neighborhood members judgementally shaking their heads at Larry

    Larry could very well be practicing rational ignorance and not voting because voting is not a utility-maximizing activity to Larry. Larry could have trust that the collective will make a moderate choice due to the rational voter theorem. However, Larry may end up being pressured into voting as a result of ostracization from his neighbors and not because Larry truly finds value in the act of voting.

A Brief Analysis of the French Presidential Election Voting System

The French presidential election voting system is a two-round system.  To be elected president, the candidate must be 1 of the top 2 candidates in the 1^st round of the election, and then the candidate must beat the other top 2 candidate in the 2^nd round.  The 2^nd round only occurs if the top candidate cannot secure an absolute majority in the 1^st round, but this hasn’t occurred since the system’s inception.

The system is said to allow people to vote first with their heart, and then their brain, but this false.  Since it is almost guaranteed the 2^nd round will occur, voters in the 1^st round should vote not for their favorite candidate but instead vote in a way that maximizes their expected utility given expected likelihoods of various candidates defeating others in the 2^nd round and the expected utilities under each presidency.  For example, a voter in the 1^st round may wish compromise and vote for a less favorable candidate if said candidate is more likely to defeat an even less favorable candidate in the 2^nd round than their preferred candidate is able to.  Alternatively, a voter may wish to vote for a candidate they dislike greatly in the 1^st round if it pushes said candidate into the 2^nd round where the disliked candidate is more likely to be defeated by a more favorable candidate than the more favorable candidate is to win against another less disliked candidate.

Less tactical voting produced the results of the 2017 elections where Marine Le Pen of the far-right Front National party narrowly defeated François Fillon of the center-right Les Républicains party.  This resulted in Le Pen getting crushed in the 2^nd round by Emmanuel Macron of the centrist La République En Marche! party as the more left-wing parties voted for Macron but Fillon’s votes were split between Macron and Le Pen.  Those who voted for Le Pen in the 1^st round likely should have compromised and voted instead for Fillon as they likely would have been happier under Fillon than Macron and Fillon would have been more likely to win against Macron than Le Pen.  As shown in the previous example, the system encourages centrist parties to form since they are more likely to win in the 2^nd round.

Could the AP Poll employ a better voting method?

 A few weeks ago, I was scrolling through TikTok and got into an argument with a Virginia Tech football fan about their aggravations with the Associated Press College Football power ranking poll (AP Poll). They felt that the poll was not reflective of actual results, and that pre-season perceptions were being given too much weight. This triggered me to look a little further into how the rankings are constructed on a week-to-week basis. After reading about how the voters are chosen and how the votes are totaled, I tried to tell the VT fan they should look into it too, and they responded “I’ll learn it when they get their **** together”.

Thanks to public choice, I get to blog about this interesting application of Borda voting. The AP poll uses the Borda method to rank the top 25 (of 130) college football teams weekly, with first-place votes being worth 25 points, second-place votes being worth 24 points, and so on. Borda voting does not satisfy the Condorcet criterion where the winner of all head-to-head matchups is the winner of the aggregate election. To get an idea of how the Condorcet (head to head) best team may not actually end up in first place in the poll, think back to Mr. Coppock’s example of the Louisiana Gubernatorial election, where the Condorcet winner was knocked out of contention. This example works the exact same way but with more "candidate" teams and more voters. In this respect, I agree with the VT fan that the poll’s method is not perfect, so I will explore some alternatives. 

The VT fan is correct that the poll could be better, and under a ranked pair voting system the weekly victor of the AP Poll would be guaranteed to be the Condorcet winner. The problem with this, however, is that a ranked pair ballot for 130 teams would force sportswriters across the country to consider over 15,000 hypothetical matchups each week, a prohibitively expensive proposition. Other options for the poll would include other single-round non-Condorcet methods, such as ranked-choice. The reason that Borda is preferable to ranked-choice here is that Borda lets voters rank the team they most believe to be the best, and 24 others, rather than all 130. 

For the reasons stated above, I do believe that the Borda Count voting method certainly has its imperfections, but is the best voting method to accomplish the very unique task of ranking college football games each week less than a day after the games happen.

The Nefarious US Government and Domino's Cheese Ring

     I have long awaited this opportunity to share with you all the greatest government scandal you have never heard of, and with the topic of rent-seeking being brought up, the time has finally arrived. So let's jump into it. 

    Allow me to briefly set the scene. It's 2010 in the US of A and life is good. America, although in the midst of an obesity epidemic, is making strides towards being a healthier nation. One small step being made was the shift from whole milk to healthier options like skim or 2% milk. The US government was pushing for a healthier America and it seemed like the tides may have begun to change for the better, or so it seemed...  The problem with 2% and skim milk is that there's a lot of fat leftover (over 98% left to be exact). This wasted whole milk and excess fat may have been good for the society as a whole, but it was not good for farmers and rural economies who the USDA have a vested interest in because of "a Depression-era commitment to use price supports and other tools to maintain the dairy industry as a vital national resource."

    So what does the USDA do? They create an organization named "Dairy Management." This is the organization behind "Got Milk?" which relentlessly pushed milk in schools (despite the evidence discouraging high consumption of high-fat dairy). This is also the organization that sponsored a $12 million marketing campaign for the struggling Domino's Pizza chain to market their collaborative effort of a new line of pizzas with 40% more cheese. Yes, you read that correctly. The United States government teamed up with Domino's Pizza to market a heart attack of a pizza to their own citizens, despite encouragements from the same exact government department to reduce consumption of saturated fats (which are especially present in cheese).

    Rent-seeking is when resources are spent to obtain rents which derive from activities that have negative social value. Rent-seeking is when the US government spends $136 million to get rid of their excess cheese in the form of contributing greatly to the obesity epidemic plaguing their own people. I rest my case and hope you are equally if not more appalled than I am.

Rent Seeking: Drug Pricing and the Pharmaceutical Industry

I recently came across this article entitled "Centrist Democrats scramble House drug pricing effort" on how three Democrats in the House’s Energy and Commerce Committee blocked a drug pricing plan that was intended to be part of the Build Back Better Act. For context, these reforms would include such measures as having the government negotiate the Medicare pricing of certain prescription drugs and setting the benchmark for these negotiations to the prices paid for the drugs in other developed countries. At first glance, this appeared to be a reflection of the median voter theorem. If we consider that moderate Democrats likely represent and reflect an ideology closer to the median voter than a more left-leaning Democrat, moderates should cast the deciding votes and determine the outcome of policy. However, there was a line in this article that shifted this thought process.

“‘It is disgusting when politicians who supported Medicare negotiation in the past switch their votes in exchange for pharma cash,’ the group Social Security Works said in a statement Wednesday.” This statement shows how this situation is complicated by the rent-seeking behavior of the pharmaceutical lobby, which has already spent over $171 million dollars in lobbying just this year to deter the full enactment of drug pricing policies. In fact, according to the same source, Rep. Scott Peters (one of the three Democrat holdouts) has received the greatest contributions for the 2022 cycle from the pharmaceutical industry out of any House member or candidate. According to Tullock, rent-seeking is when resources are spent to obtain rent which derive from activities that have negative social value. In this case, the millions spent on lobbyists and campaign contributions instead of, for instance, on producing these medicines or conducting research would constitute a misallocation of resources. Further, the scale of their potential “rent” can be seen by how this drug pricing regulation was projected to have generated $700 billion in savings for the government, as stated in the first article. Thus, it seems likely that the percent dissipation will remain low because the total investment in rent seeking by firms appears to still be lower than the total potential rent, even though pharmaceutical companies have spent the largest amount on lobbying out of any industry in recent decades.

Blast from the Past: Analyzing changes in a blog post from 2012

 Where were you in Fall of 2012? What were you doing? As I walked around the halls of my middle school, braces in my mouth and acne covering my face (I was still cool though, fret not), some students at UVA were analyzing rent seeking in the world around us. Indeed, a post by a student boldly named “Unknown,”  rent-seeking by major tech companies faced tough analysis. Citing an article from 2012 (which still has the user interface of 2002), Mr. Unknown suggests Google and Apple spending more on patents than R&D is a prime example of rent-seeking. I think many of us would be inclined to agree.

I researched to see how see how this rent-seeking has changed by these firms since my friends (not I) have gotten taller since 2012. Funny enough, the change has been nearly minimal. The article I found highlights how top tech firms such as Google has spent countless dollars to fight off patent infringement cases. In fact, in 2020, Google was the defendant in 48 different patent cases. While the exact costs of battling these cases was not mentioned, anyone who has googled the salary of a patent lawyer can appreciate the astronomical costs of this rent-seeking. Similarly, Samsung faced 42 patent lawsuits in 2020. Thus, these combined 90 lawsuits from the two firms alone imposed countless legal costs on the other companies as well as the court system – undoubtedly a suboptimal use of resources due to the rent-seeking behavior. In line with the direct mention of legal costs as a subsection of monopoly costs in class, it is easy to see how easily these costs add up. However, the most interesting piece may be the continuity of these issues over time. Ever since some of us were shoving kids into lockers (or in my case, getting shoved into lockers), these few firms alone have spent countless dollars in an allocatively inefficient way seeking economic profits. 

Milgrom and Wilson’s Monopoly Mitigation

    Last week on October 5th, the Federal Communications Commission initiated spectrum auction 110 with the intention of raising government revenue while dividing up slices of the electromagnetic pie among 33 qualified telecommunications distributors. Current spectrum auctions follow an interesting design pioneered in the early 90s by recently anointed Nobel laureates Robert B. Wilson and Paul Milgrom. The offering entails a Simultaneous Multiple Round Auction (SMRA) format which offers companies the opportunity to bid on various electromagnetic spectrum jurisdictions while gaining insight as to what opponents are bidding on at the conclusion of each round. This means that companies that produce more efficiently within certain sectors (i.e., television, radio, cellular) may be more inclined to bid higher for specific categories. Having a plethora of qualified companies contend has diminished chances for a monopoly to arise; in Auction 110, one undisclosed heavyweight has even backed out (possibly Verizon), likely due to their appetite for broadband being satiated in previous auctions. 

    This might not sound all that revolutionary, but when digging deeper into the past methods of spectrum distribution by the government, it is evident that SMRA is wholly superior to our previous alternatives, especially when it comes to monopoly mitigation. Previous forms of auctioning include ‘administrative licensing,’ a form in which major contenders would show off their efficiency in hopes of being awarded licenses. This was followed by a lottery system of distribution. Both methods were inefficient: administrative licensing begged for monopolies via favoritism, and lotteries deployed rights to inefficient producers. There are advantages and disadvantages to any form of auction, but Milgrom and Wilson’s SMRA design has held up (for the most part), and fostered an atmosphere of competition. With the 5G revolution having companies vie for supremacy in the cellular market space, their work has once again proven effective in denying the possibility for monopolies to take hold.

Inefficient Equilibria & Antitrust Law

 In our discussion of contract curves, we showed how any point on a contract curve is an equilibrium. Therefore, any movement from elsewhere towards the contract curve is a Pareto efficient move, but once you get to this line, you’re effectively stuck. Because every point on the contract curve is an equilibrium, any proposed movement along the line will be vetoed since you cannot make any party better off without hurting another. This means that the first equilibrium you reach is the one that you will stay at, at least under the rule of unanimity. The situation described can be illustrated as seen below - 

Recent lectures in my Antitrust class have reminded me of this contract curve phenomenon. We have been studying the potential anticompetitive effects of mergers, and the way the Clayton Act attempts to reduce these harmful consequences. We read Brown Shoe Co. v. United States, a case in which the court blocked a merger between two shoe manufacturing companies. The court stepped in to block this merger, though the companies both had relatively small market shares, because they saw a trend towards concentration in the market that they felt the need to reverse “in its incipiency.” This forward-looking statute is unusual, since it requires that courts estimate the potential dangers of a merger and make decisions based on these predictions, rather than certainties. The reason courts will accept this level of uncertainty has to do with this phenomenon of getting stuck at an equilibrium. Once markets become concentrated, existing law gives the FTC very little power to un-concentrate them. In fact, efforts to try to reintroduce competition into oligopolistic markets have been blocked by the courts, as in Dupont & Ethyl v. FTC. Because of the FTC’s lack of power in this area, once the markets reach an oligopolistic equilibrium, they are effectively stuck there, like A and B got stuck at S1 in the earlier example. Though the situations described here differ - since in the first, market parties are blocking each other’s movement, while in the second, a regulatory agency is unable to force movement of market parties - the phenomenon underlying them is the same.

Saturday Night Live and Rent-Seeking

When I was in high school, one of my bucket-list items was to see an episode of Saturday Night Live in person. I recently remembered this old dream of mine and looked into how one goes about getting tickets to SNL, and came to a realization: this is a prime example of rent-seeking. One cannot simply purchase a ticket to see the comedy show – your best bet is to win a ticket from the standby line that starts to form on Fridays. In this example, the rent that people seek are the free tickets to the live show or dress rehearsal, and they divert their resources to increase their chances of winning by camping out in the standby line. If someone wants to increase their odds of winning a ticket, they must get to the line earlier and wait for a longer period of time (which diverts even more time/resources). 

Here, resources are not allocated efficiently because many people wait in line to increase their odds of winning, but never actually make it into the show. Tickets could be distributed more efficiently by auction or sale, since they would go to those who value them the most; also, people would not divert their resources at a chance to win seats, only to come out empty-handed. So, why would Saturday Night Live distribute tickets like this instead of just allowing the purchase of tickets? One could argue that making show-goers seek tickets by waiting outside the studio is valuable advertising that increases the "hype" surrounding the show. After all, it quite literally demonstrates to onlookers how many people are willing to wait overnight just for a chance to see the show in person. 

The External and Decision Making Costs of the Voting Game

Last weekend, my friends and I played “The Voting Game” for two hours straight. The basis of the game is to pick a description card, for example: “who talks about their ex the most?” and each player individually votes on who in the group best fits the card. In order to win the round, a simple majority has to occur, and whoever collects 6 question cards wins the game. This game concept is a popular one, and taps into the complications that can arise from majority vote in the simplest of settings.

To consider the external costs of the game, it is useful to analyze it from a situation where only one person is required to pick the winner of a round. This can be decided at any moment, and their decision is final. This would have significant external costs on the players, where the enjoyment of all voting on a player and debating the outcome after the round would be diminished. At the current rule, simple majority lowers these external costs by lowering the number of decisions that the individual expects to run contrary to his own desires, which would be to pick a player he didn’t vote for. With unanimous agreement, each player in the game unknowingly picks the same person for a descriptor card. This is rare, but ideal for the most humorous version of the game. In this case, external costs on the individual would be zero as everyone is satisfied with the outcome and it aligns with their preferences.

The decision making costs of the game in a scenario where only one person can decide the winner of a round, on the other hand, is very small. There is no need for the group to spend time debating the outcome in hopes of an overturned decision. When a simple majority is required, the time and effort to secure agreement is introduced. In the aftermath of the round, each person has to reveal who they voted for and why. Sometimes there are such split answers that the majority seems ineffective at fitting a card to a player, and the game turns into a heated debate on who should win. This increases the decision making costs of the game significantly, where the chance of hurt feelings and wasted time is more likely. 

My Friends and Restaurants

 When my two best friends and I are faced with the decision of where to eat dinner, we all shy away from choosing. We all just want to go with the flow, and let someone else decide. None of us are very picky eaters, and we like a lot of the same places, so we all end up pretty happy no matter where we go. But if we all have to decide together, it becomes super hard to agree because we all want to default to what the other people want to do. “No, let's go to Roots because it’s your favorite!” is followed by “No, let's go to Guad, it's your favorite!” and we all go back and forth until someone can finally stand to agree to go to their favorite place. 

In Public Choice, I learned more about this predicament. Collective action has two kinds of costs: external costs and decision-making costs. External costs are costs one is expected to incur as a result of actions. In this case an external cost would be how upset I get when we choose to go with my friend's choice for dinner, which is very little. Decision-making costs are costs one is expected to incur during the whole set of decisions associated with a single activity. The back-and-forth we must endure are the decision-making costs in this scenario. Because none of us mind if someone else gets to choose where to eat and it is very hard to agree, our external cost and decision-making cost graph gets completely skewed. A simple majority is not the best way for us to decide where to eat; it is the most efficient for us to let just one person decide.