College Apartment Decision-Making

It wasn't until this semester I realized how many times I have used collective action in my very own college apartment. Collective action is frequent amongst myself and my roommates: what type of barstools should we have? Is it time to replace the tiny, broken kitchen trashcan? As an individual, it is important to consider which of these decisions should require unanimity versus a simple majority agreement. For example, I let my roommates handle most of the decisions regarding living room decor. Why? Because the external cost of how my roommates decided to decorate were relatively low to me, whereas the decision making costs were relatively high. Here we used a simple majority method – we went with what my two roommates wanted since there were very low costs associated with their actions. On the other hand, when we were deciding how to divide rent we required unanimity; after all, the external cost of enduring a rent division you cannot afford greatly outweighs the decision making cost associated with bargaining. We may not always want to take the time to go through the bargaining process associated with unanimity (especially when splitting rent), but it comes in handy when you are able to eliminate large external costs. 

Where to go for dinner?

When my team goes on the road for tournaments, often our coaches let us pick where we go for dinners. For simplicity we usually stick with a simple majority decision. However, a problem arises because within the typical five of us, there are 2 people that primarily like to eat super healthy, 2 people that don’t mind unhealthy food, and 1 person who is somewhere in the middle and can swing either direction. This causes issues as myself being on the extreme of not minding unhealthy food, will not always get my preferred dinner and sometimes end up with a salad for dinner. No matter how much the two sides try to petition our cases to our coaches about our choice of restaurant, it always comes down the middle person, the median voter. 

As we have seen, no matter the distribution of parties in an election, it will come down to the median voter, and each party will shift their policies to appeal to this median voter. We see that even outside of a political realm, the median voter theorem still holds because she is the deciding vote. In the past we have not moved in towards the median voter’s preferences, both sides sticking to our “extremist” point of view, which led to the middle person’s vote being a shot in the dark because of imperfect information. We wouldn’t act rationally and try to edge inward, sticking with our positions of a super healthy place or a super unhealthy place. This was because on any given day we had to guess what kind of food our median voter was in the mood for, and only sometimes would our perceived view of her preferences be the real view. So some days my side would be closer to her real preferences and some days the other side would be closer to her real preferences. But as we have gotten to know each other better, we have understood her preferences better. So with my new knowledge of the median voter theorem, I can now choose a restaurant that fits her preferences slightly better than the other side to convince her to choose our restaurant and we win the vote on a consistent basis.

In Defense of Aaron Burr as a Politician

 I’m a huge fan of Hamilton: The Musical, probably more than I should admit. During the second song, Hamilton meets Aaron Burr, his idol. As Hamilton talks to Burr, Burr offers political advice that doesn’t sit right with the fiery and passionate Hamilton. Specifically, Burr says, “talk less, smile more. Don’t let them [the voters] know what you’re against or what you’re for… you wanna get ahead? Fools who run their mouths off wind up dead.” Further along in the song, Burr declines to publicly voice his opinions and states: “you spit [what you believe], I’m ‘a sit. We’ll see where we land.” Hamilton responds with an iconic line: “If you stand for nothing Burr, what do you fall for?”. Lin Manuel Miranda, the writer of Hamilton, frames Burr as a weak politician unable to take a stand and credits Burr's lack of activism as the downfall to his career. Yet, based on the median voter theorem, I beg to differ. 

            The median voter theorem is the idea that politicians will shift their policies as close as possible to the center of the voter distribution to appeal to the median vote, and that this median vote is often the deciding factor of elections. A further interpretation of the theory is that "any politician who strays too far from voters at the philosophical center will soon be out of office." Under certain conditions discussed in class, the median vote is the deciding factor in elections. Thus, by appealing to this moderate vote, politicians are more likely to win. Hamilton frames Burr as a politician unable to take a stand and therefore unable to gain votes. Instead, Burr was simply appealing to the median voter by staying moderate and neutral in his policies. Burr may not have been an activist, but he certainly was a strategist. 

 

 

Externalities and the Piney Point Disaster

 After our initial discussion about externalities, the recent Piney Point leak in the Tampa Bay area came to mind. Piney Point is an abandoned phosphate mine in Manatee County, FL which was in danger of collapsing earlier this year, unless the government authorized the discharge of over 200 million gallons of nitrogen infused water into Tampa Bay. Many experts believe that this spillage caused a red tide breakout, which led to a major decline in tourism hurting many local businesses. 

I had a question from this event which I will attempt to answer here but would love any feedback from the rest of the class: when determining the externality cost factor associated with a production externality, how do we incorporate the cost of potential future disasters, such as this one? In this case, the mine had been shut down for over twenty years and the ownership company no longer exists. When the mine was operating, if the government were trying to assign a tax in order to push back production to the optimal level, would we have to include in our model the potential that the plant could have a risk of exploding and causing a major environmental disaster, even though this is something that only could happen many years down the road? I would argue that no we should not account for a cost like this when determining the optimal output level for Piney Point at the time of production, as it could not have been reasonably estimated that a disaster like this could have occurred. Additionally, although the actual mining operation did unleash the chemicals which ended up spilling into the bay and causing the red tide, I believe that Piney Point is ultimately not the one to blame for this issue because if government/environmental agencies had been keeping a better watch on the property after its abandonment, the plant may have not ever been at risk of explosion. Because of both the inability to predict the future problems of the mine and the difficulty in assigning blame for this crisis, I do not think the cost of a potential future crisis like this should have been incorporated when enforcing tax on Piney Point to determine its optimal level of output. 

Drying Rack Dilemma/The Importance of the Starting Point

I live in an apartment with 3 other guys in my fraternity and we get along very well.  We all like playing poker on Fridays, going to UVA games on Saturdays, and grinding out work during the NFL games on Sundays.  But when it comes to our weekly deep-clean of the living room and kitchen on Mondays, we clash about the need for a drying rack for our dishes.

Over the summer, my suite mate (Evan) who lived in Charlottesville had a drying rack out next to the kitchen sink.  At the start of the year, myself and another suite mate (Max) said it was taking up too much room and that we should get rid of it.  Evan and my final suite mate (Harry) both pushed back and said that a drying rack is a kitchen essential and that it didn't take up too much room.  In short, our apartment was split 2-2 on the need for a drying rack so neither side had a majority.  But, since having the drying rack out was the starting point/status quo, it is still out in the kitchen and Max and I have had to put up with it.  Click this link for a picture of the drying rack and let me know which side you are on.

Zooming out from my dilemma, it seems our founding fathers were aware that should a 50-50 split vote occur in the Senate, the status quo would remain.  That is why they wrote Article 1, Section 3 of the US Constitution, which grants the Vice President the right to cast a tie-breaking vote and give one side the majority.

Viewing Prisons as Insurance

In another one of my classes, the topic of the costs associated with incarceration was brought up, and it got me thinking with some of my newly learned public choice frameworks. First thing first, prisons are a public good. The “good” that prisons provide is a bit obscure and difficult to define in economic terms, but I think that I can appropriately define it as the protection of property and persons from harm that may be perpetrated by those who are known to harm property or persons. Prisons are public goods because the protection they afford to people and property is not excludable, and consumption of this protection is reasonably non-rival. (Prisons also must be provided through sovereign government and collective action because there is no rationale for private markets depriving people of their freedom.) There is, however, a different way of thinking about the value of prisons that is similar to our reading on redistribution as insurance. It costs about $37,000 per year (close to half the US GDP per capita) to hold an inmate in federal prison. Hopefully, it may stand to reason that those high costs are at least somewhat allocatively efficient under this different view Going along with the assumptions in Mueller 3.1, I will say that there are two classes of property, and each class has differing utility for their property and differing probability that they will be harmed by a prisoner who might otherwise be free. Under these assumptions, prisons and the protection they create is supposedly worth a large amount of money. The cost of this insurance is lowest with a membership of all society, to avoid the free-rider problem, and therefore, prisons may be best thought of as an insurance natural monopoly that protects persons and property. Through this blog post, I am aiming to analyze the costs of prisons in a different way, and considering that the costs of incarceration are very high, and the American prison system still has many concerning issues. I am wondering if public choice can justify this cost or if there may be a less expensive alternative framework introduced later in class.