Speak Softly, but Carry a Big Stick: The Prisoner's Dilemma in Taiwan

 Current events have become increasingly centered around military action as of late. Russia in Ukraine and China in the South China Sea provide news outlets with a constant supply of content. As Americans, we have concerned ourselves more and more with our position in a possible conflict with China. We do not fully know their capabilities but recent Naval intelligence models suggest their current standings in relation to our force. China, likewise, does not fully know our military strength but they have a basic analysis. With this in mind, a model can be formed as neither side has perfect information and makes decisions without inter-player communication. Within our Game Theory matrix (fig. 1), the US and China are deciding wether or not to send ships to International Waters around Taiwan, or in other-words act aggressively or peacefully. The Dominant Strategy for both nations would be to send ships and act aggressively. China, however, did not act to their dominant strategy in actuality during Nancy Pelosi's visit. There was a surprising absence of Chinese naval vessels in the waters around Taiwan, but a massive showing of US force (Teddy Roosevelt's Big Stick). While the option chosen in reality was Pareto Efficient (U Agg., C Peace), the dominant strategy equilibrium here would be Pareto Inefficient, as both countries would be better off without either one being worse off. The employment of outside means, such as the UN Counsel, could perhaps create incentives in order to move towards a more Pareto efficient outcome, like in the case of the Taiwan visit. The outside incentives from foreign allies made China take the "peaceful" approach in this instance. As the aggressor, the US gains so much from the International and domestic communities in terms of respect and military support. China has few allies internationally and so must stand on their own. Time will tell what will happen in the future, but for now, there is quite a prisoner's dilemma between the two Superpowers. 

fig. 1

Bad Voters as Pollution

I read an article for a philosophy class last year arguing that bad voters (defined as those who are ignorant, immoral, or irrational), have a moral obligation to not vote. The author casts his case in a duty to "not engage in collectively harmful activities when the cost of restraint is low" (10). That is, if you could drive 2 minutes down the road to a dump, you have a moral obligation to put your trash there rather than in the river behind your house. "We should pollute less because pollution harms us all, but I should pollute less because, all things equal, it is unfair for me to benefit from polluting as I please" (12).

I think that this moral duty is fairly simple and one that we should all be on board with. I think that it is not obvious that the moral duty applies to voting, but that is a philosophical issue, not an economic one.

What makes this argument interesting to the economist is the idea that if voting poorly really is like polluting the polls, then maybe we should apply the economist's toolkit on pollution rather than the moralist's (after all, how many people have stopped polluting because a philosopher told them it was bad?).

The economist would begin—after retching and cringing and crying at the claim that individuals should try to be slightly less self-interested and more moral creatures—with the inference that if bad voting is like pollution, then we should be treating it like an externality. The justification for this is elaborated in the philosophical article as well as the Johnson article we read recently. The social marginal cost of bad voting is far higher than the private marginal cost. Or, framed another way, the social marginal benefit of good voting is far higher than the private marginal benefit. The solution might be a tax-break or subsidy given to people who show up to the polls and pass a certain "political awareness/rationality" test. Alternatively, we could have an idiot-tax on those who try to cast votes and fail a "political awareness/rationality" test. Either solution, as well as any other I've thought of, sounds dangerous to democracy.

Is eDemocracy a viable method for increasing voter participation?

In the 1992 presidential election, businessman Ross Perot won 18.9% of the popular vote, a massive share of votes for a third party candidate. One of Perot's major campaign objectives was the implementation of direct electronic democracy. eDemocracy can be discussed in a variety of ways related to the distribution of media; however, the concept (if introduced) could also have a large impact on the marginal cost of voting. At present, voters must register to vote, drive to the polling station and forgo wages to vote. In order to increase voter participation, advocates of direct eDemocracy argue that SMS text voting, Internet voting, and telephone voting would decrease the value of C in the electoral participation model p*B - C + D.

In this equation, p*B is a minuscule amount in a typical election and civic duty and personal utility are encompassed by D. Proponents of direct electronic democracy suggest that the voting remotely by the click of a button would lower the marginal cost of voting, thereby increasing voter turnout by making the difference between C and D positive for a greater portion of the population. This argument neglects to acknowledge the other important factors that would influence the electoral participation model with the adoption of direct electronic democracy.

First, direct electronic democracy would likely lead to greater skepticism of the electoral process. The execution would involve collaboration with US tech companies who have been under popular criticism. This skepticism would not only deflate p*B but would also negatively impact the value of D as citizens lose faith in the political process. Additionally, the personal utility gained from visiting the polling station and voting in-person would be lost if voting took place entirely online. To avoid this impact, a thoughtful rollout of this proposal would still include in-person voting as an option on election day. While it is easy to get behind any effort to increase voter participation, the introduction of direct electronic democracy would need to be accompanied by extreme security measures (funded by taxpayer dollars) in order to ensure the electorate's faith in the process and actually increase turnout.

The Rationality of Voting in Virginia Elections

As I have been involved in two local political campaigns in the past few years, I have been confronted with the well-known fact that that voter turnout in local/state elections are significantly lower than voter turnout in presidential elections. Data complied by the Virginia Department of Elections shows that the average voter turnout rate (% voting of total registered) in presidential elections since 1976 is 75.2%, whereas voting turnout in non-presidential elections is only 48.1%. How do we account for this? And is there any way to overcome it?

Reading these statistics over the weekend made me re-consider Muller's Public Choice Chapter 14, particularly sections 14.1.2 and 14.1.3, 'A taste for voting' and 'Voting as a game of cat and mouse'. Mueller 14.1.1 clearly defines the rational-voting paradox, and sections 14.1.2 and 14.1.3 seek to in part, explain. Section 14.1.2 discusses how voting can be a private, symbolic act. I certainly engage in voting as a symbolic act, not because I believe my vote will affect the outcome. I don't believe that the absentee ballot that is sitting on my desk as I type this will affect the outcome of the upcoming local election. Rather, I find it much more plausible that voters such as myself vote to be 1) symbolic or 2) to be expressive. Both of these explanations are true in my life- that I vote to express my support on a candidates' position, and vote because I believe it is my civic duty to vote. All this to say that in my life, and in people I have talked to since doing the reading, Muller's explanations appear to hold true. However, Muller notes that as I expect more people to abstain, it becomes more rational for me to vote. Applying this to Virginia elections, since we expect voter turnout to be lower in local elections, it would be more rational for me to vote in those elections than presidential ones. But I feel more convicted to vote in presidential elections.... I am curious to hear other's thoughts on the matter.

Externalities in Formula 1 Racing

In 2021, a Dutch court struck down environmental activists' case against the construction of a Formula 1 track when it threatened endangered species in the area. The negative externalities produced by the construction of the track were considered in a context of social and economic gain from the construction of the racetrack and ultimately the Formula 1 circuit was granted an exemption from the constraining legislation (the 2017 Nature Conservation Act) which prohibited harm caused to plants or animals from human activity. This provides interesting insight into the role of government intervention in regulating negative externalities. That is, at least from my observations, some externalities matter more than others and not all externalities are salient enough to warrant intervention – just as the negative externalities on the endangered species warranted no intervention. The Dutch court made the argument that the social marginal benefit of the track construction exceeded the social marginal cost of the endangered species lost. Or, rather, that the construction of the track would allow for an expected "economic impulse for Zandvoort and the circuit" that exceeded the benefit of protecting these species because it catered to "a sporting event with one of the largest audiences worldwide."

In the above case, the inability to assign clear property rights to either the Dutch citizenry or the circuit for the land in question keeps the parties from reaching a Coasian solution. A further problem exists here: even if property rights did exist, the racing circuit has far greater bargaining power (in terms of funding) than do environmental activists in the Dutch citizenry. Thus, an outcome in which the circuit's property rights take precedence over the environmental activists' concerns might not represent an efficient allocation of resources or a greater present and future benefit to society. 

Public Choice Theory & UVA Election Turnout

In the March 2020 UVA elections, turnout for both the Honor referendum and the Student Council presidential elections was around 10 percent. That number increased to 23.8% and 17.4%, respectively, in the March 2022 elections. Why is this turnout relatively low? One’s marginal costs of voting are, no doubt, lower in UVA’s elections than federal or local government elections, as voting can be done online. But, the half hour it takes to vote certainly contains high opportunity costs, especially for students in the middle of midterm season. The marginal benefit can be measured by the chance of affecting the outcome multiplied by the benefit of the desired result. The probability of affecting the outcome is certainly higher than for a public election, but (given the ~6,000 student turnout of the 2022 elections) is still about the same as lifetime odds that one dies of sunstroke (link). And the utility or monetary value of getting a desired outcome is also likely very small. Some argue that -- beyond lobbying and maintaining a budget -- Student Council is ineffective, and most students never have to deal with the Honor system. So, here, again, we have the classic public choice conclusion of the costs of voting outweighing the benefits.

I would argue that if, from a normative perspective, we wish to increase UVA voter turnout (which, many seem to want to do), there would be (at least) two economic ways of doing so. First, use the social pressure thesis to increase costs of not voting. This was done to a certain degree in the run-up to the single-sanction Honor referendum of 2022, which might help explain that vote’s relatively higher voter turnout. Many high-profile CIOs and students endorsed the referendum, arguing that a vote in favor of the change was a vote of anti-racism (see, e.g., this poster retweeted by now-Student Council President Ms. Cecilia Cain, containing a statement made by a majority of the Honor Committee). College students today generally wanting to be seen as anti-racist, this, I think, offers a good social pressure that increases the costs of not voting. Second, UVA and the University Board of Elections could make efforts to literally increase the monetary marginal benefit of voting. This has been done in the past by entering every student who votes into a raffle for one of about 36 chances to win a prize valued at about $30 (e.g., a Bodo’s gift card). This would increase each students’ marginal benefit by about $0.18 (36/6,000 chance to win a $30 prize). While some might decry such efforts as corrupting the ideal of student self-governance, I argue an economist would see this as a potentially effective way to incentivize voting (and as we all know, incentives affect behavior!!). All in all, as calls to increase UVA voter turnout continue, I think it would beHOOve the University and its students to consider how economic and social incentives can be a tool to impact turnout. 

 

Rational Ignorance of Bid Day

    Until today, there has been an email sitting in my inbox with a google form asking me to vote on a bid day theme for my sorority. The google form takes approximately 45 seconds to fill out, and yet for a week it sat there unopened. One might think I was simply a lazy bum, but after reading Johnson I realize that I was completely rational in this decision. You see, my marginal benefit of one “candidate” (theme) winning over the other is essentially 0, maybe 0.000001 if I had to put a number on it. I would not pay any amount of money to guarantee one outcome over another. That being said, even with the electronic format of the ballot, the cost to me to vote is still above zero, because it will cost my time and attention for approximately 1 minute, which is worth about 16 cents if I value my time at say $10 an hour. Even without multiplying my marginal benefit by the odds that my vote determines the outcome, for which the lower bound is 0.0067 (1/150 members of my sorority), it still wouldn’t be rational to take the time to vote.

    Today though, I finally filled out the google form, and you want to know why? The social pressure hypothesis. I ran into a girl from my pledge class on the corner, and she asked me what I voted for on the bid day form, and I felt ashamed admitting that I hadn’t filled it out, so I went on google forms right there and completed it! Even though I finally voted due to social pressure, I didn’t take the time to look at the attached slides and inform myself about each of the choices, I just picked one that sounded good- to be completely honest I don’t even remember which one. Yet again, I aligned with the model from Johnson, I was rationally ignorant. Thank goodness we read Johnson this week, or I would have just considered myself lazy!

Softball Externalities

    Softball has always been a huge part of my life. The house we used to live in had a batting cage. It was a way for me to practice softball from home.  It was a dream come true for parents who hate driving their kid to local ball fields to practice....or so they thought. The cage had a sound system, and I, of course, abused that sound system. I played anything from Mac Miller to Juice World to pump me up when practicing. Why put a sound system in the cage if you don't want the user to jam out? The constant blaring music was an issue. My brother was a tutor for some local middle schoolers. They would come to our house for the massive smart board we had in the basement. Apparently, it was a necessity. The blaring music kept his students from being able to focus. There were eight kids that would come over to get tutored, and I was the reason they're grades weren't improving. 

    After talking about these negative externalities, I realize that my use of the blaring sound system caused a negative consumption externality for my brother. An article by the Tampa Bay Times replicated a similar issue.  My brother couldn't tutor the kids with me blasting music in the backyard. My practice time wasn't going to change, and he was not moving his tutoring time. A Coasian solution could not be pursued, due to the lack of property rights. Neither of us paid for anything in or around that home. The solution could only be resolved by the government, and we had none. Dad was the closest thing to that, and he wanted no part of this fight. The fight still continues to this day. I play music really loud when I am home, and my brother complains. 

    

UVA Nonvoting

    Each year UVA Student Counsel has elections and each year they send repeated emails to UVA inboxes practically pleading for students to vote for representatives and referendums. Yet, each year resulting voter turnout is rather low. Even in March of 2022, when students voted to reform the honor sanction, a seemingly substantial issue, voter turnout was only 23.75% of the student body. This clearly came at no surprise to those who make the elections rules as only 10% of students were required to vote (with 60% of the 10% approving) for the referendum to pass. To give context, the US, which has been falling behind other democracies in voter turnout, has consistently reached the mid-fifties percent in the past three presidential elections. 

    

    Why do so few UVA students vote then? At its core, Johnson's argument on nonvoting presents a fairly concise flow--nonvoting increases as time value increases and as probability of a vote mattering decreases. First, let's deal with the latter assertion on the probability of a vote mattering. If we compare UVA elections to US elections, we see the probability of a vote mattering is actually greater due to the simple fact that UVA's student body is much smaller than the US voting population. Yet, UVA voter participation is drastically below that of the US. So, if we follow Johnson's logic, the issue must occur with the the first assertion--time value. What I'm assuming here is that this is rather relative. Your time value is compared to the significance of voting ( does the outcome actually effect the you?). In this light, I presume that UVA students have high time values, not in real terms more than the average US citizen, but in relative terms as student council representative and referendum elections effect so little of student life the benefit of voting is insignificant. Even with the honor sanction reform, very few students find themselves in the position where they would benefit from reform, so for most it is a logical solution, following Johnson's thinking, to either remain rationally ignorant or spend time elsewhere via a nonvoting activity. The reality is, a students time value does not have to be that great for it to be comparatively greater than the time spent voting for Student Council and about 76% of students thought this in March of 2022. 

RSI and Motherhood

The Mueller readings for this week caught my attention in their attempt to qualify rational self-interest in voting through a taste for voting, voting as game theory, minimax-regret strategy, and the expressive voter hypothesis. Psychic value, regret, and expressive voting as theories appeared to give greater consideration to non-economic and more behavioral variables, which helped me to better understand a question I’ve been struggling with this past week: if women (especially single women) have rational self-interest, why do they have children? And what can we observe about redistribution as a public good through the lens of motherhood? In traditional cost-benefit analysis, the cost of having a child would appear to be extraordinarily high – according to the USDA, the average cost of raising a child in the US is now $233,610 (not including the cost of higher education). Other costs incurred may include damage to the body, nightly sleep, relationships with others, leisure time, and future income.

The benefits of having a child are more difficult to pin down than the costs. Maybe having a child provides financial opportunities in the future (i.e. help on the farm), or maybe having a child is an accident and the costs of getting an abortion are prohibitively high. For some, there is psychic value to having a child, if one has a “taste” for children. For others, maybe having a child is a response to the social shame of not having a child, by parents or peers, or a response to the imagined regret of not having a child. Maybe having a child is a way of expressing a preference for a partner, solidifying a commitment to another or fulfilling their “taste” for children. Maybe having a child is simply a biological tradition for humans that creates an urge to reproduce. In financial terms, however, the cost of having a child would appear to exceed the benefit of having or keeping one, implying that many women and families have an interdependent utility for their child that is greater than 1, or that motherhood is essentially a public good: extreme redistribution from parent to child is inherent to motherhood (especially single motherhood), and is not especially dependent on the mother’s marginal utility of income.

Rick and Morty, Public Choice Edition

     This September marked the beginning of Rick and Morty's sixth season. In episode two, Rick: A Mort Well Lived, Morty has been fragmented into 5 billion pieces- in the form of non-playable characters (NPCs) in the show's iconic virtual reality arcade game, Roy: A Life Well Lived. To save Morty, Rick joins as the player character Roy, and must attempt to convince the collective, 5 billion NPC Mortys, to escape the game with him. Rick must escape with as many Mortys as possible, to ensure that the whole, united Morty successfully represents the 5 billion fragments. As you can imagine, Rick's mission exhibits many of the problems encountered in public choice. 

    Although the Mortys do not line up at the polls to cast their votes, they "vote with their feet" (thank you Tiebout) by either escaping with Rick or staying in the game. We see the rational voter in of the objections to leaving: "we're basically giving up our lives to become a part of a stranger". Although voting does not generally come at such a high cost, individuals who vote incur a cost for little payoff- like becoming one five-billionth of a voice in a whole- making the act of voting irrational. Rick understands this; As he plans to leave the resistant 8% of Morty behind, one five-billionth of Morty threatens, "I'm not leaving without all of me". Rick replies, "What? Oh no, let me crunch these numbers. 8% of five billion plus one- My God, if you stay, it changes nothing! Bye." 

The Dollar General Problem

    I'm from Lookout Mountain, Georgia, in a pretty, somewhat rural area. At the end of my family's street lies a plot of land which, for years, has sporadically been a site for different construction projects. In recent years, there started to be rumors that a new Dollar General was going to be built at the end of the street. My family and our neighbors were displeased at the thought, fearing a few of the different negative externalities which it might create such as being an eyesore and bringing increased traffic to the area.

There were talks among some neighbors who were more passionate about the issue than my family about writing a petition against it being built (and I don't remember whether they did or not), but, ultimately, a new Dollar General was constructed at the end of our road. It certainly has created some negative externalities. It looks better than many imagined, but the big yellow sign certainly doesn't improve the ambiance of the area. Apparently (I didn't realize until a google search a few minutes ago) there have also been negative externalities stemming from the supply trucks getting stuck on the road going up or down the mountain, as you can read in this article: https://www.chattanoogan.com/2022/7/13/452367/Lookout-Officials-Cite-5-Incidents-With.aspx.

    My family has noted that it has actually been a convenience to have the store at the end of the road. It's nice for my mom or dad to be able to drive two minutes to grab milk or eggs if we need it. I don't know what other neighbors would say, but, at least for my family, our marginal benefit from the new Dollar General has been greater than we would have expected in relation to our marginal cost. If the same can be said for the rest of those around us, the social marginal benefit has at least been closer to the equaling the social marginal cost than originally imagined. While there may be some dead weight loss still, there is certainly less created by the negative externalities than I, among others, might have thought there would be originally.

Case of the Stolen Sunglasses

This past week, my roommate Emma has been dealing with a case of stolen sunglasses. She was wearing them on Mad Bowl a couple of weekends ago, and they were taken off her head by some of her friends. These "friends" then refused to give the sunglasses back, took them home, and have been holding them hostage for the past two weeks. Emma, being an equipment manager for the UVA football team, needs her sunglasses for gamedays or she will not be able to perform her job. She has been texting them non-stop trying to retrieve them from their house, but these friends find it amusing to keep them locked up. 

I suggested that Emma use Coase Theorem to retrieve her stolen glasses. The Coase Theorem states that when there are conflicting property rights, the involved parties can bargain or negotiate to an efficient outcome when economic conditions are ideal. It may be clear to others that Emma has property rights over the sunglasses, but if the friends try to question her, she could prove her rights with the receipt when she ordered them or photos of her wearing the glasses. If the friends feel it necessary to keep the sunglasses, then they should pay Emma $90 for using them or the cost to her when she originally bought them after taxes and shipping. However, if they find that these marginal costs of keeping the glasses exceed the marginal benefits or amusement they find in watching Emma beg, they could give her back the sunglasses, and the issue would be resolved. Coase Theorem unfortunately is a model we use when economic conditions are perfect. If they continue to refuse Emma's requests, then she may have to get the government involved to enforce her rights, or in this case ... the UJC.