Is It Rational To Eat Dessert On A Diet? The Economic Perspective

Economists know that there is an optimal level of a bad thing, and that the optimal level is not necessarily zero. This phenomenon is most often mentioned in the context of negative production externalities, for example, where there is a rational level of pollution that is greater than zero. Last week, however, we examined this economic understanding as it applies to voting and political information, an area in which there are not obvious negative production externalities. We discovered that individuals are rationally ignorant about many political issues. The rational level of ignorance for different subjects is found by graphing their marginal cost and benefit curves and calculating where the curves intersect, or where the costs of ignorance equal the benefits.

The economic inference of the rationality of a non-zero level of a “bad thing” applies in a myriad of everyday situations. One such arena is dieting. Eating sweets on a diet is generally considered to be irrational -- why behave in a way that works against your goal of losing weight? According to our economic principle, however, this behavior, of completely cutting out “bad foods” is likely a mistake.

Looking at the rough graph above, we can see that the marginal benefit of eating a small amount of dessert per week while on a diet is relatively large and the costs, or overall harm to the weight-loss process, are relatively low. Therefore, there is an optimal amount of dessert to eat per week while on a diet. While dietitians would likely have to calculate the exact number of calories where the costs and benefits of dessert meet, the economic theory suggests that it is rational to eat some amount of dessert while on a diet. Luckily, diet science agrees with the economic perspective, so go ahead, enjoy that piece of cake!

Golden Balls

For the last month or so, my apartment has been plagued by addiction—addiction to what may be one of the most entertaining shows in baking show history: The Great British Baking Show. While this is a wonderful show that should be seen by all of us across the pond, there’s another British masterpiece that I think we would enjoy far more. Golden Balls.

Golden Balls brings game theory to life—literally. Golden Balls is a British game show based on the prisoner’s dilemma. Except it has a twist. Instead of the individual contestants being placed in separate environments, they are placed at a table directly across from one another… in front of a live studio audience. The game has a cash prize and two contestants. The allocation of the cash prize is determined by two decisions made by the contestants. Each contestant has two options: split or steal the pot. If both players choose to split, they split the entire pot. If one player chooses to split and the other to steal, the player that chose to steal gets the entire pot. However, if both choose to steal, both get nothing. So basically, your classic prisoner’s dilemma situation.

But the twist is that these people aren’t making this decision separately. There sitting 3 feet away from one another and are encouraged to negotiate—let the mind games BEGIN! Unsurprisingly so, this set up is the main source of entertainment. In many economics classes we have explored the idea that when allowed to discuss we would be one step closer to minimizing issues of imperfect information. But that’s not necessarily the case. The problem here is that we are working with humans who admittedly have incentives to lie, cheat, and steal—especially if they don’t have established trust with the other player. In this game, they don’t have that incentive. The contestants are complete strangers to one another. The challenge here is getting the players to trust each other.  

In the clip above, one player attempts to convince the other to choose “split,” promising that he will split the pot after the show ends. But what incentive does that player have to trust him? He very well could just go back on his word, ignore the agreement, and go off on his merry way with the whole pot. Besides a very steadfast moral compass, the contestants have little to no loyalty to one another. Without that loyalty, the power of persuasion becomes the imperative—and there, the strategies are endless.

The unnecessarily competitive nature of college sports

College sports are a ruthless and full-time pursuit. Student athletes often spend hours or more working on their athletic craft rather than focusing on their academic performance (up to twice as much as the 20 hour weekly limit set by the NCAA). This doesn’t have to be the case however. Let us assume the college athlete is a win-maximizer. Their goal is to maximize athletic success, as measured by wins, while exerting the least effort, measured by time spent training and negative impact on academic performance.

Consider the choices made by Athlete A and Athlete B, two college athletes set to play each other. Their optimal choice would be to both rest. Let us assume that the outcome of the game, in terms of wins, would be the same as the outcome would be if they both exert extra effort (due to equal marginal benefits of training). In either case, they would tie or have similar expected win probabilities. However by jointly exerting less effort, they are better off (the same payoff, but less cost).


If one player rested while the other trained, the player who put in extra effort would be better off because they would do better (win more) than they would in either the effort/effort scenario or the rest/rest scenario. The extra effort (extra cost) would be worth it. On the other hand, the player who rested would be worse off because even though they exerted less effort (lower cost), their payoff would be lower because they would have a much lower win payoff.

While the ideal individual scenario for you as an athlete is to exert the extra effort to win while your opponent rests, the nash equilibrium is for both players to exert extra effort, leaving them with the same payoff as they would have if they both rested, but with the added costs of training. The nash equilibrium, from both players playing their dominant strategies, is not Pareto optimal. Thus, this is a prisoner’s dilemma.

My brother got married!

Over Fall break, my older brother Patrick got married in the Basilica of the Sacred Heart at Notre Dame. Patrick's younger brother, Kevin, was the best man and gave an incredible speech. Patrick and his (now) wife, Maggie, had a nearly two year long engagement because the procedure for reserving the Church for a wedding is an incredibly complicated, and drawn out process. In the wedding planning process, there were really three parties that wanted to have a say in when the wedding would happen: The bride's family, the groom's family, and the engaged couple. All parties agreed and were excited to have the ceremony at the Basilica at Notre Dame, but there was some disagreement about when the wedding should happen. Some dates worked better for some parties over others, and it didn't help that the reservation process was so convoluted that a decision had to be made well in advance. Patrick and Maggie preferred to have the wedding in October over having it in May, over having it in December. My family preferred to have the wedding in December, over having it in October, over having it in May. Maggie's family preferred to have it in May, over having it in December, over having it in October. If there was to be a vote, where each party had equal say, October would beat May, May would beat December, and December would beat October. In this situation, Condorcet's Paradox is realized. Even though all the parties have transitive preferences over when the wedding should be, the group preferences become intransitive when voted on under majority rule. The funny thing is, Maggie and Patrick had a little more say than the other two parties involved, considering they were the ones to be married. Because of this, they almost acted like the "Senate Majority Leader," in the sense that they could "set the voting agenda" and pick the winner. Given that the wedding occurred over Fall break, it's clear that Maggie and Patrick got their way, though all three families ended up having the best time at the wedding regardless of their preference for when it should have happened!

The Negative Externalities of the Juvenile Justice System

This summer I read Just Mercy, a memoir of a lawyer who represents the poor, wrongly condemned, and women and children, especially those on death row. It shares many anecdotes of various cases he has come across, including one of a young child who was tried as an adult for capital murder due to unfortunate circumstances. In prison, the boy faced many difficulties, including abuse and trauma. This is not an uncommon story; in fact, many people who are incarcerated for smaller crimes leave victim, or even under the influence of, other criminals. This is depicted in the biographical crime film Blow, in which the American cocaine smuggler George Jung says, “Danbury wasn’t a prison. It was a crime school. I went in with a bachelor of marijuana and came out with a doctorate of cocaine.”

Incarceration has many unintended consequences; yet, as it reads in Just Mercy, “[b]etween 1990 and 2005, a new prison opened in the United States every ten days...business interests that capitalize on prison construction—made imprisonment so profitable that millions of dollars were spent lobbying state legislators to keep expanding the use of incarceration to respond to just about any problem.” Many may agree that there is an overconsumption of incarceration, and this may be explained by the economic principle of externalities. Although a bit more complex than the traditional textbook examples, we can argue that there is a negative consumption externality when the justice system "consumes" jail time by sentencing criminals while taking into account only private, and not social, marginal benefit. When juries and judges deem criminals worthy of jail time or even death row, they do not have to take into account the great costs born by the individual criminal such as trauma and by society as a whole by creating worse criminals, as described in the above examples.

One example of a potential public-sector remedy that can be applied from class is quantity regulation. The government could perhaps cap the number of prison beds that local prosecutors can use each year in each state, with a fee for further imprisonments. Similar to the pollution rights we talked about in class, states could sell their beds to others. Although this would not be a perfect solution by any means, the justice system would be forced to consider other punishments and be more selective with its imprisonments.