Sunday, October 03, 2021
Omnibus Bills, The Modern Day Logroll
Jury Voting Costs for Criminal Trials
In the American courts system all criminal trials require a unanimous jury decision to pass down a verdict. Hence Jury voting is an interesting application of External Costs and Decision-Making Costs as described in The Calculus of Consent chapter 6.
The External Costs in a criminal trial are disproporiantly high for the accused since a conviction can result in the revoking of the inalienable rights of property, liberty, and in some states even life. However, External Costs for the Jury are low since it is unlikely that a jury member's utility is dependent on the livelihood of the defendant. I feel the requirement of a unanimous verdict for criminal convictions is justifiable due to the severity of the external costs imposed upon the defendant under a guilty verdict; the limiting or revoking of fundamental individual rights that pre-exist government. An implication of the unanimity requirement is higher decision-making costs since all jury members must vote for the same verdict (analogous to unanimous preferences). The main cost for jury members is the opportunity cost of their time which is best illustrated in the movie "12 angry men" where the protagonist is the holdout on a guilty vote which prevents another jury member from being able to watch a baseball game that night.
It is interesting to study a non-economic field, Law, from a Public Choice economics perspective. Curious to hear others' thoughts about how I applied the concepts of External Costs and Decision-Making Costs or anything another perspective you all have about instances of collective choice in trials/law.
Covid-19: The 2020 Election's Voter Subsidy.
We are all familiar with the with the formula that ultimately decides whether or not a citizen exercises their Civic Duty and votes: P*B+D-C. This formula holds that if P*B+D > C, the rational voter will cast a vote in the election.
The 2020 Michigan turnout for the presidential election proves that the effects of and methods used to mitigate the risks of voting during the 2020 election greatly decreased the cost of voting, causing the highest voter turnout in decades. This election was just as controversial as the 2016 election in regards to the candidates selected, yet Michigan had a 14% increase in voter participation in 2020 when compared the 2016 election.
This is a direct result of Covid-19. People were stuck at home, out of work, or with a much more flexible schedule thanks to new work at home methods. These effects of the Covid-19 pandemic greatly decreased the cost of voting. This is best seen in the widespread use of absentee voting, where a ballot is dropped off at ones home and sent off to the polls from their mailbox. Fifty Seven percent of votes casted in the 2020 election in Michigan were from absentee ballots, a time and cost effective way to exercise one's political voice.
Covid-19 did the impossible and made voting more affordable. If we can learn anything from the Pandemic and Michigan's story, it is that allowing easier voting access significantly increases voter participation. This is a fact that should not be ignored by politicians devoting their life to increase civic participation!
Tiebout and the current Congress
With the new $1-3.5 trillion infrastructure bill being debated in congress, I thought back to Tiebout’s theory of local expenditures, as well as the political science theory of devolution, which similarly to Tiebout theorizes that governments make better decisions, both with expenditure and legislation, the more proximal they are to the people they affect. This theory would suggest moving government power from the Federal government to states, and from states to localities.
Knowing the tendencies of the current Congress and the Biden
administration, it would be reasonable to conclude that localizing expenditure
is not one of their priorities, but I would like to contrast the infrastructure
bill with another bill that was passed into law in may that does focus on local
expenditures.
This bill grants $315 Billion to states and localities in
order for them to help remedy their communities’ issues coming out of the COVID
pandemic and recession. I believe that Congress and the Biden administration were
forced to realize the merits of Tiebout and Devolution in this issue, as the
vast different localities all across our country need to spend money in
different ways in order to for Federal assistance to succeed in its goal of
repairing localities and local economies.
The last point I would like to make is to contrast the
amounts that Congress and the President allocated to localized relief vs a
federally administered infrastructure package which all proponents will be
pointing to on the campaign trail to get themselves re-elected. Setting aside
the issues at hand in each of these bills, I conclude that our current politicians
only care a fraction as much about Tiebout’s useful theory as they do about
being able to take credit for solving problems rather than passing the credit
down to Government actors at a lower level.
Beach house and median voter
Recently me and my friends decided to go to Virginia Beach for fall break. When we were picking AirBnbs, disagreements arose. After eliminating some less preferred options, we came down to two options: one beach house that comes with a hot tub and a swimming pool at a 240$ per person 2-day rate, and a cheaper option in Norfolk at a 150$ per person 2-day rate. 6 kids with higher monthly allowances strong rooted for the more expensive option, whereas 5 of us voted for the cheaper option. The 6 people who clearly preferred the option A stated their reasonings very straight-forwardly, while people with weaker financial capabilities barely spoke up (they quietly voted for option B and took no further actions) out of embarrassment. Few moments after the voting took place, one person who voted for option B dropped out of the trip (abstention) because he felt alienated, as the group policy preference was clearly left-leaning (illustrated in the graph). Feeling also very strongly about option B, I first decided to mobilize right-leaning group members to speak up about their financial challenges and I thought maybe the left-voters will be empathetic and change their vote. But since I just learned about voting behavior in Econ 3330, I thought to myself: maybe I should instead find the median voter, and we can potentially come up with an option that is priced in between while also having some perks that may satisfy voters from both sides. I then went to talk to some people in the friends group that appeared to be more neutral on their decision, and surprisingly found out that 2 option A voters and 1 option B voter actually did not care much about about which house we end up choosing.
That became the turning point of this vote. The median voter, one of the three people I talked to, took the initiative of speaking up in the group chat, saying that we should try harder to find a middle option, otherwise she's gonna drop out too. We will then have less people to split the cost and the price per person will be even higher and nobody wants to see that happen. We did, in the end, find one that falls just in between at a price of $200, that is in closer proximity to the beach than the previous option B, comes with one self-heating swimming pool, however has 1 less room than option A. People from both sides ended up cooperating, and reached an consensus on this new housing option under a simple majority. This experience reinforced what i learned in this class that, the median voter's vote is decisive in many instances when majority vote is decisive, the policy space is single-issued, and individual preferences are single-peaked.
A Downs’ Perspective on the 2021 German Election
According to Downs’ analysis of multi-party systems, parties will strive to distinguish themselves ideologically from each other and maintain the purity of their positions. And this conclusion would normally stand in German politics, as small parties can have a real presence in the Bundestag as long as they retain merely 5% of the vote. But this can change as coalitions are formed post-election in an effort to gain a majority. Parties that have complementary ideologies/interests will find it easier to form coalitions, and this is currently seen with S.P.D’s lack of interest in forming a coalition with the AfD party, due to their extremism.
Another interesting note from Downs’ analysis of multi party systems is his emphasis on ideology of parties. He states that voters in multiparty systems are much more likely to be swayed by doctrinal considerations than voters of two party systems. Germany’s mounting pressure for action in regards to the climate crisis and recent flooding can be attributed to the Green Party’s best ever performance in a federal election, with 15% of the vote. We can see that ideological interests based on the climate are better reflected in a multi-party system, and can have significant influence in election outcomes.
Saturday, October 02, 2021
College Apartment Decision-Making
Friday, October 01, 2021
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.
Wednesday, September 29, 2021
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.
Tuesday, September 28, 2021
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.
Sunday, September 26, 2021
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.
Saturday, September 25, 2021
What is Democracy Good For Anyway?
The last several readings have covered the numerous failures of democracy and majority rule. From low voter turnout, to rational ignorance, to cycling and intransitivity, democracy is plagued with issues that undermine several of its founding myths. Since civics class simply inculcated falsehoods like “every vote counts”, we cannot rely on widely accepted beliefs to evaluate democracy. What advantages, if any, does democracy provide over other forms of government?
When listing the advantages of democracy, most people would point to the vote as the sacred mechanism by which every individual can make their voice heard. If you don’t like something about your government, you can vote against it and move policy towards your preferences. This falls apart when you realize that there is almost no chance that any individual actually affects the outcome of a democratic election. No matter which way you vote, the outcome of every election is almost guaranteed to be decided by everyone else’s vote, not yours. This means that the individual’s preferences are completely disregarded in a democracy. If my vote represents the influence I have over my government, then I may as well be living under a dictatorship.
Democracies are, in general, much nicer places to live than dictatorships. How can this be explained if democratic governments are not beholden to individual’s preferences? In most dictatorships, the government is controlled by a small group of powerful people. The majority of Sparta’s population were slaves, and Saudi Arabia is run by an insular royal family. Democracies, on the other hand, are dictatorships of the majority. This is a significant improvement over oligarchy. Powerful inner circles can still benefit even while the majority of the population starves. In democracies, things that greatly harm the majority like famines and total authoritarian control over freedoms are usually avoided. This still leaves room for total oppression and exploitation of the minority, the disenfranchised, and the non-citizens, however. Democracies, like all power structures, create civic religions that propagate flattering lies about the way they work. It is important to separate myth from reality and evaluate democracy on its true merits and true failures.
Thursday, September 23, 2021
The Rational Voter and Social Media
“Finger the Pulse” – a comedy segment on Trevor Noah’s “The Daily Show” – highlights the rational ignorance of voters. In this segment, Jordan Klepper attends Trump rallies and interviews supporters, asking them about their knowledge of political issues. With their response, he fires back with a witty comment, alluding to their ignorance or misunderstanding of political knowledge.
One of the interviewees admitted that she does all of
her research on politics – through Twitter and Facebook that is. To this,
Jordan Klepper responds that she puts facts and nonsense together. Jordan
agrees with the judgement that social media platforms are inherently biased
(from algorithmic and herd mentality factors) and vessel widespread misinformation
campaigns. Despite this, it’s incredibly rational for this woman to utilize
social media platforms for election information. When analyzing her marginal
costs and benefits of gathering information about politics and candidates, it
might be costlier for this woman to go out of her way and find unbiased,
credible sources to politically inform her. The convenience of social media in consuming
political information supports the marginal benefits one gets from using it as
a news source. Additionally, through the in-app adjustments made to limit
the misinformation circulating platforms, finding information outside of social
media platforms has an even greater marginal cost.
Although segments like “Finger the Pulse” take a jab at ignorant
and opinionated comments voters make, they highlight the preferences that
people have in gathering electoral information.
Wednesday, September 22, 2021
Coase on Piracy
Illegal film/television streaming websites are a product of the last 20 years of technological advancements. Entire movies and television shows are uploaded online for the free consumption of viewers without legal permission or payment to the production companies who own them. These websites generate profit from advertisements, either from real brands or hackers who place malware in the ads. There are few ways for the government to regulate these websites. If one site is taken down, multiple sites pop up in its place as there are low barriers of entry. Currently, there are about 84,000 illicit entertainment sites.
The Coasian thought model solution to this problem would be to define the property rights, hold who is liable for the damages accountable, and allow free-market negotiations to occur. This would force the quantity produced to be equal to the allocatively efficient quantity. In this case, the production companies would own the property rights, and the streaming websites would be liable. If they were to negotiate and the marginal social benefit of producing is greater than than the social marginal cost, the streaming websites would continue uploading the movies but for a cost, which would, in turn, bring down the number of films uploaded, leading to the quantity being at its efficiently allocated amount. However, if the cost is not greater than the benefit, the sites would shut down. This solution is only applicable if there are no limitations, which we know are not true. Due to the number of websites, we would face the assignment problem as we could not quantify how much damage each website produces. Neither the website nor the production studio would have an incentive to reveal this information. Further, we live in a world of transaction costs; the transaction cost of finding each website and negotiating with them would make the costs higher than the benefit of going after the website for their illegal use of the copyrighted property. Unfortunately for the production companies, they will not receive the profit from the movies being streamed on illegal websites as the costs of attempting to reclaim potential profits would outweigh the benefits.
Sunday, September 19, 2021
Revolutionary Business Seeking Investors
Dear Econ 3330 Classmates,
Every presidential election, I find myself stuck between a rock and a hard place. I can either act irrationally and go vote or stay home and be talked down to by my politically active friends, who flex their "I voted" stickers on their Instagram stories. Well I have had enough of this, so I will be starting a new sticker business! My business will sell "I voted" stickers that are identical to those you receive after voting at the polls. I would say the average social cost I incur for not voting is approximately $5. I figure $5 is the correct amount because it is the amount I would pay for my friends to not heckle me about not voting. Therefore, this is the price that I will set for my stickers. From this site, I can buy 500 "I voted" stickers for $14. This is approximately $.03 per sticker, so if I sell each seller for $5, I can make $4.97 per sticker! This margin is incredible! If you would like to consider investing in my business, please send me an email and we can discuss!
Sincerely,
Wilson Friestad
Graduated Income Tax vs. Flat Tax
In the United States, we have a graduated or progressive federal income tax. This means that the more money a person makes, the greater the percentage they will pay of income tax. One of the main intellectual defenses for the graduated tax is that it is fair because those who make more money pay a higher percentage of their income in taxes, and value each dollar of their income less than those who don't make as much. Thus, it would seem reasonable that the rich would pay a greater percentage than the poor. However, that is poor economic reasoning. This argument does not take into account the utility of each extra dollar for the rich versus the poor. John D. Rockefeller, the richest man in the world in his day was asked how much money was enough for him. His response was "A little bit more." This shows that a person's wealth is not indicative of their marginal utility for their next dollar. As a result, one cannot assume another's preferences and utility rates simply based on their wealth.
Instead of advocating for the graduated income tax, those who want everyone to "pay their fair share" should push the federal government to revert to a flat tax, where everyone is taxed at the same rate. Although a situation where everyone told the government their marginal utility for each dollar would be most desirable, in reality, it is not practical, which is why a flat tax is the best option. The rich will still have to pay more than those with less money but will pay the same percentage of their income in taxes.
When Votes "Matter"
I have worked on a couple of political campaigns at the grassroots level. This mostly involved registering voters and knocking on doors. I once worked on a campaign with an incumbent Democratic congressional candidate in a very blue area. The strategy of this campaign was to make sure that the Democratic base turned out enough. While I knocked on doors, countless voters told me they did not want to vote because the incumbent was going to win. The word "pointless" was thrown around a lot. Both voters and campaigns know that elections all boil down to swing states and districts, so why show up if you live in a strong blue or a strong red area?
Returning to the paradox of voting, many voters already think that the probability of influencing the election (P) is small. P is infinitesimal in these reliably blue and red states. The only way I and other campaign staff convinced voters to show up was by suggesting that they would dislike the candidate if the opposing party won. As a result, they would regret not voting. I did not realize that we were using the minimax regret to try to convince people to vote. From my personal experience, it is very persuasive and does increase turnout. Hatred of the other candidate drives people to the ballot more than love of their preferred candidate. In retrospect, we likely made them overestimate their marginal benefit of voting by talking to them about the consequences of a loss.
First Year Dorms as Localities
As a first year, I was assigned to live in Gooch-Dillard, suite-style dorms that are located on the outer edge of Grounds. I recall being extremely annoyed by this assignment and complaining about the walk to classes pretty much constantly. I specifically remember a situation in which I asked my RA why first year dorms were both randomly assigned and uniformly priced. In my mind, it did not make sense that I, in Gooch, could be paying the same amount as someone centrally located in Kent-Dabney. Furthermore, I was sure that there were people who may have preferred to live in Gooch because of the suite-style layout. When reading Tiebout, I was reminded of my initial arguments for why the assignment of first year dorms should be treated as a free market in order to maximize utility.
Tiebout argues that with no costs of moving, full information, and heterogeneous localities (among other assumptions), people will reveal their preferences for the allocation of public goods by their choice to move somewhere. In my scenario, I am treating UVA as the federal government, the dorm buildings as localities, and the cost of housing as the taxes paid to the localities. The public goods provided from those taxes would be specific to each locality. For example, Gooch-Dillard would provide larger rooms and Kent-Dabney would provide a central location. Furthermore, taxes would be lower in places such as Dunglison in which AC is not provided as a public good. In the current system, UVA is allocating these public goods from a “federal” level and having uniform taxes. This current system is inefficient and utility would be maximized by focusing on the local level (the dorms) and creating heterogeneity between them.
Virginia as a Case Study For Rational Abstention
Do people vote when the issues mattered most? Political economists like Johnson say no. But how does Virginia fit into this? Unlike most states, Virginia has an election every year. Of course, it has Presidential elections and Congressional elections every two years. But many do not realize that Virginia has a governor’s election the year after the presidential election, and a midterm for the House of Delegates the year after the Congressional midterms. Thus, with an election every year, it provides a fascinating case study into voter turnout based on various issues on the ballot.
The results are clear: many Virginians are indifferent to state and local elections. 72% of registered voters turned out in 2016, but only 48% for the 2017 Governor’s race and 42% for the House of Delegates and local races in 2019. This seems peculiar – in the elections where your vote matters most, where there was even a tie in 2017 which ultimately decided the control of power in the House of Delegates, people vote the least. And these elections have important issues that decide the funding for your local schools, the police department, and other vital local services that impact us daily, and voter turnout is at its lowest. And this feeds into Johnson’s argument – that regardless of the potential benefit of a preferred candidate winning, the social pressure to vote in the house of delegates midterm and the local school board election is insufficient. And anecdotally, we can all see this. Think, how many times were you asked “did you vote? Have you voted yet?” prior to the 2020 election? I could name at least a dozen times. But would I be the first person to ask “do you have a plan to vote this November?” I would assume so. Thus, through the lens of my life and yours in our Commonwealth, we can see that Johnson was right: voting in a gubernatorial election just isn’t that cool.
