Dangerous Dogs

Yes, I know what you are thinking, that is poop, specifically dog poop. Why am I posting this horrific picture on the famous econ. Blog? The answer: the negative externality of dogs and their poop. Other individuals’ dogs and their fecal matter have a huge negative impact not only on my life but on society as a whole. Gruber states, “An externality occurs whenever the actions of one party make another party worse or better off, yet the first party neither bears the costs nor receives the benefits of doing so” (Gruber Ch.5). Of course dog owners themselves obtain utility from the ownership of their dog, but there is a cost imposed on society caused by this individual’s ownership of this dog that is not considered in everyday interactions. This cost to society occurs through unscooped dog poop. For instance, walking to class I found this nasty pile of scat (pictured above) outside Monroe and almost face planted after unknowingly stepping in it (talk about a bad day). This dog owner’s “consumption” of their pet reduced my well-being, for which I was not properly compensated, resulting in a market failure. That day, I had to deal with the smell/dirt on my shoes and the overall embarrassment; a large cost imposed on me because of the actions of another. Don’t get me wrong, I love dogs, but the cost on that day greatly out-weighed the small benefit I would have received if I had gotten to pet the stranger’s dog.  

 

Now, it would be nice to find a Coasian solution and be compensated for my troubles, but (no matter how much I wish) I don’t own UVA and therefore can’t claim property rights. If I were to solve this negative externality, I would suggest government intervention. Taxing all dog owners would seem ultimately unfair for the few good owners who pick up their dog’s poop, and it would validate owners to never pick up their pet’s poop because they pay a tax. Regulation seems to be the best option; a fee for not picking up after your pet. The overall damage received from this poopscapade was enough to drive me to discuss this negative externality; however, I did not even mention the environmental factors and health risks society bears from unscooped dog poo.

When Voting Becomes Dangerous

Amid threats of violence from the Taliban, hundreds of polling places in Afghanistan did not open up. A photo was circulating online of a man named Safiullah Safi holding up two fingers: one was dipped in purple ink and the other was missing its tip. The tip of his finger had been cut off by the Taliban for voting in the prior 2014 election. Despite this warning to not vote again, he ended up voting in the election this year. When asked for a justification, he told the reporter, "When it comes to the future of my children and country I will not sit back even if they cut off my whole hand." Was it rational for Mr. Safi to cast his vote, even with the strong possibility of losing a limb?

In lecture, we discussed when it is rational to vote: we vote when the expected marginal benefits are greater than the marginal costs. The expected marginal benefits of voting is the difference in value we derive from our preferred candidate vs. the other candidate, times the probability of our vote being decisive in the election. Of course, the probability of casting the decisive vote is very small. But there is another factor in calculating marginal benefits that is independent of the probability of casting a decisive vote. Let's call this independent factor, D. Thus, it is rational for us to vote when

E[MB] + D > MC

where E[MB] is the expected marginal benefits, and MC is the marginal costs. 

Going back to Mr. Safi, there is no doubt that the threat of violence from the Taliban drastically increases the marginal cost of voting. By going to the polls, he risked losing his hand or even his life. However, Mr. Safi refuses to sit back in the process. Thus, he is voting to express something about himself (think expressive demand). This is independent of the outcome of the election, and is not multiplied by the probability of casting a decisive vote. For Mr. Safi, D is incredibly high. Therefore, although there were high marginal costs associated with voting in Afghanistan, it may be rational for him to vote nonetheless.

NCAA Recruitment Prisoner's Dilemma

CA governor Gavin Newsom recently signed the Fair Pay to Play Act, which will allow collegiate athletes in CA to maintain athletic eligibility while receiving endorsements. This comes after a basketball season in which Duke sensation Zion Williamson generated massive uncompensated value. The NCAA places significant restrictions on player compensation. Some defend this practice as maintaining the student-athlete's integrity, while others are uncomfortable with the athletes foregoing economic rights. It is uncertain how this bill will affect college sports, but there should be more discussion about the other big issue regarding athlete compensation: the prisoner's dilemma in which many colleges have been caught offering illegal incentives to top prospects.

Because schools cannot negotiate a salary with prospects, there is an incentive to attract top high school athletes through under-the-table benefits. Some of the worst examples include coaches hiring escorts for underage prospects and colleges allowing companies like Adidas to pay families to pressure their kids towards Adidas-sponsored teams. Schools recognize a treasure trove to be found in recruiting a superstar athlete. We can model this issue with two schools competing to recruit a unique 5-star athlete to be their centerpiece player, otherwise their best star will be the next best player among the 3-star athletes. In this model, the 5-star player must pick one of the schools. The relevant payoffs involve the expected value of the program's centerpiece player, as well as the costs incurred from bribery (including legal action), which are assumed to be lower than the benefit of having a 5-star player over any other player (less than 1-star).

If neither school offers the player illegal benefits, it will be a toss-up between the schools, with no costs of bribery. The expected payoff will be 4-stars for each school to recognize the toss-up between a 5-star or a 3-star recruit. If one school alone bribes the star, they will have a 5-star player but incur bribery costs while the other school will be left with a 3-star player and no further costs. Lastly, if both teams bribe the athlete, another toss-up will occur, so the expected value for both will be 4-stars minus the costs of bribery. The dominant strategy here is to bribe the athlete, yet the expected payoff for both schools would be higher if neither did so. While legislation is addressing the player's right to their likeness, perhaps it could be used to more robustly police college recruitment. Action to address this prisoner's dilemma could reduce the ills of bribery costs, unfair competition, and exploitation.

Minimax-Regret Strategy for Class Attendance

Going to class is hard. No one really likes doing it, but for some reason many of us college students drag ourselves out of bed every weekday to sit in lecture for what adds up to several hours per day. I'm going to be honest with you all, my first year I skipped class a lot. It was pretty bad. However, my second year and this year so far, I have been really good about attending all my classes. What sparked this change, you may ask? Maturity? Realizing the value of learning? Remembering how much tuition costs? Nope, it was none of those.

Instead, it was fear of maximum regret. Every time I would skip class my first year, I would worry about whether or not my professor was teaching something incredibly important that day that would cause me to do terribly on future assignments/exams if I missed it. While many would say that students should always attend class for many reasons, most students realize pretty quickly that on some days, the material that is taught is very easy to understand and something you could have easily taught yourself, therefore it is not worth it to go to lecture. The problem is that I was and still am unsure as to which lectures will be pointless and which ones will actually be helpful to my learning and understanding the course material, thus giving me anxiety whenever I skipped my first year because I didn't know if I was missing something important or not.

Though I didn't realize it at the time, I ended up conducting a minimax-regret strategy (see chart below), which I still use to this day, to decide how to best curb my worrying. I found that there were four possible scenarios that could occur and assigned a value of regret to each one. Scenario 1) is that I attend class and the professor actually teaches important material, therefore the lecture is important. In this scenario, my regret level would be 0 because by going to class, I would be able to absorb and understand the important material that was taught, so I would have no regrets about attending. Scenario 2) is that I attend class but the lecture ends up being pointless and teaching nothing important. In this case, my regret level would be equal to the cost (C) that I incurred by going to class — this could be waking up early, walking a long distance to the classroom, etc. Scenario 3) is that I skip class and the lecture is pointless, resulting in my regret level being 0 because I didn’t miss anything important by skipping and I did not have to incur the cost of actually going to class. Scenario 4) is that I skip class and the professor teaches something important, therefore lecture is important. Here, my regret level would be equal to the benefit (B) of going to class minus the cost (C) of going to class since I didn’t incur the cost (C) of attending class but I was missing out on the benefit (B) of attending since I missed the important material. Scenario 4) has the maximum level of regret out of all four scenarios because to me, the benefit (B) of going to class when something important is taught is more than double the cost (C) of attending since I want to have good grades way more than I don't want to wake up early or walk to class. Therefore, my priority is to avoid experiencing this maximum level of regret and because I do not know when lecture will be important or pointless, the minimax-regret strategy is to always attend class, hence why I started and have continued to do so since first year.

Wakeboarding Prisoner's Dilemma

     For Fall Break I went to Lake Anna to practice wakeboarding for the last time this year. When I went out Saturday morning, it was different than most wakeboard runs. Not because it was 48 degrees outside, but because my brother wasn't able to come. My brother and I both wakeboard a lot and whenever we practice we are always trying to one-up each other in the tricks we can perform. However, he snapped his ACL in half while wakeboarding a few weeks ago so he cannot practice until April. I was thinking about this as behind the boat and I realized I wasn't being as risky as usual because my brother was not there and because of a Prisoner's Dilemma.
     While practicing, you can wakeboard aggressively or more smoothly and relaxed. When I am with my brother, I want to make sure I look better than him, so I wakeboard aggressively. He attempts to be as good as me (though rarely does) so he also practices aggressively. However in practicing that way, falls often hurt more and injuries can sometimes happen (hence his ACL). So, the ideal situation would be if we both took it easily to reduce the risk of injury. However, the potential respect and admiration from our peers in the boat is so great, we are each incentivized to practice aggressively. As we do not usually wakeboard at the same time and wakeboarding aggressively is a dominant strategy, the result is that we both wakeboard aggressively which is an inefficient dominant strategy equilibrium. Mueller contends that in small groups this can be overcome through social pressure or deals, but to reason with my brother has high transaction costs and would likely not provide high marginal benefits. It is possible that the impact of the water knocked some sense into him, so hopefully after he is recovered next Spring he would be more willing to come to an agreement about how we will practice.

Public Choice, My Dear Watson

Sherlock Holmes is such a popular fictional character because of how differently he behaves from the average person. Sherlock Holmes cares little about the impressions others have of him (except when theatrically proving the police wrong with a solution to a case), and instead pursues private utility at all costs. Although some psychologists have described Sherlock Holmes as psychopathic (to which, in the modern-day television adaptation, Holmes responds that he is merely a high-functioning sociopath), perhaps he can be better described as an approximation of a perfectly rational, utility-maximizing individual for the purposes of economic modeling.

In the first Sherlock Holmes novel, A Study in Scarlet, Dr. Watson reflects upon Sherlock Holmes’s startling ignorance in many common fields of knowledge. Although Holmes knows the details of every murder committed in London in recent memory and can deduce the brand of cigar used by a suspect by glancing at an ashtray, he shows a perplexing dearth of knowledge in many other areas. The reader learns that Sherlock Holmes does not know that the earth travels around the sun, and also knows no information about philosophy or literature. Although this lack of knowledge is surprising for someone as brilliant as Sherlock Holmes, Sherlock actually seeks a rational level of ignorance. The following is a graph of Sherlock Holmes’s allocatively efficient level of ignorance for astronomy compared to that of the average population. 

To start, Holmes’s private marginal benefit of learning astronomy is lower than that of the average person. He cares very little about ever needing basic astronomy information for day-to-day conversation due to his diminished desire for social approval, and he is also certain he will not need to understand astronomy for his detective work. His private marginal cost of learning astronomy is higher than that of the average person as well, because the opportunity cost of maintaining his occupational reputation as genius private detective is advanced time spent researching specific subjects and developing his deductive reasoning ability. As a result, the allocatively efficient level of knowledge of astronomy for Sherlock Holmes is extremely low.

One of Sherlock Holmes's under-appreciated attributes is that he represents a utility-maximizing actor in an economic system. A world where everyone is a little more like Sherlock Holmes might be a less friendly place, but at least it would improve the applicability of economic models. 

Twitter Polls: Rational Ignorance Problem

Last week in one of my ECON elective courses there was a group presentation. Before the presentation began, a girl from the group projected that she had voter registration forms and we could "easily register, only spending a couple minutes after class" to do so. Immediately, I thought of how big of a problem this girl was going to cause for the county of Charlottesville and the state of Virginia. To illustrate this destruction in the making I will compare this to polls on Twitter.
Ever since Twitter has allowed users to create polls, I have been a rationally ignorant voter. I vote on every Twitter poll I see. It does not matter if I have absolutely no clue what the topic of the poll is, I will vote. The method of voting is so easy, the only cost that I incur from voting is the strength I use in my thumb to press which option I desire. The utility I get from pressing that random answer cannot get any easier to obtain. Every time I do this though, I am actually hurting the true effectiveness of said poll. You see, the costs of actually taking time to go look up what I need to know about said poll, or message the maker of the poll about the topic, is too high for me to do and still be able to gain utility from voting. Just like how I am voting on random twitter polls I see, many from people who I do not even know, this girl in my class was encouraging students who may not even be from Virginia or Charlottesville, to effect the outcome of the upcoming election. Many of us do not even know who is running or what topics of legislation the election is covering.
This is a classic example of why making voting for public offices "easier" actually conflicts with the desired social outcome that would benefit society the most. Johnson writes "Even if individuals could be driven to the polls by social pressures, by fines, or by 'costless' electronic voting, there is no assurance that those individuals who did vote would have sufficient knowledge to vote their own interests". I hope in the future this girl can also handout pamphlets or brochures that provide all the information needed to become knowledgable of the current election before she attempts to pressure or make easier this registration process to vote.

Median Voter Theory: Israel

Say what you wish about the current state of political affairs in both the US and the UK; it is certainly...messy.  Israel, however, may take the cake in the contest for most unsustainable political circumstances.  After two legislative elections within the span of six months, Israel is still without a functioning governing coalition. With the rise of the Blue and White party and the defection of a long-time coalition partner, PM Bibi Netanyahu is in the political fight of his life. As a third election looms in the horizon, dysfunctional government appears to be the new status quo for the foreseeable future. What insights can Downs' Median Voter theory offer in such a situation?

This model roughly demonstrates the current ideological spectrum of Israel and her political parties:

This model most closely resembles figure 7 of Downs' paper.  There exists a bimodal distribution of voters on the left and right, though more voters fall on the right. Though there are a number of small parties throughout the spectrum, they roughly group in coalitions concentrated on the left and right. Before the Blue and White party was formed, Likud was closest to the median voter. As predicted, they dominated elections for the last 20 years. To maintain power in government, however, Likud had to form coalitions with far-right, ultra-Orthadox parties. These far right parties have increasingly pulled Likud to the right, and subsequently further and further from the median voter. As Downs correctly predicted, a new party formed near the center and to the left of Likud. This "faction of desirous compromise" manifested as the Blue and White party, a centrist big-tent party, primed to gain voters at the expense of the Likud party.

The particular problem in this situation, however, is that while both parties are centered near the median voter, neither can get enough support from parties to the left or the right to form a governing coalition. As predicted, ideological purity is king in this political system. Far be it for either Likud or Blue and White to partner with the Arab parties. And good luck in getting the secularists to join the ultra-Orthodox in a government. As it sits now, those 61 seats seem all that more elusive for all parties involved. 

Perhaps, as has been rumored, a unity government may be the only way out of this political quagmire. 

Modern Beauty and the Prisoner's Dilemma

      In a feminist theory course last semester we discussed the tensions present in modern narratives on women’s liberation. While some hail individual choice and self-expression as the ultimate indication of an equal society, others recognize that although the power of decision is crucial for women, that does not indicate that all choices are feminist choices. Consider the topic of makeup, or plastic surgery. While we have come to a general conclusion that cosmetic enhancements may be a mode of self-expression that is powerful for the individual, that does not mean that there should not be serious considerations of the social environment that may put pressure on women to look a certain way.
I realize now that the conclusion I kept nearing last term was that makeup (or Botox, or plastic surgery) can likely create a prisoner’s dilemma. This is not a black and white situation, for I am not discussing the makeup artist but rather a woman who would rather not wear makeup but fears she must, for example in the workplace, to look presentable. The individual woman’s choice is based upon the choices of other individuals by which she is surrounded. Makeup, Botox, and plastic surgery are all time consuming, expensive, and range from being potentially harmful to the skin to dangerous if procedures go awry. Though this may seem simplistic, consider the idea that, to an extent, women have settled into a prisoner’s dilemma situation in which all are defecting to spend X minutes a day putting on makeup before work, but if no one did then no one else would feel as though they “have” to, and those minutes could be spent more freely. 
       The dominant strategy arises here because as less and less people wear makeup and we arrive at a point in which all women are wearing nothing on their face, then one woman would feel inclined to do so, as it would make her more attractive. Therefore, whether Person A chooses to wear makeup or not wear makeup, it is likely that Person B is better off wearing makeup, so we reach a state in which everyone may begin to follow suit. This same logic is applicable for plastic surgery or botox. This may result in other effects, such as the way our society accepts sexist ageism or the fact that cosmetic enhancements have been shown to increase popularity on dating apps such as BeautifulPeople. The consequences show this is something to consider. 

Gambling With My Future

Last Monday, I got a last minute notification on Handshake from a recruiter about an interview slot open for the next morning, Tuesday, from 9:30-10:30am. I was chosen as an alternate for this company, so I was not able to initially secure an interview slot, nor was I expecting a slot to open up. But, this interview time slot conflicted with Coppock's class. I had to make a decision... skip class and go to the interview, or miss out on the interview opportunity and go to class.

So, I calculated my expected marginal benefit versus marginal cost. My expected marginal benefit would include the benefit of attaining the internship multiplied by the probability that I was offered the internship. This is a low probability, but not as low as the chance of a single vote determining the outcome an election. The probability would reflect the chance that I would make it past multiple interview rounds, competing against a large pool of applicants that have presumably prepared more than me for the initial interview. But, added to the equation would be the benefit of practicing my interview skills in order to prepare for different interviews. The marginal cost would be missing Coppock’s class, which I would feel morally guilty about. The cost would also include taking the time on my own to catch up on the material presented in class. Lastly, the opportunity cost of my time — scrambling to prepare for the interview instead of completing other work, dressing myself in professional attire, and taking the time to get to the interview and back to my next class was significantly high.

Did this expected marginal benefit plus the extra opportunity to practice interview skills surpass the marginal cost and opportunity cost of my time? The answer is no. In looking at a graph with MB and MC on the y axis, and a scale of ignorance to knowledge on the x axis, I valued more knowledge in Coppock’s class than ignorance. So, my marginal cost curve for attending class represented a low opportunity cost of my time, resulting in an equilibrium point that reflected more knowledge over ignorance. So, I did not take the last minute interview opportunity. I went to class, and I’m glad I did, because the topics covered gave me the inspiration to write this blog post.

Redistributing Everything but the Beer

Carson King, a 24-year-old Iowa State fan, prepared his sign for ESPN’s“College GameDay.” It read, “Busch Light Supply Needs Replenished” followed by his Venmo handle. Carson didn’t expect much. “College GameDay” boasts hundreds of clever, grammatically-correct, well-designed signs each week, so why would his sign – a simple black-Sharpie-on-a-white-background piece – go viral? Carson fully expected himself to end up in the poor class with income Y₁. After all, the odds that your sign is spotted in the crowd and people actually overcome the bystander affect to send a random stranger money for beer must be pretty low. This result depends on so many variables outside of his control, and he anticipated π₁ to be greater than π₂.

One week later, Carson received a grand total of about $270,000. That’s a pretty good haul for a week, and I would say – for the week at least – Carson found himself in the rich class with income more like Y₂.

Carson’s poster experiment represents a small-scale, real-world scenario of the equation we looked at in class. Before arriving at “GameDay,” Carson had no idea of whether his poster would bring him any money at all. He didn’t expect hundreds of thousands of dollars, and any small event could’ve changed the outcome. Traffic could’ve made him late to the show, or he could’ve broken his arm, preventing him from hoisting his glorious sign. Carson accepted that he could end up either in the rich or poor class and tried anyways.

His B value was pretty high as well. Instead of keeping the money to pay for his education, rent, or an Iron Throne made of Busch Light, he kept about $15 in order to buy exactly one case of beer as promised. The rest of the roughly $269,985 is getting matched by Venmo and Busch and donated to the University of Iowa Stead Family Children’s Hospital. Carson clearly values redistribution. Count him as a “yes” towards the class’ redistribution-policy vote.