Thursday, January 26, 2012

The San Francisco Treat

Ed.: I originally wrote this prior to my first post here, so please don't be thrown by the concluding paragraph.

The standard trolley problem goes something like this: you find yourself inexplicably drinking a soymilk latte in the Mission District a few blocks up from the The Embarcadero when out of nowhere a runaway trolley comes rumbling down yonder boulevard. Alack! The trolley is laden with passengers and if not stopped, ‘twill surely crash into the Bay, killing all and sundry aboard. Luckily for the people aboard, a portly gentleman out for his morning constitutional has lost his footing and fallen on the tracks and if no action is taken by you, the trolley will come to rest against his meaty flanks, the passengers shaken but otherwise unharmed. The man, naturally, as happens when struck by a runaway trolley will surely perish. The question then is, do you roll him out of the way? If you do, he lives and the people on the trolley die. Spoiler: most people will not respond that they roll him out of the way. Smugly perhaps, the person posing the scenario then alters it ever so slightly—instead of the fat guy having already fallen on the tracks, your choice is now to push him on the tracks or do nothing. Spoiler the second: most people again elect to do nothing (a close second is to look pained for a moment, then reluctantly admit that they’d push him, but only with much regret). Economists, heartless vermin they are, sacrifice the few for the many without batting an eye, and I suspect they do so without even so much as a fleeting thought to Spock’s ad hoc repair of the Enterprise inside the Mutara Nebula. To the economist or the (suppress your shudders, please) utilitarian, the two variants are perfectly identical, except for a few extra calories burned… fat guys dies so that 20 strangers may live.

Other folks tend to disagree.

Contrary to appearances, trolley problems do not exist solely to exasperate the significant others of over-bearded humanities students. As the GTM and the late Mel Hinich point out in Analytical Politics, "to 'analyze' means to break down into components and understand." We bowtied tweed enrobeurs aren't just smirking into our dusty lapels when asking you if you'd condemn a score of men, women, children, their pets and walkin'-around possessions to a violent, shrieking death merely so you'd avoid actively murdering (or failing to save, or whatever other flavor is up for proposal) a (possibly) innocent bystander. The purpose of these thought exercises is to get at justice or fairness heuristics.

Economics is very interested in efficiency. We see prices as The Agent of Justice. Prices tell us what and how much to produce and what and how much to consume. Indeed, one of the strongest claims (and one pretty well established by a pile of Big Names in economics) is that planning can’t beat markets. The First Welfare Theorem states, in no uncertain terms, that a competitive equilibrium is Pareto efficient. That’s sort of a fancy way of saying that parties external to a trade cannot make one party better off without making the other worse off.  What’s more, this theorem relies on very few assumptions. This is why economists read something like “Euvoluntary or not, Exchange is Just”, shrug, stick out their tongues and say “duuuuh”. But then again, economists wouldn’t think twice about throwing you under the bus.

So where am I going with all this? These trolley problems help us tickle out moral intuition. The theme of EE is that some trades don’t violate most folks’ moral intuition, but some do. Economists then claim that people’s moral intuitions are misleading. It’s perfectly fine to charge a million dollars for a glass of water in the desert (or eight bucks a gallon for gas after an earthquake), but it’s abhorrent to prevent foreign butter from crossing the Norwegian border during an acute shortage. We claim that moral intuitions are wrong, but I’m not convinced we have a decent understanding of what those moral intuitions are. I have a suspicion that terms like “exploitation” or “fairness” meet criteria similar to “pornography”: people have a hard time defining them, but they know it when they see it.

To this end, I propose a periodic series of trolley-type thought experiments you can try at home with your (soon-to-be ex-) friends and relatives. Each variant is meant to isolate a particular component: be it initial endowments, relative power in exchange, the Hobbesian dilemma, the role of pure luck or ex ante vs ex post distributions. By the time we’ve wrapped, I hope that we will be able to pin down why exactly it is people are willing, nay eager to chuck the First Welfare Theorem out the window and go merrily about interfering in other peoples’ business. If it turns out to be something more or less benign, then perhaps we’ve got evidence that with better PR, we can change hearts and minds. Barring that, at least we can have more ammunition to make our loved ones more uncomfortable at cocktail parties.

Because that’s clearly something economists need to be better at, right? Our failing is that we’re too popular.

At any rate, the GTM has generously extended an invitation to me and my colleague and friend Jeff Horn that we might share some of the flavors of these problems we find interesting and describe their relevance to Euvoluntary Exchange. Please enjoy your delicious dilemmas in moderation. For trouble with philosophical conundrums (conundra as the plural form is just stupid, people), please contact the director of your nearest PPE workshop (unless you’re at GMU, in which case the Mighty Pete Boettke has no time for your juvenile nonsense).


  1. Why the jab at Pete? Was that playful?

    1. Of course it was. Pete likes to tease me about my fondness for Robin Hanson's predilection for brain uploads, so I feel a sliver of liberty in returning the favor now and again.


Do you have suggestions on where we could find more examples of this phenomenon?