Wednesday, November 27, 2013


My post yesterday on television was inspired by a chat Mrs. Spivonomist had with a co-worker. Paraphrasing, it went something like this:

Co-Worker: Do you watch [a presumably popular TV show]?

Ramute: No, we don't have a TV.

Co-Worker (astonished): How did you decide to not get a TV?

Ramute: ...

The word "nonplussed" is often used incorrectly. It doesn't mean "dismissive" or "indifferent". It means, "surprised and confused so much that they are unsure how to react." That ellipsis up there is my wife (and me when I heard the story) being nonplussed. Luckily for me, smarty-pants I occasionally claim to be, I had recently refreshed my memory on Prospect Theory. Experimental subjects have an interesting way of judging distributions not from a null condition, but from an existing endowment.

And that presumably includes the bundle of goods and services that is normal within their reference domain. If everyone they know has a TV, you're weird if you don't. If everyone else has at least one kid by age 25, you're weird if you don't. If everyone drives a car to work, or personally supervises their children at playtime, or eats organic, free-range kale, or recycles... you get the idea.

If everyone else has medical "insurance", you're abnormal if you don't.

But for me, I never pretended to start out with a TV. For me the null condition is no TV. The decision is to buy one, not to not buy one. And it got me thinking, if folks do their reasoning from something other than the null conditions that statisticians use, should euvoluntary exchange conditions be applied to the decision not to exchange? Is my TV-less existence non-euvoluntary?

Economists are often mocked for assuming a can opener. It occurs to me that ordinary folks, unschooled in formal modeling, are probably far more guilty of this insult to reason than any economist. The cognitive error of assuming the whole world blinds us to the deep complexity of productive activity. Qué lástima.

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