Megan McArdle

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Crooked Timber » » McMuddled

22 Feb 2008 02:28 pm

Henry Farrell fires back with the delightfully titled McMuddled:

Umm, no. I sent her Tom Slee’s book, which uses the analogy of shopping at Walmart to demonstrate that vulgar revealed preference arguments do a very bad job of capturing situations of interdependent choice. This is something that is quite clearly laid out in the extended Alex Tabarrok description of Slee’s argument which I quoted in my original post. What’s at stake here isn’t shopping; it’s interdependence. When choices are genuinely interdependent, behaviour doesn’t necessarily tell us anything about the ‘true’ preferences of the actors in question. What it does tell us about, (if we think that actors are behaving rationally) is what actors think the best reply to other actors’ strategies is in a given strategic situation. I’d like it very much if Megan – and others who use similarly poorly-thought-through arguments – would read about and absorb this basic lesson of game theory. It complicates the analysis of social situations in some very useful and fruitful ways.

We seem to be talking at cross purposes. Henry seems to be treating tax revenue, rather than the things it purchases, as the collective action problem.

I concede that there is a collective action problem in providing actual public goods, like the military and statues of politicians on horseback; that is why I am not an anarchist, or even a minarchist. There is also a collective action problem in setting up a tax system in the first place; people will not participate if they think other people are not participating. This is one of the many problems with the budget of Eastern Europe.

But if you think that you have more money than is fair--money that the government should, by rights, be using for some more noble purpose--then there is no collective action problem. You can send the money to the government. They will spend that money on either actual public goods, or things that you think should be paid for out of the common weal. (Or at least, they will do this to exactly the extent that they would if you plus 20 million of your fellow citizens were forced to send them money via a new tax bill.) There is no strategic value to withholding the money from the government; your fellow citizens are not going to say to themselves, "Oh, Henry's paying extra, so I guess it's okay if I vote for McCain." There is no interactivity here. You, alone, can secure more public goods by putting your extra dollars in the treasury--exactly as many public goods as your dollars will secure if you vote for a politician who extracts that tax money, plus the same amount from other similarly affluent people, via the tax code.

I suspect that Henry is trying to get, not at an actual collective action problem, because there isn't one, but the moral intuition that we appear to have evolved in order to resolve these collective action problems at the small group level. We refuse to contribute unless everyone else does out of the sense that it's unfair for us to do it alone. But it seems to me that if you believe that there are serious distributional injustices in our society that your extra tax dollars ought to be out there resolving, then those distributional concerns should override your resentment at those you feel are shirking their duty. There is simply no strategic benefit to withholding your extra taxes when the tax base numbers in the millions. Essentially, if you think your taxes should be higher, but won't contribute unless everyone else also does, then you are saying you are willing to punish the neediest members of society for the sins of its more affluent members.

Which just takes us back to where I was before: people aren't interested in increasing their own taxes; they're willing to pay to increase other peoples' taxes. These are not the same thing.

Comments (53)

Is there any real need to dignify the insane bleatings of Farrell or any of the blazingly ignorant twats at Crooked Timber with even so much as derisive laughter, never mind a reply?

Yes, BC. We should definitely ignore all those highly learned and skilled people over at CT. Furthermore, we should make an exceptional effort to ignore all their published research, and any blog posts that draw on their research. Doing so will ensure that we never encounter an opinion we don't already share, or wish we shared.

I concede that there is a collective action problem in providing actual public goods, like the military and statues of politicians on horseback;

That's the best laugh I've had in a while. But in fairness, there are probably lots of equestrian statutes erected by the DAR or similar organizations, so private charity might offer us an adequate supply even in an anarchist world.

I mean, don't get me wrong: there's definitely something precious about a poli-sci Ph.D trying to appeal to hard science concepts like game theory, like a toddler trying to sound out a three-syllable word. But beyond that, "Aww, innit cute!" sentiment, do we really need to indulge the lunatic ravings of self-important pseudo-intellectuals?

Hey, Henry, have a free clue: there's no interdependent choice, here, dipshit.

Do you have any evidence, besides mere assertion, that there is no interactivity? Like, maybe, totally, some research to support your point?

BC-

See, the difference between Henry and Megan is that Henry is citing scholarly evidence to support his point.

We should definitely ignore all those highly learned and skilled intellectually-pompous people with degrees in pseudo-sciences over at CT.

Fixed that for you, RICKM.

So now the anti-intellectual right has deemed that Political Science is a pseudo science? Wow.

RICKM:

Which "scholarly evidence" is that? I see Henry citing bullshit arguments from Tom Slee, and trying to imbue those arguments with authority by further citing Alex Tabarrok's positive review of Slee's book.

Rick, what's scholarly research are you looking for? It's not an empirical point. I say people want to use their tax dollars to buy the coercion of other people. Henry says I don't understand collective action problems. I'm still waiting on a clarification of the dependent choice here.

Uh, BC. Farrell was citing Tom Slee's book, because Megan was responding to something Farrell said about Tom Slee's book. To support his argument that there is interdependence and that this is a collective action problem, Farrell cites some pompous pseudo intellectuals, such as Mancur Olsen and Russell Hardin.

No, Megan. You said that the problem is not a collective action problem. You wrote that there is no "interactivity" on people's behavior regarding paying taxes. Henry Farrell cites John T. Scholz and Mark Lubell.

I quote, from Henry's post, "Scholz and Lubell provide good reason to believe that taxpaying is indeed a large scale collective action problem; although they don’t use this term, they clearly think of it as being in part an assurance game (that is one in which people’s willingness to contribute is conditioned on their belief that others will contribute too)."

I'm the "anti-intellectual right"? Who knew?

But yes, political science is pseudo-science. Get back to me when it's based on reproducible experimental data.

Hey, RICKM: Do you have any evidence, besides mere assertion, that there is no interactivity?

Maybe you should have that conversation with Farrell.

If the choices that individuals make are interdependent, as they self-evidently are here, then observed behaviour tells us diddly-squat about the preferences individuals would have if they didn’t have to take account of others’ behaviour.

This argument is similar to the tiff I had in this forum with some "ethical vegans", defined as those people who state it is unethical to participate in the killing of furry or feathered animal, and perhaps gilled creatures, except in those instances when it is required to kill them for human survival or safety. They became a little frustrated with me when I asked why they were required to participate in the killing of our furry and feathered friends which inevitably results when the land is cleared to build a new Starbucks, since to my understanding, human beings had not yet evolved to need overpriced lattes for survival, or furniture from Ikea, for that matter. What these folks really want is for others to share their preferences as to when it is o.k. to kill animals strictly for human comfort.

Similarly, if one really believes, as a matter of ethics, that the state should be collecting more revenue, the ethical imperative is to give it more revenue, no matter whether your neighbors do or not. What these folks really want is for others to send more revenue.

You can send the money to the government. They will spend that money on either actual public goods, or things that you think should be paid for out of the common weal. (Or at least, they will do this to exactly the extent that they would if you plus 20 million of your fellow citizens were forced to send them money via a new tax bill.)

What a bizarre (and untrue) claim to make.

Are you contending that if I think that everyone's taxes should be raised by $100 so that Social Security benefits can be increased, I can just send the government $100 and they'll adjust every retiree's check accordingly?

Or that if I think that everyone's taxes should be raised by $100 so that children under 18 can be covered by Medicare, I should send the government $100 and the government will use it to pay a fractional amount of every child's medical care (or even for one kid's doctor visit and antibiotic prescription)?

Or that if I think that everyone's taxes should be raised by $100 so that the Second Avenue subway line should be completed, I should send the government $100 and someone will mix up a bag of concrete in my honor?

If those things were true, it might make sense for individuals to make excess contributions to the government. But those things aren't true, and it's just odd to pretend otherwise.

BC-

To the extent that you believe you are serious, I fell bad for you. Anyway, I was citing Henry, who was citing a paper by John T. Scholz and Mark Lubell. That's a far cry from self-evident.

Surely this has been mentioned (I didn't see it in the comments to this one...): isn't this just like a vegetarian (on moral grounds) saying that they think everyone should not eat meat, but that they are going to continue eating meat until everyone else is forced to stop? After all, while one person going vegetarian will make some tiny impact, what is the point unless everyone does it?

Are any of the toe-the-line libertarian regulars here going to engage the evidence supporting the argument that tax decision to pay taxes is interdependent?

Alkali, what I think is that you are mistaken if you believe that you can control what tax increases are spent on, any more than you can control what voluntary contributions are spent on.

Are any of the toe-the-line libertarian regulars here going to engage the evidence supporting the argument that tax decision to pay taxes is interdependent?

You keep using that word. I do not think it means what you think it means.

Hint: navel-gazing by soft scientists is not "evidence".

Alkali, I proppose we have Congress set up a program where people can send money directly to the government program they wish to support, over and above their required taxes. Want more money to got go social security payouts? Have at it. More defense spending? Just check the box.

I strongly suspect that level of monies collected would be tiny, especially in comparison to that given to private charities.

Wow, BC. So economics and biology are presumably also pseudo-sciences? Natural experiments aren't research? And how, exactly, is game theory a hard science concept? Strategic interaction of atoms?

And by the way, just because you keep saying that no one has shown strategic interdependence in the question of whether to fund government programs through voluntary donation doesn't make it true. I think that a number of people have presented a reasonable and logically valid argument that suggests that (non-libertarians') willingness to contribute to the provision of a public good is dependent upon the knowledge that others will also make such a contribution -- that they are not, in other words, trying to raise the level of the lake by tossing in a single pebble.

What kind of science are engaging in when you deny the validity of such arguments? I'm not saying they are definitively correct, but I am having trouble understanding how you know that they are so obviously wrong.

RICKM: To the extent that you believe you are serious, I fell bad for you.

That's okay. To the extent you take people like Farrell seriously, I feel the same way about you.

Will Allen,

Your tongue-in-cheek proposition illustrates the point that Farrell, Lubell, Scholtz, et al are making--the decision to contribute taxes is interdependent with other's decisions to contribute taxes. Therefore, one cannot deduce another's true preferences for the tax level by their decisions on contributing taxes. So far, no one has presented any evidence that Lubell and Scholtz's argument is wrong, inadequate, or irrelevant to the issue at hand.

It may challenge libertarian orthodoxy, but that does not make it untrue.

Wow, BC. So economics and biology are presumably also pseudo-sciences? Natural experiments aren't research? And how, exactly, is game theory a hard science concept? Strategic interaction of atoms?

What in God's name are you talking about? Are you suggesting that economics and biology don't rely on reproducible experimental data? That would be news to pretty much every economist and biologist in the world.

Natural experiments are research, sure. I'm not sure what that has to do with anything.

Game theory is a field of applied mathematics. That's about as hard science as there is.

Actually, yes. I am suggesting that. Most economic research and a lot of biology research relies on natural experiments that are not, strictly speaking, reproducible. Most contemporary political science research (in America, at least) also relies on natural experiments. Applied mathematics does not rely on experiments at all. I'm not sure that I understand what your dismissal of political science research is based upon...

Megan writes:

[W]hat I think is that you are mistaken if you believe that you can control what tax increases are spent on, any more than you can control what voluntary contributions are spent on.

There's nothing "mistaken" about supporting some sort of government commitment along with supporting a tax increase to pay for it. When Medicare was passed, and FICA taxes were raised to pay for it, the taxes raised really did go to pay for medical care for seniors, not hookers and gin for Congressmen.

Will Allen writes:

[Suppose] we have Congress set up a program where people can send money directly to the government program they wish to support, over and above their required taxes. ... I strongly suspect that level of monies collected would be tiny, especially in comparison to that given to private charities.

I'm not sure quite what that would prove. In any event, lots of states have these kind of voluntary checkoffs on their tax returns, and I assume they are at least somewhat effective in fundraising.

Virginia Beach

Megan, your hypothesis turns out not to be the case. Your mistake is displayed here:
...if you think that you have more money than is fair--money that the government should, by rights, be using for some more noble purpose....
How did you manage to leap to the conclusion that because I have more money than I need, that I should give it to the government? How about if I give it directly to the person who needs help? Or if I contribute to churches, charities, non-profits, or programs like the Energy Share at my local electric company? It is certainly true that I'm not interested in raising my taxes; but last year I gave away about 15% of my net income, without stopping to ask how much anyone else was giving (in case it matters to you, my net was somewhat less than $40K). So if your these is "people don't want to do good, they want to force other people to do good"...then you might want to rethink that.

people aren't interested in increasing their own taxes; they're willing to pay to increase other peoples' taxes. These are not the same thing.

Other people paying taxes along with me lowers the cost of the taxes I pay because of positional goods. It really is different to pay along with everyone else compared with being the only one.

It is truly a wonder that charities raise any money at all.

Actually, yes. I am suggesting that.

Well, then, you're flat-out wrong, and there's no need to continue this conversation.

Whew. Thank god that's over, then.

But just in case it isn't... You do acknowledge that there is a difference between a reproducible experiment and a natural experiment, and that the former generates reproducible data and the latter does not, right? And you do acknowledge that economists are not capable of stopping the economy, rewinding it, and running it again, which means that they tend to rely on data from natural experiments, right? (And I'm guessing that the examples from behavioral economics of controlled experiments are pseudo-science by some criterion as well, so I won't even bring those up.) And you do acknowledge that political science relies on similarly gathered data (like polls, or voting results), right?

So why, exactly, are you being so dismissive of political science? And, excuse me if there is an obvious answer that I've missed due to not being a diligent reader of this blog's comments section, why are you being so uncivil about it?

RICKM - I don't think you quite understand what you're saying here when you argue about scholarly citations.

MM and HF don't disagree on the empirical point (the empirical point is not particularly contentious - nobody is claiming that a whole lot of people choose to pay more taxes absent any coercion). The difference appears to be in how "collective action problem" is being construed.

HF argues (yes, yes - by citation) that there is an assurance game here and therefore says that it's a collective action problem. MM comes out and says nearly exactly the same thing (I don't want to pay unless others are paying). But, she argues, this isn't a true collective action problem since our actions viz. taxpaying are not interdependent for exactly the reasons she explains.

On the merits of the particular term definition, I go with MM here and agree that this is more about talking past each other than about true disagreement. One doesn't need to cite scholarly work to make that point and doing so doesn't make it stronger in any way.

I think matt_c and BC have different understandings of the word "reproducible". Valid scientific hypotheses do depend on the reproducibility of results of experimentation (and if the results are not reproducible, then the hypothesis had better have an explanation for why in that instance). This is true in biology, chemistry, economics, and even political science.

If I am not mistaken, matt_c is thinking of experimental obervations of large scale phenomena, such as the behaviors of consumers in the wide economy or the exploding of a supernova. Obviously, you can't experimentally reproduce a supernova.

You do acknowledge that there is a difference between a reproducible experiment and a natural experiment, and that the former generates reproducible data and the latter does not, right?

No, I don't.

The antonym of "natural experiment" is "laboratory experiment", not "reproducible experiment".

I see matt_c has clarified it. As usual, people talk right past one another.

Alkali. I'm no expert, but I believe your assumption is wrong.

RickM, my contention is with those who assert that sending more revenue to the state is an ethical or moral imperative. That cannot be the case if such an action only becomes an imperative if other people do so as well. Now, if such people simply restate their claim as, "I would prefer that the state have more revenue, and I want everyone, including me, to act on my preference.", then I don't have much to contend with. Unfortunately, calls for higher taxes, when couched as mere preferences, instead of moral imperatives, are rather less likely to carry the day. Thus, we get people claiming their mere preferences are moral or ethical imperatives, despite the fact that their behavior reveals that they really don't think what they are calling for reaches that plane.

I was just trying to figure out what it was that BC thinks economics and biology and other "real" sciences do that "pseudo" sciences like political science don't. BC threw around the phrase "reproducible experimental data," and I was (understandably, I think) bewildered as to what possible definition of that phrase would leave out the kind of data that political scientists use. My guess was that he was trying to make a distinction between controlled and natural experiments, and claiming that only the former are valid. But then how do evolutionary biologists and economists do valid research? I still don't get what BC is trying to say here. But unfortunately he will never return to clarify, because the conversation is over.

Will Allen-

Point taken. Sorry I missed it in the first go round.

And yes, I got the phrases reproducible and laboratory/controlled muddled. I don't think that this in any way undermines my argument, but BC still has not really offered any clarification on this whole pseudo-science thing.

A physics major should be able to tell science from pseudo-science when he sees it -- the same thing a SCOTUS Justice can do regarding pornography.

The above is not intended to be a joke.

Megan:

Alkali, what I think is that you are mistaken if you believe that you can control what tax increases are spent on, any more than you can control what voluntary contributions are spent on.

We control it indirectly, by the medium of our elected representatives, to whom we give exclusive power of the purse and hold accountable at elections. Now, you can argue that in practice we don't hold them accountable and that government is therefore this rampaging, uncontrolled and unaccountable beast (and I'm sure that's what many people here do believe); but at that point you've departed from the realm of political theory and philosophy and entered the realm of "applied" political science, and the discussion is completely different. I'll readily agree that the system is not working as it should; but I'm not ready to scrap the system because of it.

Will Allen:

Alkali, I proppose we have Congress set up a program where people can send money directly to the government program they wish to support, over and above their required taxes. Want more money to got go social security payouts? Have at it. More defense spending? Just check the box.

Oh no, you don't get to do that. No stopping at "above their required taxes." If you're going to implement a checkoff system, it's either all or nothing; nothing else is fair. Why should I be required to pay even a minimal amount of my tax money towards spending I disagree with? If I disagree with it, it's not getting ANY money from me. That's what people like skullberg are saying should be the case.

liberalrob wrote: If you're going to implement a checkoff system, it's either all or nothing; nothing else is fair. Why should I be required to pay even a minimal amount of my tax money towards spending I disagree with?

Because your disagreement with the use of a new stoplight to regulate traffic flow at a busy intersection poses a serious hazard to the life and property of both of us. Therefore, if we are to have a system of civil roads, we both pay for the stoplight, a cop to watch for violations, and a court to enforce penalties.

Now, if you happen to think that a new 102 bypass to route excess traffic around the 101 that passes through downtown, we might be able to come up with a solution that inolves funding for the 102 only by those who use it. I think we could call it a "toll road".

"You, alone, can secure more public goods by putting your extra dollars in the treasury--exactly as many public goods as your dollars will secure if you vote for a politician who extracts that tax money, plus the same amount from other similarly affluent people, via the tax code."

No. Let us suppose that the public good I want is a manned mission to the moon. If I send my fractional share of this in as a donation, congress may conclude that there isn't enough money to go to the moon, and spend it on some other public good that I think is worthless.

If I contribute it to a private charity, not enough money is raised, and I still don't get the public good I want.

On the other hand, if I vote for legislators whose platform includes the public good I want and a tax increase, I get the public good I want. I probably have to fund other public goods I'm less enthusiastic about, but that's politics, the art of the possible.

You, alone, can secure more public goods by putting your extra dollars in the treasury--exactly as many public goods as your dollars will secure if you vote for a politician who extracts that tax money, plus the same amount from other similarly affluent people, via the tax code.

No. This is transparently wrong. I would be happy to pay extra taxes if it resulted in, say, a universal health insurance system. In order for that to happen, my extra taxes have to be a part of a universal effort in which national tax rates for everyone go up. But I would not be happy to just pay some extra taxes, myself, if no one else paid extra taxes, and thus no universal health insurance system came about as a result. In case one, I am paying some extra money as part of a collective effort which buys something valuable for everyone. In case two, I am paying some extra money and getting diddly squat.

Basically I'm just saying the same thing Will McLean said above. I just can't understand how someone as intelligent as Megan can possibly have written the above passage, which seems willfully obtuse.

towards spending I disagree with?

Because your disagreement with the use of a new stoplight to regulate traffic flow at a busy intersection poses a serious hazard to the life and property of both of us. Therefore, if we are to have a system of civil roads, we both pay for the stoplight, a cop to watch for violations, and a court to enforce penalties.

I disagree. And I fail to see how you can convince me. How do you propose we solve this dispute? What is the middle ground, if you will?

It appears that some of you are conflating two separate issues: government spending versus financing of government spending. Discussions regarding how much each of us pay in taxes relates to the financing of government spending. Discussions regarding how much we give seniors in Medicare benefits relates to government spending itself. These are distinct issues, even though politicians like the blur the lines between the two. See, for example, social security. Payroll taxes, while supposedly earmarked for Social Security and Medicare, have been paying for unrelated government programs for years.

rob wrote: See, for example, social security. Payroll taxes, while supposedly earmarked for Social Security and Medicare, have been paying for unrelated government programs for years.

Yes, but this was primarily an opportunistic sleight-of-hand by politicians who wanted not the risks of confronting the taxpaying public with the real cost of their pet spending projects.

"I would not be happy to just pay some extra taxes, myself, if no one else paid extra taxes, and thus no universal health insurance system came about"

In other words, there's no moral imperative here. You feel you can keep your excess disposable income, not contribute to universal healtchare, and sleep well at night. Why won't you grant the rest of us the same right?

If, however, contributing excess income towards universal health plan is a moral imperative, why wait for the government? Why not start collecting money now, either for contribution to the eventual government program, or as a private charity function?

If, however, contributing excess income towards universal health plan is a moral imperative, why wait for the government?

Of the fifty zillion ways to respond to this question, I choose this: "universal" health care or insurance can by definition only be a function of government. No non-governmental entity can make a guarantee that every citizen will have health insurance. No non-governmental entity can guarantee that the revenue to fund such insurance will be forthcoming. Charity depends on the whims of the donors, and hence cannot offer universal guarantees. A right to health insurance, like the right to a lawyer or the right to education, can only be established by government.

Will Allen -They became a little frustrated with me when I asked why they were required to participate in the killing of our furry and feathered friends which inevitably results when the land is cleared to build a new Starbucks, since to my understanding, human beings had not yet evolved to need overpriced lattes for survival, or furniture from Ikea, for that matter.


What these folks really want is for others to share their preferences as to when it is o.k. to kill animals strictly for human comfort.

Um...no. Your listening skills are abomidable, and your ability to read other people's hearts are even worse. I never once asked you or anyone else to share my ethics. I tried to get you to understand that my ethics were not self-contradictory. You repeatedly ignored my explanations rather than addressing them, and continued to assert I was some kind of hypocrite.

You come across like those people who say that it's hypocritical to support the death penalty and yet oppose abortion. And they stick their fingers in their ears if someone explains where they draw their ethical lines. That doesn't mean you have to share such a person's views. I don't. It does mean that you should stop trying to blindly insist that they are a hypocrite if you want your arguments to be taken seriously.


What these folks really want is for others to share their preferences as to when it is o.k. to kill animals strictly for human comfort.

should be in italics above.

And to respond again to your post, since you brought the whole damn matter up all over again;

1. You have provided no evidence whatsoever other than your own bald assertion that building a Starbucks involves some kind of massive slaughter of any kind of animals. Pigeons in Central Park are a legitimate health risk. I provided citations to prove it which you blithely ignored.

2. I do not believe that animal rights trump property rights.

3. I said that I tried to find ways to minimize rather than eliminate animal suffering.

4. I indicated that humans were responsible for suffering deliberately inflicted, but were not responsible for wild animals.

My beliefs must be tremendously threatening to you, though, if you still dwell on them.

Though as long as we're looking deep into each others hearts and what not, I notice it was you who seemed to want me to change my views. A little projection, perhaps?

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