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I'm not really convinced by his third point "Revealed Preference — Actions Speak Louder Than Words". I mean it's a useful concept to understand some interaction

by Ixio 9y ago

I'm not really convinced by his third point "Revealed Preference — Actions Speak Louder Than Words". I mean it's a useful concept to understand some interactions but it seems to me it also fails on some simple examples like payday loans and software bundling. "My point is that if the exchange is voluntary and there is no fraud or misrepresentation, then it is a win-win transaction." Though maybe it can be argued that with abusive loans and getting Windows on most computers the exchange is not voluntary?

candiodari 9y ago
How is a payday loan not a win-win transaction ? The person getting the loan obviously values money now more than total amount of money, for some reason (which may or may not make this preference entirely voluntary). The person providing the loan values total money more than having constant availability of all their money (ie. they're investors). And I'm sure you would argue they also value more money more than ethics/decency. Ie. the reason the economy works is that while price may be the same between buyers and sellers, value is subjective. Therefore it is a win-win in that both parties increase their perceived value through this transaction. This is also how a mortgage works, for instance.
- falcolas 9y ago
  > How is a payday loan not a win-win transaction Usually because the borrower is not in a rational state of mind, and because we as humans focus more on today than tomorrow. Payday loans (like the loan sharks of old) take advantages of this in order to put borrowers in positions that a rational, future conscious person would never get into. Economics say one thing, but it's the humans in the equation which muck up these otherwise ideal economic principals. Ultimately, economics should be there to serve people, not the other way around; payday loans are there to exploit people in need, not serve those who are in tough situations.
  - dismantlethesun 9y ago
    We can't assume that all of the borrowers aren't in a rational state of mind. And I'd hesitate to even say most of them aren't. Payday loans serve a pretty specific purpose: covering short-term cash flow when you can easily pay off the interest in the next term. This is a fairly common problem for people on the low-income scale with little emergency savings. If a car breaks down, it may cost $350 to fix it, and that money is necessary now and not 10 days from now. It used to be that people would ask for advances from their employers, but this is a solution that sidesteps that.
    - candiodari 9y ago
      Excellent response. The only thing I'd like to add is that you cannot design a system that allows for individualism and yet somehow does not require individuals "to be in a rational state of mind". Besides, that is like attempting to "protect" a drug addict from the consequences of their actions. It is the one thing in the world that is worse for them than letting them suffer.
      - falcolas 9y ago
        Yes, let's let the drug pushers continue to legally advertise and sell their harmful drugs, and be sure to assign the blame onto their customers. Great analogy.
    - falcolas 9y ago
      Personally, I couldn't disagree more. It's my belief that people who think that those who take on really poor debt are in their rational minds and have a complete understanding of the consequences are really just trying to make themselves feel better about how badly their peers being taken advantage of. "It's their own fault; the system is fine." But enough of beliefs. There is plenty of documentation about the costs to society available, including formal studies, which shows that even taking the time to better educate people about about the long term effects significantly reduces the uptake of payday loans. Yes, in a few cases, they are useful as replacement for emergency funds. But I'm convinced by the literature and studies done about payday loans that if this kind of use is even a majority - it's barely such. But don't take my word for it. Do a search for the "psychology of payday loans" and read some of the first party sources yourself.
igk 9y ago
I just commented with the concept of "bargaining inequality" which is more commonly used with employment, but it also works with Windows...this is one thing the popular america-libertarian intellectuals (the OP is funded by a libertarian think tank with the Koch brothers and their ilk as funding source) tend to dismiss/obfuscate in my opinion: they focus on the ideal "voluntary transaction" and generally don't address real-life,studied power dynamics in human groups
deleted 9y ago
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by Ixio 9y ago

candiodari 9y ago

How is a payday loan not a win-win transaction ? The person getting the loan obviously values money now more than total amount of money, for some reason (which may or may not make this preference entirely voluntary). The person providing the loan values total money more than having constant availability of all their money (ie. they're investors). And I'm sure you would argue they also value more money more than ethics/decency. Ie. the reason the economy works is that while price may be the same between buyers and sellers, value is subjective. Therefore it is a win-win in that both parties increase their perceived value through this transaction. This is also how a mortgage works, for instance.

falcolas 9y ago
> How is a payday loan not a win-win transaction Usually because the borrower is not in a rational state of mind, and because we as humans focus more on today than tomorrow. Payday loans (like the loan sharks of old) take advantages of this in order to put borrowers in positions that a rational, future conscious person would never get into. Economics say one thing, but it's the humans in the equation which muck up these otherwise ideal economic principals. Ultimately, economics should be there to serve people, not the other way around; payday loans are there to exploit people in need, not serve those who are in tough situations.
- dismantlethesun 9y ago
  We can't assume that all of the borrowers aren't in a rational state of mind. And I'd hesitate to even say most of them aren't. Payday loans serve a pretty specific purpose: covering short-term cash flow when you can easily pay off the interest in the next term. This is a fairly common problem for people on the low-income scale with little emergency savings. If a car breaks down, it may cost $350 to fix it, and that money is necessary now and not 10 days from now. It used to be that people would ask for advances from their employers, but this is a solution that sidesteps that.
  - candiodari 9y ago
    Excellent response. The only thing I'd like to add is that you cannot design a system that allows for individualism and yet somehow does not require individuals "to be in a rational state of mind". Besides, that is like attempting to "protect" a drug addict from the consequences of their actions. It is the one thing in the world that is worse for them than letting them suffer.
    - falcolas 9y ago
      Yes, let's let the drug pushers continue to legally advertise and sell their harmful drugs, and be sure to assign the blame onto their customers. Great analogy.
  - falcolas 9y ago
    Personally, I couldn't disagree more. It's my belief that people who think that those who take on really poor debt are in their rational minds and have a complete understanding of the consequences are really just trying to make themselves feel better about how badly their peers being taken advantage of. "It's their own fault; the system is fine." But enough of beliefs. There is plenty of documentation about the costs to society available, including formal studies, which shows that even taking the time to better educate people about about the long term effects significantly reduces the uptake of payday loans. Yes, in a few cases, they are useful as replacement for emergency funds. But I'm convinced by the literature and studies done about payday loans that if this kind of use is even a majority - it's barely such. But don't take my word for it. Do a search for the "psychology of payday loans" and read some of the first party sources yourself.

igk 9y ago

I just commented with the concept of "bargaining inequality" which is more commonly used with employment, but it also works with Windows...this is one thing the popular america-libertarian intellectuals (the OP is funded by a libertarian think tank with the Koch brothers and their ilk as funding source) tend to dismiss/obfuscate in my opinion: they focus on the ideal "voluntary transaction" and generally don't address real-life,studied power dynamics in human groups

deleted 9y ago

[deleted]