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I thought his main policy suggestion was just solving poor people's problems without strings attached (has the same effect and is cheaper to run with no bureauc

by loumf 16y ago

I thought his main policy suggestion was just solving poor people's problems without strings attached (has the same effect and is cheaper to run with no bureaucracy).

yummyfajitas 16y ago
His main theory is that poor people's utility function is flat. The policy implications are more nuanced than he says. We should do one of two things: 1.) give the poor so much money that they get into the region with an upward sloping utility function, assuming such a region exists. 2.) Tax the poor, since taking some of their money will not make them worse off (what's one more bee sting?). Mysteriously, he never mentions 2).
- archgoon 16y ago
 Because 2 doesn't solve the problem the problem of poverty. I don't find that particularly mysterious or dishonest.
- CountSessine 16y ago
 1.) The Bee Sting model doesn't imply that the poor have a completely flat utility function - just a huge drop-off at some point and then a gradually decreasing plateau from there on. Indeed, the poor do seek to improve their utility functions - with booze and drugs and short-term gratification - in ways that would never allow them to overcome that seemingly insurmountable drop-off. The initial drop-off is the chief characteristic of the Bee Sting model. 2.) Utility functions are mathematical tools, and our interpretations of and use for them don't exist in a moral vacuum. Why should tax policy seek to minimize it's effect on our utility functions at all? Why not take $40000 from Warren Buffet AND the primary school teacher? Local movement on one's utility function is important, but so is absolute position, with all of the attendant moral implications.
 - yummyfajitas 16y ago
 1.) If the utility function of the poor wasn't flat, they would make some effort to cure a few bee stings. 2) Tax policy should minimize impact on our utility because the goal is (in principle) to harm people as little as possible. This is why we consider it fair to take $1 million from Buffet but nothing from a poor person - the loss of $1 million will harm Buffet less than the loss of $50 would hurt a poor person. If Karelis is right, taking $50 from a poor person won't hurt them at all - what's one more bee sting?
 - CountSessine 16y ago
 1.) No, if the utility function of the poor wasn't flat, they would make some effort to address, not cure, a few bee stings. And in fact they do address those bee stings - they booze and drug themselves into numbness. There's no point in curing anything less than all the bee stings, because of the huge drop-off in their utility function. Would it make any sense at all for you to attend 1/2 of medical school if you wouldn't eventually enjoy the pay-off of becoming a doctor? Would doing half the monumental amount of work to start a successful business make you rich? And yet you probably wouldn't think that you have a flat utility function, would you? 2.) This is only relevant if you make the flat-utility function assumption, which I don't think is true.
 - yummyfajitas 16y ago
 If U(4 bee stings) > U(5 bee stings), a poor person would attempt to eliminate a bee sting since they would increase utility by doing so. The fact that there is a spike at x=0 bee stings is irrelevant, it does not make it pointless to go from 5 stings to 4, it just means that going from 1 to 0 makes you happier than going from 5 to 4. If Karelis asserts there is no utility gain in going from 5 to 4 bee stings, then Gain = 0 = U(4 bee stings) - U(5 bee stings), or U(4 bee stings) = U(5 bee stings). That's a flat utility function. Would it make any sense at all for you to attend 1/2 of medical school if you wouldn't eventually enjoy the pay-off of becoming a doctor? Would doing half the monumental amount of work to start a successful business make you rich? And yet you probably wouldn't think that you have a flat utility function, would you? You've just described exactly what a flat utility function means. U(0 years of med school) = U(half of med school). And similarly, there would be no harm in kicking people out of med school who would not finish anyway.

by loumf 16y ago

I thought his main policy suggestion was just solving poor people's problems without strings attached (has the same effect and is cheaper to run with no bureaucracy).

yummyfajitas 16y ago

His main theory is that poor people's utility function is flat. The policy implications are more nuanced than he says. We should do one of two things: 1.) give the poor so much money that they get into the region with an upward sloping utility function, assuming such a region exists. 2.) Tax the poor, since taking some of their money will not make them worse off (what's one more bee sting?). Mysteriously, he never mentions 2).

archgoon 16y ago
Because 2 doesn't solve the problem the problem of poverty. I don't find that particularly mysterious or dishonest.
CountSessine 16y ago
1.) The Bee Sting model doesn't imply that the poor have a completely flat utility function - just a huge drop-off at some point and then a gradually decreasing plateau from there on. Indeed, the poor do seek to improve their utility functions - with booze and drugs and short-term gratification - in ways that would never allow them to overcome that seemingly insurmountable drop-off. The initial drop-off is the chief characteristic of the Bee Sting model. 2.) Utility functions are mathematical tools, and our interpretations of and use for them don't exist in a moral vacuum. Why should tax policy seek to minimize it's effect on our utility functions at all? Why not take $40000 from Warren Buffet AND the primary school teacher? Local movement on one's utility function is important, but so is absolute position, with all of the attendant moral implications.
- yummyfajitas 16y ago
 1.) If the utility function of the poor wasn't flat, they would make some effort to cure a few bee stings. 2) Tax policy should minimize impact on our utility because the goal is (in principle) to harm people as little as possible. This is why we consider it fair to take $1 million from Buffet but nothing from a poor person - the loss of $1 million will harm Buffet less than the loss of $50 would hurt a poor person. If Karelis is right, taking $50 from a poor person won't hurt them at all - what's one more bee sting?
 - CountSessine 16y ago
 1.) No, if the utility function of the poor wasn't flat, they would make some effort to address, not cure, a few bee stings. And in fact they do address those bee stings - they booze and drug themselves into numbness. There's no point in curing anything less than all the bee stings, because of the huge drop-off in their utility function. Would it make any sense at all for you to attend 1/2 of medical school if you wouldn't eventually enjoy the pay-off of becoming a doctor? Would doing half the monumental amount of work to start a successful business make you rich? And yet you probably wouldn't think that you have a flat utility function, would you? 2.) This is only relevant if you make the flat-utility function assumption, which I don't think is true.
 - yummyfajitas 16y ago
 If U(4 bee stings) > U(5 bee stings), a poor person would attempt to eliminate a bee sting since they would increase utility by doing so. The fact that there is a spike at x=0 bee stings is irrelevant, it does not make it pointless to go from 5 stings to 4, it just means that going from 1 to 0 makes you happier than going from 5 to 4. If Karelis asserts there is no utility gain in going from 5 to 4 bee stings, then Gain = 0 = U(4 bee stings) - U(5 bee stings), or U(4 bee stings) = U(5 bee stings). That's a flat utility function. Would it make any sense at all for you to attend 1/2 of medical school if you wouldn't eventually enjoy the pay-off of becoming a doctor? Would doing half the monumental amount of work to start a successful business make you rich? And yet you probably wouldn't think that you have a flat utility function, would you? You've just described exactly what a flat utility function means. U(0 years of med school) = U(half of med school). And similarly, there would be no harm in kicking people out of med school who would not finish anyway.