5 ms·

This story is a remarkable reductio-ad-absurdum of the Subjective Theory of Value.

SilasX 9y ago
No, it isn't. It introduces a non-standard situation where the actors' motivations are hard to model, and results in a non-standard outcome. That doesn't help build the firmer X-free worldmodel that I would count as a refutation of X. It requires us to posit someone who's money-hungry enough to do something disgusting for a large amount of money and yet who still would spend all of that gain to get some (for-most-people) trivial kick out of seeing someone else do the same. Well, yes, if two people both had that bizarre preference set, and you fully intuited the implications of that situation, it wouldn't be strange to view it as creation of that much value, because both of them satisfied each other's values. I don't see how this parable carries more kick than if you cut off the parable halfway through and said, "hah! Someone ate feces for money! That's silly, isn't it?" Yes, bizarre values lead to bizarre outcomes. But then, if that's all you want to prove, then just "go Rule 34" and link some fetish sites. To the extent that the parable has a valuable lesson, it's "back-and-forth exchange of money for services, if officially canceled out, is a kind of gain in utility that doesn't show up in formal accounting". (E.g. Alice provides romantic satisfaction to Bob, who simultaneously provides romantic satisfaction to Alice. They do not transfer money on net. "We're right where we were before, and didn't create any value." Um, yeah you did.) Or, if the point is that decisions can be regretted (which you could tweak the Alice/Bob example to include) , sure, but that doesn't shed a lot of light on the Subjective Theory of Value.
- natural219 9y ago
  It seems abundantly clear to me that humans routinely take actions that are far more irrational than eating a turd for $20,000. There are literally TV shows dedicated to that type of thing. The whole point is to draw absurdity to the Subjective Theory of Value -- the claim that, if a trade occurs, the trade must be Good, because both participants (with full information!) made a rational (!) calculation that this trade was in their best (!) long-term (!) interests. I find this proposition -- one that rests at the heart of economics -- to be incredibly dangerous and outrageously wrong, but since our entire economy / political system sort of depends on this being true, I don't know what to do about it.
  - SilasX 9y ago
    I was replying to the idea that the parable demonstrates those points for someone who doesn't already agree. (And that's not the SVT you're describing, but the SVT plus some ancillary claims that I agree are flawed -- see the last paragraphs of my other reply.)
    - natural219 9y ago
      I'm curious to pick your brain about this. What is a better concept to describe the idea that "if a trade occurs, it is Good?" I agree STV does contain real insights about the nature of trading, but there's some ideological extrapolation that transforms obviously correct things like marginal diminishing utility to "justifying every trade as it occurs as inexorably good" See also: http://www.paulgraham.com/wealth.html http://www.paulgraham.com/wealth.html
      - SilasX 9y ago
        You're actually right, I think -- I don't know of a specific (standard) term to describe that fallacy, and every time I've criticized its appearance, I've had to make up a neologism or spell it out expliclity [1]. ("Vulgar Keynesianism" is one term for it, but it's not the only school that does it so it's a fair term for the precice concept.) In any case, I was just trying to make the point that a) The turd-trade example does not help the debate about the underlying concepts -- regardless of label -- because it's uses an intuition breaking situation to build intuitions, which is no more insightful than pointing and laughing at people with bizarre preferences. b) STV is not the same as the thing the parable is criticizing. [1] Example comment I remember: https://news.ycombinator.com/item?id=12242525#12243088 https://news.ycombinator.com/item?id=12242525#12243088
        natural219 9y ago
        Man. Thank you so much. "Vulgar Keynesianism" is indeed a very good summary of my central complaint. although it arrives at it from a totally opposite direction. Sidenote: I miss when Paul Krugman was actually good :(. http://web.mit.edu/krugman/www/vulgar.html http://web.mit.edu/krugman/www/vulgar.html
natural219 9y ago
Ah. Thank you for teaching me that the Subjective Theory of Value is the specific cooky idea I find disastrously wrong in modern economics.

No, it isn't. It introduces a non-standard situation where the actors' motivations are hard to model, and results in a non-standard outcome. That doesn't help build the firmer X-free worldmodel that I would count as a refutation of X. It requires us to posit someone who's money-hungry enough to do something disgusting for a large amount of money and yet who still would spend all of that gain to get some (for-most-people) trivial kick out of seeing someone else do the same. Well, yes, if two people both had that bizarre preference set, and you fully intuited the implications of that situation, it wouldn't be strange to view it as creation of that much value, because both of them satisfied each other's values. I don't see how this parable carries more kick than if you cut off the parable halfway through and said, "hah! Someone ate feces for money! That's silly, isn't it?" Yes, bizarre values lead to bizarre outcomes. But then, if that's all you want to prove, then just "go Rule 34" and link some fetish sites. To the extent that the parable has a valuable lesson, it's "back-and-forth exchange of money for services, if officially canceled out, is a kind of gain in utility that doesn't show up in formal accounting". (E.g. Alice provides romantic satisfaction to Bob, who simultaneously provides romantic satisfaction to Alice. They do not transfer money on net. "We're right where we were before, and didn't create any value." Um, yeah you did.) Or, if the point is that decisions can be regretted (which you could tweak the Alice/Bob example to include) , sure, but that doesn't shed a lot of light on the Subjective Theory of Value.

natural219 9y ago
It seems abundantly clear to me that humans routinely take actions that are far more irrational than eating a turd for $20,000. There are literally TV shows dedicated to that type of thing. The whole point is to draw absurdity to the Subjective Theory of Value -- the claim that, if a trade occurs, the trade must be Good, because both participants (with full information!) made a rational (!) calculation that this trade was in their best (!) long-term (!) interests. I find this proposition -- one that rests at the heart of economics -- to be incredibly dangerous and outrageously wrong, but since our entire economy / political system sort of depends on this being true, I don't know what to do about it.
- SilasX 9y ago
  I was replying to the idea that the parable demonstrates those points for someone who doesn't already agree. (And that's not the SVT you're describing, but the SVT plus some ancillary claims that I agree are flawed -- see the last paragraphs of my other reply.)
  - natural219 9y ago
    I'm curious to pick your brain about this. What is a better concept to describe the idea that "if a trade occurs, it is Good?" I agree STV does contain real insights about the nature of trading, but there's some ideological extrapolation that transforms obviously correct things like marginal diminishing utility to "justifying every trade as it occurs as inexorably good" See also: http://www.paulgraham.com/wealth.html http://www.paulgraham.com/wealth.html
    - SilasX 9y ago
      You're actually right, I think -- I don't know of a specific (standard) term to describe that fallacy, and every time I've criticized its appearance, I've had to make up a neologism or spell it out expliclity [1]. ("Vulgar Keynesianism" is one term for it, but it's not the only school that does it so it's a fair term for the precice concept.) In any case, I was just trying to make the point that a) The turd-trade example does not help the debate about the underlying concepts -- regardless of label -- because it's uses an intuition breaking situation to build intuitions, which is no more insightful than pointing and laughing at people with bizarre preferences. b) STV is not the same as the thing the parable is criticizing. [1] Example comment I remember: https://news.ycombinator.com/item?id=12242525#12243088 https://news.ycombinator.com/item?id=12242525#12243088
      - natural219 9y ago
        Man. Thank you so much. "Vulgar Keynesianism" is indeed a very good summary of my central complaint. although it arrives at it from a totally opposite direction. Sidenote: I miss when Paul Krugman was actually good :(. http://web.mit.edu/krugman/www/vulgar.html http://web.mit.edu/krugman/www/vulgar.html

natural219 9y ago

Ah. Thank you for teaching me that the Subjective Theory of Value is the specific cooky idea I find disastrously wrong in modern economics.