3 ms·

Is ‘More Efficient’ Always Better?

19 points by donohoe 16y ago

steveklabnik 16y ago
This is a question I've been giving a lot of thought to over the last 6 months or so. My conclusion: We should be attempting to create an ethical, moral set of rules first, and then optimizing for efficiency, rather than creating an efficient system and then moralizing it. Not that I have any answers for how to do this yet, but that's where I've decided my priorities lie.
- quanticle 16y ago
  Fortunately, this is a topic that has been widely discussed in academic philosophical circles. Read Rawls' "Theory of Justice" - he goes into great detail on how one ought to balance the competing forces of efficiency (e.g. maximal utility) and distributive justice.
  - steveklabnik 16y ago
    Thanks, I'll check this out.
- jbooth 16y ago
  I sympathize but the problem with that conclusion is "Who sets the ethical set of rules"? There's a lot of room for bottom-up using the democracy/capitalism combination, provided you don't let those who have money at one particular point in time totally break the system through lobbying, rent-seeking and regulatory capture (fail).
  - anamax 16y ago
    > There's a lot of room for bottom-up using the democracy/capitalism combination, provided you don't let those who have money at one particular point in time totally break the system through lobbying, rent-seeking and regulatory capture (fail). the "provided" applies to all systems and doesn't seem solvable. The only way to avoid it is to keep such things outside the political sphere.
    - jbooth 16y ago
      What, money and regulation? Does this mean you're against corporations being able to spend money on political campaigns? ;)
      - anamax 16y ago
        > Does this mean you're against corporations being able to spend money on political campaigns? Corps and unions spend money on political campaigns because of ROI. No law will stop that as long as there is ROI, as long as there is some benefit to owning politicians. So, if you don't want them to do that, you need to take the R out of the system, you need to make it so that owning politicians isn't profitable.
        jbooth 16y ago
        Man, I love conservatives. So, you're proposing eliminating the ability of politicians to influence how laws are written? Got anything more specific than that? Or is this like the Republican budget proposal.
        anamax 16y ago
        > Man, I love conservatives. Huh? > So, you're proposing eliminating the ability of politicians to influence how laws are written? Not at all. I'm proposing opposing politicians who pass certain kinds of laws. The US also some mechanisms to keep certain things outside the political sphere. Perhaps they could be used.
yummyfajitas 16y ago
Summary of the article: Pareto improvements are changes in allocation that harm no one. State A > State B if A is a Pareto improvement on B, i.e. if no one in State A is worse off than in State B and at least one person is better off. This is a partial ordering, which means that for some states "A > B == undefined". The example is that (2,2) < (2,3) == TRUE (and similarly, (2,2) < (3,2) == TRUE), but (2,3) < (3,2) is undefined. Since Pareto efficiency can not evaluate all states relative to each other, economists must define a total ordering which introduces subjectivity and ethical choices.
Lagged2Death 16y ago
"Astute readers will have figured out by now that literally every point falling on the entire solid curve in the graph must be “Pareto optimal” by the economist’s definition of that term..." Isn't that wrong? I can see how it could be true for the points on the curve between Y and Z. It's obviously not true for R and U, which result in decreased happiness for someone. What is the curve supposed to represent, anyway? Or to put it another way, why is it on the graph? What does it mean? What purpose does it serve?
- aamar 16y ago
  Y and Z are Pareto improvements on X, and they are also Pareto optimal. Points on the line between X and Y are also Pareto improvements on X but not Pareto optimal. R and U are not Pareto improvements on X, because as you note some people lose happiness, but they are Pareto optimal, since according to the model, no further Pareto improvements can be made on those positions. The point of the article, as I understand it, is that everyone would prefer Pareto improvements, but these are often infeasible. Economists seem to prefer Pareto optimums over non-optimums even when they are not Pareto improvements, perhaps because the word "optimum" and "efficient" have such positive suggestions. I think the curve is sort of relevant to making this point, but the harder I think about it, the more wrong it seems. It's meant to be (I guess) a theoretical model for what different public policies can achieve. But we would all prefer points between Y and Z to X, so why don't we enact policies that achieve that? If those policies are impossible or undiscovered, we should instead redraw the curve of optimality to reflect that, i.e. it should connect R, X, and U.
  - zb 16y ago
    But we would all prefer points between Y and Z to X, so why don't we enact policies that achieve that? It seems to me that that becomes a whole lot more difficult in a society with more than two members.
losethos 16y ago
Justice is better. Numbers for happiness are silly, I've learned. Everyone has highs and lows. Are people richer than Jesus or 99% of other humans who have lived? You want greater resources in the hands of the more skilled. Don't worry about income disparities, but making all boats rise. "Thou shall not covet." If 90% of wealth was in the hands of 5% of people and you equalized, people would have 10 times as much money... they go to the store... are there ten times the goods and services? Cuba or Soviet Russia. 6 "It will be as when a man who was going on a journey 7 called in his servants and entrusted his possessions to them. To one he gave five talents; 8 to another, two; to a third, one--to each according to his ability. Then he went away. Immediately the one who received five talents went and traded with them, and made another five. Likewise, the one who received two made another two. 9 But the man who received one went off and dug a hole in the ground and buried his master's money. After a long time the master of those servants came back and settled accounts with them. The one who had received five talents came forward bringing the additional five. 10 He said, 'Master, you gave me five talents. See, I have made five more.' His master said to him, 'Well done, my good and faithful servant. Since you were faithful in small matters, I will give you great responsibilities. Come, share your master's joy.' (Then) the one who had received two talents also came forward and said, 'Master, you gave me two talents. See, I have made two more.' His master said to him, 'Well done, my good and faithful servant. Since you were faithful in small matters, I will give you great responsibilities. Come, share your master's joy.' Then the one who had received the one talent came forward and said, 'Master, I knew you were a demanding person, harvesting where you did not plant and gathering where you did not scatter; so out of fear I went off and buried your talent in the ground. Here it is back.' His master said to him in reply, 'You wicked, lazy servant! 11 So you knew that I harvest where I did not plant and gather where I did not scatter? Should you not then have put my money in the bank so that I could have got it back with interest on my return? Now then! Take the talent from him and give it to the one with ten. 12 For to everyone who has, more will be given and he will grow rich; but from the one who has not, even what he has will be taken away. 13 And throw this useless servant into the darkness outside, where there will be wailing and grinding of teeth.' God says...speed morrow open scarce incorruptible wilfully fuller overcoming dissolvest forests

19 points by donohoe 16y ago

This is a question I've been giving a lot of thought to over the last 6 months or so. My conclusion: We should be attempting to create an ethical, moral set of rules first, and then optimizing for efficiency, rather than creating an efficient system and then moralizing it. Not that I have any answers for how to do this yet, but that's where I've decided my priorities lie.

quanticle 16y ago
Fortunately, this is a topic that has been widely discussed in academic philosophical circles. Read Rawls' "Theory of Justice" - he goes into great detail on how one ought to balance the competing forces of efficiency (e.g. maximal utility) and distributive justice.
- steveklabnik 16y ago
  Thanks, I'll check this out.
jbooth 16y ago
I sympathize but the problem with that conclusion is "Who sets the ethical set of rules"? There's a lot of room for bottom-up using the democracy/capitalism combination, provided you don't let those who have money at one particular point in time totally break the system through lobbying, rent-seeking and regulatory capture (fail).
- anamax 16y ago
  > There's a lot of room for bottom-up using the democracy/capitalism combination, provided you don't let those who have money at one particular point in time totally break the system through lobbying, rent-seeking and regulatory capture (fail). the "provided" applies to all systems and doesn't seem solvable. The only way to avoid it is to keep such things outside the political sphere.
  - jbooth 16y ago
    What, money and regulation? Does this mean you're against corporations being able to spend money on political campaigns? ;)
    - anamax 16y ago
      > Does this mean you're against corporations being able to spend money on political campaigns? Corps and unions spend money on political campaigns because of ROI. No law will stop that as long as there is ROI, as long as there is some benefit to owning politicians. So, if you don't want them to do that, you need to take the R out of the system, you need to make it so that owning politicians isn't profitable.
      - jbooth 16y ago
        Man, I love conservatives. So, you're proposing eliminating the ability of politicians to influence how laws are written? Got anything more specific than that? Or is this like the Republican budget proposal.
        anamax 16y ago
        > Man, I love conservatives. Huh? > So, you're proposing eliminating the ability of politicians to influence how laws are written? Not at all. I'm proposing opposing politicians who pass certain kinds of laws. The US also some mechanisms to keep certain things outside the political sphere. Perhaps they could be used.

yummyfajitas 16y ago

Summary of the article: Pareto improvements are changes in allocation that harm no one. State A > State B if A is a Pareto improvement on B, i.e. if no one in State A is worse off than in State B and at least one person is better off. This is a partial ordering, which means that for some states "A > B == undefined". The example is that (2,2) < (2,3) == TRUE (and similarly, (2,2) < (3,2) == TRUE), but (2,3) < (3,2) is undefined. Since Pareto efficiency can not evaluate all states relative to each other, economists must define a total ordering which introduces subjectivity and ethical choices.

Lagged2Death 16y ago

"Astute readers will have figured out by now that literally every point falling on the entire solid curve in the graph must be “Pareto optimal” by the economist’s definition of that term..." Isn't that wrong? I can see how it could be true for the points on the curve between Y and Z. It's obviously not true for R and U, which result in decreased happiness for someone. What is the curve supposed to represent, anyway? Or to put it another way, why is it on the graph? What does it mean? What purpose does it serve?

aamar 16y ago
Y and Z are Pareto improvements on X, and they are also Pareto optimal. Points on the line between X and Y are also Pareto improvements on X but not Pareto optimal. R and U are not Pareto improvements on X, because as you note some people lose happiness, but they are Pareto optimal, since according to the model, no further Pareto improvements can be made on those positions. The point of the article, as I understand it, is that everyone would prefer Pareto improvements, but these are often infeasible. Economists seem to prefer Pareto optimums over non-optimums even when they are not Pareto improvements, perhaps because the word "optimum" and "efficient" have such positive suggestions. I think the curve is sort of relevant to making this point, but the harder I think about it, the more wrong it seems. It's meant to be (I guess) a theoretical model for what different public policies can achieve. But we would all prefer points between Y and Z to X, so why don't we enact policies that achieve that? If those policies are impossible or undiscovered, we should instead redraw the curve of optimality to reflect that, i.e. it should connect R, X, and U.
- zb 16y ago
  But we would all prefer points between Y and Z to X, so why don't we enact policies that achieve that? It seems to me that that becomes a whole lot more difficult in a society with more than two members.

losethos 16y ago

Justice is better. Numbers for happiness are silly, I've learned. Everyone has highs and lows. Are people richer than Jesus or 99% of other humans who have lived? You want greater resources in the hands of the more skilled. Don't worry about income disparities, but making all boats rise. "Thou shall not covet." If 90% of wealth was in the hands of 5% of people and you equalized, people would have 10 times as much money... they go to the store... are there ten times the goods and services? Cuba or Soviet Russia. 6 "It will be as when a man who was going on a journey 7 called in his servants and entrusted his possessions to them. To one he gave five talents; 8 to another, two; to a third, one--to each according to his ability. Then he went away. Immediately the one who received five talents went and traded with them, and made another five. Likewise, the one who received two made another two. 9 But the man who received one went off and dug a hole in the ground and buried his master's money. After a long time the master of those servants came back and settled accounts with them. The one who had received five talents came forward bringing the additional five. 10 He said, 'Master, you gave me five talents. See, I have made five more.' His master said to him, 'Well done, my good and faithful servant. Since you were faithful in small matters, I will give you great responsibilities. Come, share your master's joy.' (Then) the one who had received two talents also came forward and said, 'Master, you gave me two talents. See, I have made two more.' His master said to him, 'Well done, my good and faithful servant. Since you were faithful in small matters, I will give you great responsibilities. Come, share your master's joy.' Then the one who had received the one talent came forward and said, 'Master, I knew you were a demanding person, harvesting where you did not plant and gathering where you did not scatter; so out of fear I went off and buried your talent in the ground. Here it is back.' His master said to him in reply, 'You wicked, lazy servant! 11 So you knew that I harvest where I did not plant and gather where I did not scatter? Should you not then have put my money in the bank so that I could have got it back with interest on my return? Now then! Take the talent from him and give it to the one with ten. 12 For to everyone who has, more will be given and he will grow rich; but from the one who has not, even what he has will be taken away. 13 And throw this useless servant into the darkness outside, where there will be wailing and grinding of teeth.' God says...speed morrow open scarce incorruptible wilfully fuller overcoming dissolvest forests