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Not the OP. Designing a policy for minimization of dead weight loss in the economy (typically centered around consumer surplus), with preferential properties in
by tomrod 5y ago
Not the OP. Designing a policy for minimization of dead weight loss in the economy (typically centered around consumer surplus), with preferential properties including time stability, enforceability, and fairness across implementees.
- lisper 5y agoBut "dead weight", "fairness", and the desirability of time stability (weighed against other considerations) are all judgement calls.
- tomrod 5y agoNo, they really aren't. - Lacking time stability means no one tomorrow has any incentive to stick to the policy, and means the policy is unlikely to succeed in its objectives. - Deadweight is lost efficiency - The only arguable one is "fairness", and to clarify I blunted the term to avoid the nuance of explaining Pareto optimality. But sure, we can also consider egalitarianism and other moral frameworks.
- ttfkam 5y agoMany industries got rid of deadweight only to find during the pandemic they and their industry had lost resilience when circumstances changed (which they always do). See: CPUs and GPUs in 2020-2021, baby formula in 2022, etc. It can absolutely be a judgment call.
- colinmhayes 5y agodeadweight loss has a specific meaning in economics.
- ttfkam 5y agoTIL
- wbsss4412 5y agoDeadweight loss refers to a net reduction in consumer+producer surplus within the economy. It has nothing to do with the everyday meaning of the term “deadweight”.
- ttfkam 5y agoTIL
- lisper 5y ago> - Lacking time stability means no one tomorrow has any incentive to stick to the policy, and means the policy is unlikely to succeed in its objectives. That's true, but time stability means that a bad policy is going to be maintained even in the face of evidence that it is bad. Deciding which is worse is, as I said, a judgement call. > Deadweight is lost efficiency The flip side of increased efficiency is decreased resilience. Without unused capacity (i.e. inefficiency) the slightest contingency will send the entire system into chaos. How much inefficiency you want to maintain as a hedge against contingencies is a judgement call. Different people have different risk postures. > Pareto optimality I think it's safe to assume that people on HN understand Pareto optimality (or are capable of looking it up). Do you really think that Pareto optimality is synonymous with "fairness"? > we can also consider egalitarianism and other moral frameworks. Of course we can consider these things. But that doesn't answer my question, which is how do we address them in a principled way that doesn't degenerate into a political dispute?
- colinmhayes 5y agoDeadweight loss is not a judgement call, it's an actual calculable amount, effectively the loss of productivity due to the tax. https://en.wikipedia.org/wiki/Deadweight_loss https://en.wikipedia.org/wiki/Deadweight_loss
- arethuza 5y agoMaybe its just the way things are described on Wikipedia, but isn't there an almost complete lack of citing any experiments or empirical evidence on that page?
- colinmhayes 5y agoI'm not sure what you mean. Deadweight loss is tautological. Maybe you're asking for evidence that taxes distort markets? If you accept that as true it's easy to see that deadweight loss is just the difference in surplus before and after the tax. Every econ paper on tax policy will try to measure the deadweight loss of the intervention.
- arethuza 5y agoI guess I just find it weird to have a page on Wikipedia about a quantity with no mention of what that quantity has ever been measured to be?
- kelseyfrog 5y agoWikipedia is a very difficult way to learn economics. In many ways it's like trying to learn mathematics or physics from an encyclopedia. The encyclopedic approach is - pedagogically speaking - sub-optimal.
- arethuza 5y agoBut if I look at the page for "friction" it has tables of actual values and many references to practical experiments? NB I was just comparing the writing style of that page (which seemed a bit odd to me) with other examples. https://en.wikipedia.org/wiki/Friction https://en.wikipedia.org/wiki/Friction
- marcosdumay 5y agoIf you go look at the theories, you will find that economics uses a lot of those overloaded terms, but they have perfectly reasonable objective meanings for them that are different from the popular subjective meaning.
- lisper 5y agoOK, but it doesn't help to answer a question posed by a layman using overloaded terms of art without defining them, or at least providing references, or at least pointing out that the words you are using do not mean what they mean in common usage. So where do I find these definitions? Because I am still highly skeptical that they can be defined in ways that do not conceal hidden judgement calls.
- vkou 5y agoIf we applied that same standard when talking about programming here, we would never get past talking eli5 semantics and definitions. You can be skeptical, but the cure for that skepticism is something more akin to taking an undergrad course, or two.