3 ms·

What’s the utility of being in a different economic class? There is more to money than just spending it and I’d argue there are large utility gains from crossin

by TimPC 4y ago

What’s the utility of being in a different economic class? There is more to money than just spending it and I’d argue there are large utility gains from crossing class boundaries. The academic models ignore any utility except spending and don’t even adequately account for things like more expensive high-quality goods being cheaper in the long run. So I don’t find this utility argument that proven or convincing.

fsckboy 4y ago
if the marginal utility of wealth declines for an individual, it declines for a population. you have to show that these things add, but it has been. in ye olden times there may have been strict class distinctions based on birth etc., but the notion of class you are using is hazy and undefined but basically is based on wealth, which does not slot neatly into categories but is continuous and differentiable and is a standard population density function, depending how you look, gaussian or pareto, etc. you just accounted for higher quality goods being cheaper in the long run in your head and you make that assessment when you purchase, so why do you think markets or models of markets can't handle that or that the people who study them haven't thought of it? they have. you being unimpressed with the argument is like me being unimpressed by what my doctor says. what are the odds he knows more about it than me, where "me" and "he" are extended across the population and all doctors?
- zozbot234 4y ago
  In theory, poverty traps can lead to increasing marginal utility of wealth, and make it quite rational to e.g. gamble on a lottery. However, the notion of a poverty trap is not very popular these days. The concept only ever had traction wrt. people in extreme poverty, and even for those it has now been shown that small increases in income are hugely beneficial. There's no need for what used to be called a "big push" to pull people out of the trap.
  - TimPC 4y ago
    Poverty traps are still very real and exist in most welfare systems. Small increases have to be targeted to not push someone over a clawback boundary in order to be beneficial. If you give someone $100 and they lose their subsidized housing as a result that’s still a poverty trap.

by TimPC 4y ago

fsckboy 4y ago

if the marginal utility of wealth declines for an individual, it declines for a population. you have to show that these things add, but it has been. in ye olden times there may have been strict class distinctions based on birth etc., but the notion of class you are using is hazy and undefined but basically is based on wealth, which does not slot neatly into categories but is continuous and differentiable and is a standard population density function, depending how you look, gaussian or pareto, etc. you just accounted for higher quality goods being cheaper in the long run in your head and you make that assessment when you purchase, so why do you think markets or models of markets can't handle that or that the people who study them haven't thought of it? they have. you being unimpressed with the argument is like me being unimpressed by what my doctor says. what are the odds he knows more about it than me, where "me" and "he" are extended across the population and all doctors?

zozbot234 4y ago
In theory, poverty traps can lead to increasing marginal utility of wealth, and make it quite rational to e.g. gamble on a lottery. However, the notion of a poverty trap is not very popular these days. The concept only ever had traction wrt. people in extreme poverty, and even for those it has now been shown that small increases in income are hugely beneficial. There's no need for what used to be called a "big push" to pull people out of the trap.
- TimPC 4y ago
  Poverty traps are still very real and exist in most welfare systems. Small increases have to be targeted to not push someone over a clawback boundary in order to be beneficial. If you give someone $100 and they lose their subsidized housing as a result that’s still a poverty trap.