Mike Konczal: Here’s the normal story. Picture you are in a room with 10 people. Each of them has a slice of cake. How much you are willing to pay for a slice of the cake is the ‘marginal utility’ of having it, and the more cake you have the less any more cake is worth to you. You’d be willing to pay a $1 for the first slice of cake, but you’d only be will to pay 90 cents for the second slice. You’d only be willing t…
If you change the good to be "five guys stop screaming" or "ten guys ..." then then MU may be once again diminishing.
A common example of this is given with eggs. You may only like omelets, which take three eggs apiece. So, a third egg is worth more to you than the first two. But if the good is considered as "three eggs", a different good entirely, the LoDMU holds.
it's amazing how few policymakers realise that. mostly, the poor tend to be infantilised and patronised.
To be blunt, quite a few politicians really don't want changes to the current status because it would endanger their power-base. If you ran on an issue, it is helpful not to solve the issue and blame the other guy for not solving it. One example is bilingual education. There are very effective groups and lessons that can teach students English in a short amount of time, allowing the student to be in the same classroo…
Not only that, but there's money involved. How many billions are sent in foreign aid? Some of that money disappears due to corruption and who doesn't want some corruption happening ;p
Hi. I'd like to see if I can offer you some personal insight about the plausibility of extrapolating evidence from the scenarios you describe into broader policy judgments. Currently I'm in a Ph.D. program in a field I find extremely interesting, and am quite happy with my position relative to my goals and background. A few years ago, however, I was living in a one room apartment above an auto body shop, sharing a ki…
Very good comment with some really good observations, thanks!
Mike Konczal: Here’s the normal story. Picture you are in a room with 10 people. Each of them has a slice of cake. How much you are willing to pay for a slice of the cake is the ‘marginal utility’ of having it, and the more cake you have the less any more cake is worth to you. You’d be willing to pay a $1 for the first slice of cake, but you’d only be will to pay 90 cents for the second slice. You’d only be willing t…
I wish the proponents of this theory would carry it to it's logical conclusion: we should tax the poor more heavily than the middle class. Sure, we might be imposing one extra screaming guy on them. But so what? The harm to them is minimal, only $0.01 of diminished utility. This is the logical conclusion to Karelis' bee sting theory of poverty. Yet neither he nor any of his proponents are willing to follow their theo…
From Charles Karelis. This objection is treated in my book. I show that it would take only a small transfer from the richest people in the U.S. to the poorest to relieve their poverty entirely, which would have the greatest positive impact on aggregate well-being of all the options. The conventional wisdom, that the poorest people have the greatest marginal utility for a dollar, salves the conscience of the middle class by implying that small transfers can make a big positive impact on the well-being of the poorest people. The inconvenient truth is that only sizable transfers can make a significant difference to the well-being of the poorest people.
Mike Konczal: Here’s the normal story. Picture you are in a room with 10 people. Each of them has a slice of cake. How much you are willing to pay for a slice of the cake is the ‘marginal utility’ of having it, and the more cake you have the less any more cake is worth to you. You’d be willing to pay a $1 for the first slice of cake, but you’d only be will to pay 90 cents for the second slice. You’d only be willing t…
If you change the good to be "five guys stop screaming" or "ten guys ..." then then MU may be once again diminishing. A common example of this is given with eggs. You may only like omelets, which take three eggs apiece. So, a third egg is worth more to you than the first two. But if the good is considered as "three eggs", a different good entirely, the LoDMU holds.
From Charles Karelis. Of possible interest, the "lumpy good" rebuttal of my hypothesis is treated in detail in my book. In essence, while there are obviously goods such that sub-threshold quantities have no utility whatever (fewer than four tires or two shoes, perhaps), most "reliever goods" are not examples of that. For instance, if I have six dents in my car, I prefer the hammering out of the last unfixed dent to the hammering out of the first unfixed dent, the one that leaves five more to go, BUT I prefer the hammering out of that first dent to the hammering out of none.There is more to it, and lots of examples in the book, but that's the heart of the matter, in my view.
Mike Konczal: Here’s the normal story. Picture you are in a room with 10 people. Each of them has a slice of cake. How much you are willing to pay for a slice of the cake is the ‘marginal utility’ of having it, and the more cake you have the less any more cake is worth to you. You’d be willing to pay a $1 for the first slice of cake, but you’d only be will to pay 90 cents for the second slice. You’d only be willing t…
It is a commonly used argument that the lives of poor people are very hard and unpleasant and that dealing with the hardships sucks out all their energy and brings down their spirits so they can't take advantage of all the opportunities that middle-class people have to improve their situation. The problem I see with this reasoning is that if you consider the entire range of standards of living which people had throug…
From Charles Karelis. Surely, as you point out, there is no absolute standard of poverty across different times and places. Nevertheless, the suffering of poor Americans today, some of whose objective circumstances would have qualified them for the middle class back in the U.S. of 1930, is real suffering, and seems to call for a response. In addition, I think it lowers the marginal utility of small improvements in their consumption. The conundrum is, that in a (we hope) super-prosperous future America, there will be poor people (by the standards of that time), who are objectively better off than middle class Americans today, and it is (for many people at least) hard to care a great deal about their plight. So do we absolutize contemporary intuitions about poverty and say these future people won't be "really" poor, or do we say they will be really poor but that that doesn't impose a moral obligation on us today, e.g. to conserve so they will be less "poor"? Neither answer feels totally right.
Mike Konczal: Here’s the normal story. Picture you are in a room with 10 people. Each of them has a slice of cake. How much you are willing to pay for a slice of the cake is the ‘marginal utility’ of having it, and the more cake you have the less any more cake is worth to you. You’d be willing to pay a $1 for the first slice of cake, but you’d only be will to pay 90 cents for the second slice. You’d only be willing t…
It is a commonly used argument that the lives of poor people are very hard and unpleasant and that dealing with the hardships sucks out all their energy and brings down their spirits so they can't take advantage of all the opportunities that middle-class people have to improve their situation. The problem I see with this reasoning is that if you consider the entire range of standards of living which people had throug…
From Charles Karelis. Surely, as you point out, there is no absolute standard of poverty across different times and places. Nevertheless, the suffering of poor Americans today, some of whose objective circumstances would have qualified them for the middle class back in the U.S. of 1930, is real suffering, and seems to call for a response. In addition, I think it lowers the marginal utility of small improvements in their consumption. The conundrum is, that in a (we hope) super-prosperous future America, there will be poor people (by the standards of that time), who are objectively better off than middle class Americans today, and it is (for many people at least) hard to care a great deal about their plight. So do we absolutize contemporary intuitions about poverty and say these future people won't be "really" poor, or do we say they will be really poor but that that doesn't impose a moral obligation on us today, e.g. to conserve so they will be less "poor"? Neither answer feels totally right.
At 9 months, he had completed his goal, and a family member fell ill. Wait, what was this? He got faced with a situation he couldn't handle with wise decision-making, saving, and elbow grease and had to tap into his riches to get himself out? You know, the real problem is that he got a nice apartment and car. If he lived in a shack and walked everywhere, I bet he'd have been able to help his family member out. Was he…
The only reason he had to help his relative when they fell ill is because although he was playing poor, he technically still had the money. Refusing to help the family member for the sake of making a point would be highly unethical. Had he actually been that poor (only 5k in his name at the time), then he would have been under no real obligation to drop everything and support that family member.
If you are right, and money is "the only reason he had to help his relative," that would actually prove his experiment failed -- that for all his pluck, his savings of $5,000 were not sufficient to help a sick relative. The fact that his relatives tend to be better off than those of the genuine poor would only reinforce this.
As it happens, his experiment might not actually be a failure, because what you're saying seems dubious -- people help sick relatives for all kinds of reasons beyond possessing money. If he quit the experiment to contribute love or support, for example, that does not conclusively prove it wrong (although it does raise the issue that it would be much harder for a poor person to contribute such support to a sick relative -- time is not free and quitting a job has more dire consequences when you're poor).
I read the whole article, however, I didn't think it did a good job of getting to the bottom of everything that does matter. The article needed to give people a better sense of the situation of the poor, by providing more insights. Otherwise, people who've never experienced poverty would not understand why it's so important to help these people out. The best reporter on an issue like this is someone who actually made it out of poverty and is actively trying to help their own people.
The only reason he had to help his relative when they fell ill is because although he was playing poor, he technically still had the money. Refusing to help the family member for the sake of making a point would be highly unethical. Had he actually been that poor (only 5k in his name at the time), then he would have been under no real obligation to drop everything and support that family member.
If you are right, and money is "the only reason he had to help his relative," that would actually prove his experiment failed -- that for all his pluck, his savings of $5,000 were not sufficient to help a sick relative. The fact that his relatives tend to be better off than those of the genuine poor would only reinforce this. As it happens, his experiment might not actually be a failure, because what you're saying se…
In absence of money, he would be unable to help the relative. The reason why he helped is because it's human to do so. The reason why that was an option is because he had money.