Diffuse Costs, Concentrated Benefits

In a principles of economics class, I have to spend a lot of time explaining why the government puts into place policies that create inefficiencies in markets, or policies that don’t seem to make much sense. In a situation where you’re already faced with disseminating large amounts of information, I tend to emphasize one factor above all, the principle of concentrated benefits and diffuse costs. When we examine very simplistic market-changing tools like a price floor or a quota, we can clearly identify the winners–generally a really small group of people that benefits greatly–and the losers–generally a large group of people that loses out, but usually just a small amount. So even if the losses of the larger group outweigh the benefits to the smaller group, it’s hard to get the losers to rally around a cause to change things because what they’re losing is not quite worth the time to push for a change. Those who are winning have a strong incentive to make sure the policy stays in place to ensure their continued winning.

The press around the Occupy Wall Street protests is beginning to take form with a small twist on this outcome. Instead of just losing out a little bit, those who are losing out are losing out a lot. And though those who are winning still have a vested interest in maintaining the power structure, but even that is coming unraveled a bit. Warren Buffet’s offering to pay more taxes and in today’s Washington Post, Ezra Klein says there are a lot of people bitter at the fact that “You did everything you were told to do, and it didn’t work out.”

Maybe we’ve gotten far enough along the inequality path that the diffuse costs are big enough for individuals that they’re asking for change. That they don’t know what kind of change yet is definitely something that needs to be worked out, but perhaps not all that surprising. We had to know this wouldn’t last forever.

Advertisements

Cartoon Violence

There are all sorts of studies that claim that cartoon violence, particularly of the video-game variety, encourages children to be violent, but this morning I was treated to a cute little analysis of violence that most likely isn’t actually engendering any violence. It does bring up questions of exactly what is being represented, though. Does violence in New Yorker cartoon articles correlate with rates of violence in the real world?

There are myriad questions, of course, that one could ask that might strengthen or weaken the relationship. Whether the total number of cartoons (violent or not) is constant over decades, turnover in the cartoonists, who the cartoonists are, etc.

I’ve never really known any cartoonists, so I can’t say much about their average temperaments, or sources of inspiration, or how much they read the news, or how much their cartoons reflect other trends in society. It’s reasonable to assume that, however inaccurately, they have some idea of what’s going on, even if they don’t metaphorically have their finger on the pulse of the nation. But more than rates of actual violence or murder in real life, I wonder if the increases can be associated with differing levels of depression or other mood disorders. A quick google search did not reveal an easy way to get depression statistics in the same format as the New Yorker cartoon violence data (and even if it did, it’s unlikely that there are enough data points to get a statistically significant answer). I’m sure a health economist friend (or even my mom) could help me out with this, were I to pursue it.

Then, I thought, maybe confidence in government? This WSJ graph has historical presidential approval ratings. The discontinuities would make it difficult to analyze, but  could be aggregated over each decade. There might be a story, or even better, might be a story about stability. Perhaps more volatility in presidential approval ratings over time means more violence. Or some combination of level and volatility?

Regardless of the outcome of such a search, this is clearly not a case of causation. Even asking whether cartoon violence is predictive or reflective of actual trends in depression or presidential approval ratings would take much finer data and many more assumptions. But I think it’s fun to try to link trends in media to trends in other facets of life. I used to tell a friend, who complained often about seemingly obvious journalism–“People use technology to do stuff”-type articles, for instance–that they’re necessary for the historical record. They’re also for nerdy economists to read and try to find patterns over time.