Giffen Data?

[Bill_Williams_UMKC]

[From Bill Williams UMKC 30 November 2002 2:00 PM CST]

Bill Powers [200:11:18:0736 MST] raised the possiblity that something like
the Giffen effect might occur when only one good is involved. And, there is
an example "the backward bending labor offer curve" which fits such a
discription. Suppose you have a laborer who has a goal for consumption.
Then at a given wage rate the laborer will work the number of hours
required to generate sufficient income to meet the goal. If the wage-rate
is increased then it requires fewer hours to meet the goal. So, there is a
perverse effect from the standpoint of orthodox theory that contrary to
expectations based upon a conventional supply and demand analysis, an
increase in the price paid to labor will result in labor reducing the
number of hours of labor voluntarily worked. And, the converse is also
true. Reducing the wage-rate will result in labor being willing to work
more hours. This effect was reported during world war two during landings
in North Africa. Initially too high a wage rate was paid to native labor to
unload supplies. The result was that many of the natives quit when they
percieved that they had earned enough. As a result of this experience in
subsequent landings a lower wage was paid and this solved the problem
initially experienced.

best

Bill Williams

[Bill_Powers1]

[From Bill Powers (2002.12.03.1633 MST)]

Bill Williams UMKC 30 November 2002 2:00 PM CST]

Bill Powers [200:11:18:0736 MST] raised the possiblity that something like
the Giffen effect might occur when only one good is involved. And, there is
an example "the backward bending labor offer curve" which fits such a
discription. Suppose you have a laborer who has a goal for consumption.
Then at a given wage rate the laborer will work the number of hours
required to generate sufficient income to meet the goal. If the wage-rate
is increased then it requires fewer hours to meet the goal. So, there is a
perverse effect from the standpoint of orthodox theory that contrary to
expectations based upon a conventional supply and demand analysis, an
increase in the price paid to labor will result in labor reducing the
number of hours of labor voluntarily worked. And, the converse is also
true. Reducing the wage-rate will result in labor being willing to work
more hours. This effect was reported during world war two during landings
in North Africa. Initially too high a wage rate was paid to native labor to
unload supplies. The result was that many of the natives quit when they
percieved that they had earned enough. As a result of this experience in
subsequent landings a lower wage was paid and this solved the problem
initially experienced.

I saw a mention of this in a footnote in an economics text by Samuelson.

Your concluding remark about "solving the problem" is, I hope, a bit of wry
humor. In fact I think this is exactly how "the problem" is solved in
general. If labor were paid enough to satisfy all its needs and wants,
there wouldn't be enough leverage to force them to work as much as
management desires, at the wages management wants to pay. I have seen
comments many times that if unemployment gets too low, something should be
done to increase it because low unemployment gives labor too much power
(meaning, of course, that it gives management too little). Alan Greenspan
said that once at a Congressional hearing, so a reference could probably be
dug up by someone with lots of patience.

Of course if it can be arranged that you want a lot more than you can
afford to buy, demand will never fall much, and certainly never to zero. If
you like conspiracy theories, there's the start of a good one.

Best,

Bill P.

[William.D_Williams]

[From Bill Powers (2002.12.03.1633 MST)]

Bill Williams UMKC 30 November 2002 2:00 PM CST]

I wasn't trying to be funny when I commented on the military planners reducing
the wage rate so that the natives would work more hours. Economics, after all,
is or at any rate despite the frequent misadventures is supposed to be a
serious subject. Ordinarily I think my sympathies would be with the native
workforce, but consider the situation-- there was as you will recall a war on.
And, the immeadiate opposition in Europe was facism. So, I'm not inclined to be
judgmental regarding the military planners exercising good sense and getting
the supplies unloaded rather acting as if they believed orthodox economic
doctrine and had attempted to "correct" the situation by _increasing_ the wage-
rate and making the problem worse.

A long time ago I gave a presentation devoted to control theory and economic
anomolies and mentioned the labor paradox. A Professor Davis from Jamacia in a
comment told a story about a sugar plantation manager and the paradox. One year
their was the precise combination of sun, rain, and no hurricanes that
generated an exceptionally good sugar cane crop. Far more than the labor supply
was going to be able to cut. The manager knew that raising the wage rate wasn't
going to increase his workforce. So what he did was hire a drummer and send him
into the cane cutter camps with a Sears Catalog where he went door to door
pointing at the illustrations telling the wives, "You see if your man would
work a few more hours you could have one of these."

Re: your comment on Samuelson. It is my impression that Samuelson in some
sense understands economics much better than one might think. He keeps slipping
comments in about things like the Giffen Parradox in his Nobel acceptance, and
mentioning the labor paradox you saw. But, he was all too well aware of which
direction the wind was blowing.

best

Bill Williams

···

>Bill Powers [200:11:18:0736 MST] raised the possiblity that something like
>the Giffen effect might occur when only one good is involved. And, there is
>an example "the backward bending labor offer curve" which fits such a
>discription. Suppose you have a laborer who has a goal for consumption.
>Then at a given wage rate the laborer will work the number of hours
>required to generate sufficient income to meet the goal. If the wage-rate
>is increased then it requires fewer hours to meet the goal. So, there is a
>perverse effect from the standpoint of orthodox theory that contrary to
>expectations based upon a conventional supply and demand analysis, an
>increase in the price paid to labor will result in labor reducing the
>number of hours of labor voluntarily worked. And, the converse is also
>true. Reducing the wage-rate will result in labor being willing to work
>more hours. This effect was reported during world war two during landings
>in North Africa. Initially too high a wage rate was paid to native labor to
>unload supplies. The result was that many of the natives quit when they
>percieved that they had earned enough. As a result of this experience in
>subsequent landings a lower wage was paid and this solved the problem
>initially experienced.

I saw a mention of this in a footnote in an economics text by Samuelson.

Your concluding remark about "solving the problem" is, I hope, a bit of wry
humor. In fact I think this is exactly how "the problem" is solved in
general. If labor were paid enough to satisfy all its needs and wants,
there wouldn't be enough leverage to force them to work as much as
management desires, at the wages management wants to pay. I have seen
comments many times that if unemployment gets too low, something should be
done to increase it because low unemployment gives labor too much power
(meaning, of course, that it gives management too little). Alan Greenspan
said that once at a Congressional hearing, so a reference could probably be
dug up by someone with lots of patience.

Of course if it can be arranged that you want a lot more than you can
afford to buy, demand will never fall much, and certainly never to zero. If
you like conspiracy theories, there's the start of a good one.

Best,

Bill P.

______________________________________________________________________
Do you want a free e-mail for life ? Get it at http://www.personal.ro/

______________________________________________________________________
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[Bill_Powers1]

[From Bill Powers (2002.12.10.2996 MST)]

Bill Williams (2002.12.10)

I wasn’t trying to be funny when I commented on the military planners
reducing

the wage rate so that the natives
would work more hours. Economics, after all, is or at any rate
despite the frequent misadventures is supposed to be a

serious subject. Ordinarily I think my sympathies would be with the
native

workforce, but consider the situation-- there was as you will recall a
war on. And, the immeadiate opposition in Europe was facism. So, I’m not
inclined to be judgmental regarding the military planners exercising good
sense and getting the supplies unloaded rather acting as if they believed
orthodox economic doctrine and had attempted to “correct” the
situation by increasing the wage-rate and making the problem
worse.

If this happened only in wartime, and in a “good” war when
there was a pretty good excuse for expediency, I would agree with you.
But I think it happens all the time, as I tried to argue in my post. If
there is anything to PCT, the natural way to behave is to slacken one’s
efforts once the goal is near and maintain only the level of effort
needed to keep the controlled variable(s) in or near their goal state(s).
Most of us think of the good life as one in which we work only as much as
is enjoyable, leaving ample time for pursuits that are optional and
non-remunerative. The only way to obtain a sustained large effort from
people is to make sure that their errors remain large, one way or
another. In other words, make sure they are not enjoying the good life.

As you suggest in one of your examples, one way to do this is to dangle
enticements before people with the hope that they will raise their
expectations and wants, and experience greater errors as they compare the
new set of reference levels with their previous state of existence.
Another is to gain control of major resources, including political power,
and simply arrange that people must put out higher levels of effort just
to maintain the status quo. I think both approaches are widely used. The
latter method is evident in the fact that it now takes at least two
people working full time to maintain a family that 50 years ago could be
maintained by the labor of one person. By some measures, the quality of
life has improved over those 50 years, but by others, which I maintain
are more important than considerations like how many CDs one owns or how
many hours of TV one watches every week, it has deteriorated a great
deal.

Re: your comment on Samuelson. It is my impression that
Samuelson in some
sense understands economics much
better than one might think. He keeps slipping comments in about things
like the Giffen Parradox in his Nobel acceptance, and mentioning the
labor paradox you saw. But, he was all too well aware of which direction
the wind was blowing.

Which way is that? I am very concerned about the way the Republicrat wind
seems to be blowing as our political parties merge with the business
world into a sort of World Corporation. What on earth do the movers and
shakers think will happen once we get rid of all regulation of industry,
all taxation of corporations and rich individuals, and all redistribution
of income? Once the producers and owners have all the money, to whom do
they plan to sell their goods and services? Are they incapable of seeing
this greatest paradox of all economic paradoxes? If you get everything
you want, you lose.
I’m not just arguing from personal preferences. To me, it seems clearer
than ever that we must understand all human systems as wholes, not just
one little part at a time, It seems clearer than ever to me that the
health of the economy depends on maintaining the buying power of the
consumer, all consumers, and that this buying power comes entirely from
the people who now seem to be trying to hoard it all for themselves – a
stupid and futile attempt if there ever was one. Again I ask, what will
they have when they have it all? Nothing! The stupidity of it all
is staggering.
I hope there is a revolution brewing in economics – you’re fortunate to
be so near its center. And I hope something develops soon, because
it looks to me as though the lives of all the people near and dear to me
are headed for disasters in every direction. Mary and I have recently
learned that the college funds we set up for our grandchildren (a lot of
money, for us) are about to collapse. The life is being drained out of
just about everything I find worthwhile, everything that signifies a
better future. And for what good human purpose? To make rich people
richer, and powerful people more powerful?

How wonderful for them.

Best,

Bill P.

[Fred_Nickols2]

[From Fred Nickols (2002.12.11.0800)] --

[From Bill Powers (2002.12.10.2996 MST)]

Bill Williams (2002.12.10)

>I wasn't trying to be funny when I commented on the military
planners >reducing

the wage rate so that the natives would work more hours. Economics,
after all, is or at any rate despite the frequent misadventures is
supposed to be a
serious subject. Ordinarily I think my sympathies would be with the native
workforce, but consider the situation-- there was as you will recall a
war on. And, the immeadiate opposition in Europe was facism. So, I'm not
inclined to be judgmental regarding the military planners exercising good
sense and getting the supplies unloaded rather acting as if they believed
orthodox economic doctrine and had attempted to "correct" the situation
by _increasing_ the wage-rate and making the problem worse.

If this happened only in wartime, and in a "good" war when there was a
pretty good excuse for expediency, I would agree with you. But I think it
happens all the time, as I tried to argue in my post. If there is anything
to PCT, the natural way to behave is to slacken one's efforts once the
goal is near and maintain only the level of effort needed to keep the
controlled variable(s) in or near their goal state(s). Most of us think of
the good life as one in which we work only as much as is enjoyable,
leaving ample time for pursuits that are optional and non-remunerative.
The only way to obtain a sustained large effort from people is to make
sure that their errors remain large, one way or another. In other words,
make sure they are not enjoying the good life.

I might have mentioned this example before and, if so, apologies for the
redundancy. Years ago, when doing sales training work with the
pre-divestiture Yellow Pages sales organization, I was shadowing one of the
canvassing crews when the crew chief (i.e., sales manager) asked me for my
thoughts about a problem he was having with a couple of his best sales
reps. It seems they would be having a great week and then call in
sick. He couldn't comprehend why and he was pretty convinced they weren't
really sick. What they were doing didn't make any sense to the manager.

Over beers at the end of a long day I got one of the sales reps to tell me
what was going on. It's been a long time but I'll try to get the
particulars straight. The reps called in sick two weeks after they'd had a
not so good run of sales and this also had to be the week in which the pay
period ended. The reason was the timing of commissions and the timing of
sick pay. Sick pay was paid in the pay period in which the sick time was
taken and was based on average commissions. Commissions were paid two
weeks after the sale. The reps were bolstering a lower than desired
commissions paycheck with sick pay. One rep put it very directly: "It's a
way of managing our income stream."

Fred Nickols
Distance Consulting
nickols@safe-t.net
www.nickols.us

[Richard_Marken2]

[ From Rick Marken (2002.12.11.1100)]

Bill Powers (2002.12.10.2996 MST)–
I am very concerned about the way the Republicrat
wind seems to be blowing as our political parties merge with the business
world into a sort of World Corporation. What on earth do the movers and
shakers think will happen once we get rid of all regulation of industry,
all taxation of corporations and rich individuals, and all redistribution
of income? Once the producers and owners have all the money, to whom
do they plan to sell their goods and services? Are they incapable of seeing
this greatest paradox of all economic paradoxes? If you get everything
you want, you lose.
Why should the Republicrat wind blow any way other than the way people
want it to blow? This is still a democracy and people are free to
vote for whomever they like. Clearly, people prefer the Republicrats overwhelmingly.
When you give people an industry regulating, rich taxing, redistributive
choice (like Nader) very few people take it. I think this means you
can’t blame the Republicrats for the problem. You have to blame the people
who are putting them in office: us!
The problem, I think, is that deterioration in the quality of life happens
very slowly. So people don’t really notice the change. Since people don’t
perceive things getting worse, they vote based on ideology rather than
on error signals resulting from a deteriorating quality of life. And I
think the prevailing “ideology” in the US is a combination of “can do”
individualism and self-righteous moralism – ie. Republicratism. The Republicans
dominate now, to some extent, because they’ve gotten the corner on self-righteous
moralism, thinks to Clinton, adding it (in the form of Southern Dixiecrats)
to their “individualism” image. So the Democrats really have nothing except
some hope that the inevitable economic/environmental/quality of life catastrophe
that will result from Republicrat policies (which, of course, includes
their own) will happen sooner rather than later.

I’m not just arguing from personal preferences. To
me, it seems clearer than ever that we must understand all human systems
as wholes, not just one little part at a time, It seems clearer than ever
to me that the health of the economy depends on maintaining the buying
power of the consumer, all consumers, and that this buying power comes
entirely from the people who now seem to be trying to hoard it all for
themselves – a stupid and futile attempt if there ever was one. Again
I ask, what will they have when they have it all? Nothing! The stupidity
of it all is staggering.
I hope there is a revolution brewing in economics

All it takes is seeing that the aggregate consumer and producer are basically
the same entity: the aggregate controller. The aggregate controller
acts to produce, via specialization, inputs that it wants. Specialization
increases productivity but also demands some way to distribute the gross
product of this specialization to those who produced it. This is
what money is for (as Adam Smith explained). It’s not for prestige or hoarding;
it’s for distributing the gross product of specialization to those who
produced it.
This control system view of the economy is quite different than what
seems to have become the conventional view, which is that producers and
consumers are two different entities. According to this view, producers
(basically, the “rich”) are those who actually make stuff (ignoring that
it’s non-rich labor that does the real making) and consumers who sit around
like Jabba the Hut consuming the fruits of the entrepreneurial zeal of
the rich producers. It’s this economic model that justifies the Republicrat
approach to economics, which is always biased toward the transfer of wealth
to the rich (the “productive ones”).

Best regards

Rick

···

---

Richard S. Marken, Ph.D.

The RAND Corporation

PO Box 2138

1700 Main Street

Santa Monica, CA 90407-2138

Tel: 310-393-0411 x7971

Fax: 310-451-7018

E-mail: rmarken@rand.org

[Bill_Williams_UMKC]

[From Bill Williams UMKC 11 November 2002 2:30]

Fred, your story of the salesforce behavior is a nice illustration of
people making unanticipated use of a policy created for other purposes to
control their situation.

Bill Currey, a week ago or more you mentioned an example of a control
theory paradox something like the Giffen paradox. THere's no rush, but I
continue to have an interest in such examples which illustrate control
theory in specific situations.

best

  Bill Williams

[Bill_Powers1]

[From Bill Powers (2002.12.12.0800 MST)[

Rick Marken
(2002.12.11.1100)]

I hope there is a revolution
brewing in economics

All it takes is seeing that the
aggregate consumer and producer are basically the same entity: the
aggregate controller.

I know you’ve been saying that, but I have some reservations about this
idea. It’s true that the individuals who operate the composite producer
are also consumers, but they have different goals in those two roles. The
income of the people who own or manage the composite producer is
generally tied to the part of the producer’s expenses that is called
profit. It is in their interest to increase profit as much as possible,
paying out capital income, wages, and investment costs to other consumers
or producers only to the extent absolutely necessary. I think this may be
a minimax problem, in that there may be some rate of payout at which
profit reaches a maximum, with lower profits for either greater or
smaller payouts. What I was writing about was the apparent ignorance of
the existence of payouts for wages and capital income that are too
small. If not enough is paid to consumers as wages and capital income
other than profits, there will not be enough income for the producer and
profits will fall as the business activity contracts. I think this is
what we see going on right now.

Instead of “cutting costs,” which ends up reducing the buying
power of consumers and thus further reducing producer income, what
producers ought to be focusing on is increasing the amount of money in
the hands of people who will turn right around and spend it on goods and
services. Some people –

Reich, for example – see this. This does not mean giving more money to
corporations or rich individuals. Recent history shows that when
corporations receive large windfalls, they do not invest it in increasing
their production or lowering prices, but use it to acquire other
companies and become even less efficient. Rich individuals do try to
invest their surplus money, but unfortunately if the population at large
does not have enough income to buy more than they are already buying,
increasing investment will have no effect on increasing production – who
could buy the extra goods? So giving more money to rich people will not
help the economy recover. In fact, increasing the share of total income
obtained by rich people must, relatively,decrease the share in the hands
of the general consumer, reducing consumer buying power and putting a
damper on producer income – as we are seeing right now.

This control system view of the economy is quite different than what
seems to >have become the conventional view, which is that producers
and consumers are >two different entities.

It’s not so much that producers and consumers are different entities, but
that consumers fall into two groups: those who benefit from increases in
producer costs other than profits (wage-earners, pensioners, etc), and
those who benefit from decreases in them, and resulting increases in
profits (mainly the owners and controllers of the means of production).
This is where the real conflict lies. Those who want to increase profits
want to sell the lowest quality in the lowest quantity for the highest
possible price, while those who live off producer expenses other than
profits want exactly the opposite: the most goods of the highest quality
for the lowest possible price.

Best,

Bill P.

[Richard_Marken2]

[From Rick Marken (12.12.02.1200)]

Dick Robertson (2002.12.12.1314CST) --

> (RM) Why should the Republicrat wind blow any way other than the way people
> want it to blow? This is still a democracy and people are free to vote for
> whomever they like. Clearly, people prefer the Republicrats overwhelmingly.

You mean like they did in 2000?

What I meant was that the total vote for Democrats and Republicans (the
"Republicrats") was _much_ greater than the vote for progressive (ie. Nader). But
the fact that nearly half the population of voters voted for the reactionary
candidate (Bush) over the conservative (Gore) shows that the wind sure ain't
blowin' our way;-)

> When you give people an industry regulating, rich taxing, redistributive
> choice (like Nader) very few people take it. I think this means you can't
> blame the Republicrats for the problem. You have to blame the people who are
> putting them in office: us!

Well, maybe, but how about the huge amounts of money devoted to scam hard
working, ordinary people-who are too busy making a living to be able to research
every false message-into voting against their own interests?

This is a good point. I want to think that money shouldn't matter. I mainly object
to private campaign financing because of the corruption (legalized bribery). I
like to think that people should be as immune to the deceptions of campaign
advertising as they are to that of any other kind of advertising. But the fact is
that people really don't have time to think about the issues carefully. So a
candidate with enough money to produce a well publicized and convincing deception
is at an advantage, I suppose. So that's two reasons (corruption and public
deception) for eliminating all private funding of campaigns (as I think they do in
most of Europe). But I think public financing of campaigns (like single payer
health care) is never going to happen here (in the US) -- well, not before there
is a complete collapse of the economy.

Best

Rick

···

--
Richard S. Marken, Ph.D.
The RAND Corporation
PO Box 2138
1700 Main Street
Santa Monica, CA 90407-2138
Tel: 310-393-0411 x7971
Fax: 310-451-7018
E-mail: rmarken@rand.org

[Dick_Robertson]

[From Dick Robertson,2002.12.12.1314CST]

Richard Marken wrote:

[ From Rick Marken (2002.12.11.1100)]

Bill Powers (2002.12.10.2996 MST)–
I am very concerned about the way the Republicrat
wind seems to be blowing as our political parties merge with the business
world into a sort of World Corporation. What on earth do the movers and
shakers think will happen once we get rid of all regulation of industry,
all taxation of corporations and rich individuals, and all redistribution
of income? o
(RM) Why should the Republicrat wind blow any way
other than the way people want it to blow? This is still a democracy
and people are free to vote for whomever they like. Clearly, people prefer
the Republicrats overwhelmingly.
You mean like they did in 2000?
When you give people an industry regulating, rich
taxing, redistributive choice (like Nader) very few people take it.
I think this means you can’t blame the Republicrats for the problem. You
have to blame the people who are putting them in office: us!
Well, maybe, but how about the huge amounts of money devoted to scam hard
working, ordinary people-who are too busy making a living to be able to
research every false message-into voting against their own interests?
The problem, I think, is that deterioration in the
quality of life happens very slowly. So people don’t really notice the
change. Since people don’t perceive things getting worse, they vote based
on ideology rather than on error signals resulting from a deteriorating
quality of life. And I think the prevailing “ideology” in the US is a combination
of “can do” individualism and self-righteous moralism – ie. Republicratism.
The Republicans dominate now, to some extent, because they’ve gotten the
corner on self-righteous moralism, thinks to Clinton, adding it (in the
form of Southern Dixiecrats) to their “individualism” image. So the Democrats
really have nothing except some hope that the inevitable economic/environmental/quality
of life catastrophe that will result from Republicrat policies (which,
of course, includes their own) will happen sooner rather than later.
You probably got that pretty much right.
I’m not just arguing from personal preferences. To
me, it seems clearer than ever that we must understand all human systems
as wholes, not just one little part at a time, It seems clearer than ever
to me that the health of the economy depends on maintaining the buying
power of the consumer, all consumers, and that this buying power comes
entirely from the people who now seem to be trying to hoard it all for
themselves – a stupid and futile attempt if there ever was one. Again
I ask, what will they have when they have it all?
Slaves.
Nothing! The stupidity of it all is staggering.

I hope there is a revolution brewing in economics
All it takes is seeing that the aggregate consumer and producer are basically
the same entity: the aggregate controller. The aggregate controller
acts to produce, via specialization, inputs that it wants. Specialization
increases productivity but also demands some way to distribute the gross
product of this specialization to those who produced it.
This control system view of the economy is quite different than what
seems to have become the conventional view, which is that producers and
consumers are two different entities. According to this view, producers
(basically, the “rich”) are those who actually make stuff (ignoring that
it’s non-rich labor that does the real making) and consumers who sit around
like Jabba the Hut consuming the fruits of the entrepreneurial zeal of
the rich producers. It’s this economic model that justifies the Republicrat
approach to economics, which is always biased toward the transfer of wealth
to the rich (the “productive ones”).

I think you should consider that hierarchical control systems control
for maximizing their system-concepts–which probably includes enhancing
onesself–though I don’t think anyone has studied that yet. Anyway,
if you concede that all HCSs work to enhance self then it seems to follow
that they inevitably get into competition for resources, with those having
the luck, and /or the cleverness, and/or the ruthlessness to begin to win
the larger share of resources, power, status being able to keep building
that with the advantages that a head start gives. The losers (even
if only relatively so) being the same kinds of creatures are also trying
to maximise all those same things, but with the disadvantages that follow
not having a head start.

And, ideologies should be seen as rationalizations that seek to scam
(anyone they can) into lowering their own reference settings for acquisition
in favor of those doing the scamming. Or, in other words, I
would argue that status-striving is a natural feature of being organized
as a HCS. And, maybe in the background of economics is the structure
of a class/status system being worked by everybody for self enhancement,
but slanted to favor those who at any one time are already most enhanced.

Best regards
Dick R.

[Bill_Williams_UMKC]

[From Bill Williams UMKC 12 December 2002 2:00PM CST]

Thinking about Bill Powers' remarks concerning the Backward Bending Labor
Offer Curve, recalled a comment by Arthur Young in 1771:

    "every one but an idiot knows that the lower classes must be kept
     poor, or they will never be industrious."

best

Bill Williams

[William.D_Williams]

[From Bill Williams UMKC 12 December 2002 2:15 PM CST]

[From Dick Robertson,2002.12.

Bill Powers

>> The stupidity of it all is staggering.
>> I hope there is a revolution brewing in economics
>

                           maybe in the background of economics is the

structure of a class/status system being worked by everybody for self
enhancement, but slanted to favor those who at any one time are already
most enhanced.

After the 2000 election I heard a report on NPR of a survey of voters, and
their attitudes. One of the goals of the survey was to determine why so many
people voted against their own economic interests. One of the very interesting
things but logical findings of the study was that people vote their perceived
economic interest not their _actual_ economic interest. Something like half of
those polled reported that they were in the top 1/5 of the income distribution.
So apparently people are making quite reasonable choices in terms of their
_perceived_ interests. Its just that their perceptions are somewhat delusional.

best

bill williams

···

______________________________________________________________________
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[Isaac_Kurtzer1]

I.kurtzer (2002.12.16.1000)

I just saw the title to book that might be revelant to the Giffen
thread though I haven't read it so I can't vouch for it.
"Puzzles and Paradoxes in Economics"
Mark Skousen and Kenna Talyor

The 50 P&P's include Giffen goods, thrift, gold absurdity, and leisure
among others.
We don't have a copy at my library and the paperback is pretty pricey:
56-70. Anyway, it might be of use to someone.

Isaac

[Bill_Williams_UMKC]

[From Bill Williams UMKC 16 December 2002 2:00PM CST]

Isaac [2002.12.1000] wrote mentioning Skousen and Talyor's _Puzzles and
Paradoxes in Economics_. The Puzzles & etc book isn't in our library, but I
did look at Skousen's 1990 book _The Structure of Production_. Skousen has
some interesting ideas about economic theory and the role that time plays in
economic theorizing. On page two he quotes Hahn to the effect that,
conventional economic theory "...assumes that everything is happening _at
the same time_ a false and misleading assumption." I hadn't previously been
aware that I'd been making such a _mistake_. Irony aside, I am not
inclined to spend my time puzzling over how it is possible for things to be
simultaneously happening at different times.

Skousen, however, does provide an extremely idiosyncratic treatment of
issues in macro-economic theory, and some of his criticisms of conventional
practices, such as the typical use of the circular flow diagram which seems
to me have merit.

best

  Bill Willliams

[Dick_Robertson]

[From Dick Robertson,2002.12.16.2020CST]

"William.D Williams" wrote:

[From Bill Williams UMKC 12 December 2002 2:15 PM CST]

> [From Dick Robertson,2002.12.
>

Bill Powers

> >> The stupidity of it all is staggering.
> >> I hope there is a revolution brewing in economics
> >

                           maybe in the background of economics is the
> structure of a class/status system being worked by everybody for self
> enhancement, but slanted to favor those who at any one time are already
> most enhanced.
>

After the 2000 election I heard a report on NPR of a survey of voters, and
their attitudes. One of the goals of the survey was to determine why so many
people voted against their own economic interests. One of the very interesting
things but logical findings of the study was that people vote their perceived
economic interest not their _actual_ economic interest. Something like half of
those polled reported that they were in the top 1/5 of the income distribution.
So apparently people are making quite reasonable choices in terms of their
_perceived_ interests. Its just that their perceptions are somewhat delusional.

best

bill williams

Bill,

This is very interesting. I have long had the impression that a lot of people are
persuaded to vote against their own interests in certain situations, but this is
the first real confirmation of it. The idea that they are controlling something in
their self-image makes a lot of sense to me.

Thanks,

Dick R.

···

[William.D_Williams]

[From Dick Robertson

Bill,

This is very interesting. I have long had the impression that a lot of

people are

persuaded to vote against their own interests in certain situations, but this

is

the first real confirmation of it. The idea that they are controlling

something in

their self-image makes a lot of sense to me.

Unfortunately I was driving while listening to the report of the study on NPR
and I didn't get the reference to who did the survey, or where it was
published. However, the distortion in people's perceptions that was reported
was so absurdly distorted I'm confident that the study can and will eventually
be repeated. I don't have much of an idea where to look for it. If anyone else
heard the report and has a reference I be most grateful for the citation.

There's also a fairly widely cited study that claims that two democracies have
never gone to war with each other. I don't have the citation at hand, but its
been widely reported and cited. This study at least provides some basis for
optimism concering peoples good sense when they have more or less control of
their situation.

best

Bill williams

···

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[Richard_Marken2]

[From Rick Marken (2002.12.18.0900)]

"William.D Williams" wrote:

One of the very interesting
things but logical findings of the study was that people vote their perceived
economic interest not their _actual_ economic interest. Something like half of
those polled reported that they were in the top 1/5 of the income distribution.
So apparently people are making quite reasonable choices in terms of their
_perceived_ interests. Its just that their perceptions are somewhat delusional.

I think where people perceive themselves to be in the income distribution is more
an imagination than a perception. It's a perception if they can see the actual
distribution of income and can compare their own income to that. But I think very
few people have any idea what the distribution of US household income actually
looks like. When you ask people where they are in this distribution they probably
mentally compare their own income to an imagined distribution of income. It is
interesting that so many imagine a distribution of income in which they are at the
top. But I don't think it's a delusion, really. It's just ignorance.

I'm also not sure that one's imagined place in the income distribution has much to
do with the "interests" that determine how one votes. I think that, as long as
things aren't going too badly for too many people, people probably just vote for
the candidate who seems to be most like oneself in intelligence and
self-righteousness;-)

Best regards

Rick

···

--
Richard S. Marken, Ph.D.
The RAND Corporation
PO Box 2138
1700 Main Street
Santa Monica, CA 90407-2138
Tel: 310-393-0411 x7971
Fax: 310-451-7018
E-mail: rmarken@rand.org

[Acree_Michael]

[From Mike Acree (2002.12.18.1310 PST)]

Bill Williams UMKC 12 December 2002 2:15 PM CST]--

Something like half of
those polled reported that they were in the top 1/5 of the income distribution.

There's a more general phenomenon here. If you ask people their expectations about a medical treatment they are about to undergo, everybody says they expect to do better than average. This could be called the Wobegon Effect.

Mike

[Bill_Williams_UMKC]

[From Bill Williams UMKC 18 December 2002 2:40 PM CST]

[ Rick Marken 2002.12.18.0900] wrote about most people reporting that their
income was in a top bracket,

I don't think it's a delusion, really. It's just ignorance.

It can't be "just ignorance." Something is going on which results in
people misreporting their standing in the income distribution. It's like
the kids on the Prarie HOme Companion who are "all above average." But, it
is something that wouldn't be all that difficult to replicate. Or, who
knows maybe I was delusional when I only thought I heard it on NPR.

best

bill Williams

[Bill_Williams_UMKC]

Mike,

Somehow your email came through with the message clipped. Take a look at
how it looks on the CSGnet archive.

Bill