Tuesday, October 13, 2009

Comparative Advantage and Nobel Prizes

Before I started reading about Ricardo in high school I was stuck thinking in terms of absolute advantage. There's so many brilliant and talented people in this world, I thought, and no matter what I do there's always going to be countless others who can do it better than me so what's the point? I pretty much suck, and no matter how hard I try I'm still going to suck compared to so many others so why bother?

Discovering the subtle logic of comparative advantage made nonsense out of my old defeatist attitude. Just because someone else might be better than me in every conceivable measure of absolute achievement that doesn't necessarily mean I'm completely worthless, I can still have a comparative advantage in something! Doesn't sound terribly reassuring when you put it like that, but still, it made me feel a little better about myself.

For example just because I'll probably never become a Nobel laureate like Elinor Ostrom doesn't mean I'm wasting my time in college. Ostrom is a political scientist by trade but she's also an intimidatingly brilliant economist. Say one day I get a PhD in economics and a masters in political science (yeah right). Ostrom is still a much better economist and political scientist than I could ever be. She has absolute advantages in both political science and economics. Say she can publish 5 papers in the political science journals or 5 papers in the economics journals in a given year. By comparison I'm a disgrace, I can only publish 1 paper in political science or 2 in economics in the same year (and I write all my drafts in red crayon because I'm just that hopeless).

Ostrom will put me to shame no matter what subject she writes on, but that's OK. Being as brilliant as she is she has a higher time opportunity cost for writing research. For every paper on poli-sci she writes she has to give up on writing one econ paper. By comparison for every paper on poli-sci I write I have to give up writing two econ papers. I have a comparative advantage in writing on economics. If Ostrom focuses on publishing research in political science and I focus on economics and we both read and learn from each others articles the amount of research produced and knowledge gained will be greater than if we both produced the research on our own.

Of course in the real world I'm still writing hasty blog posts that almost no one will read and Ostrom, thankfully, is producing important research in both poli-sci and econ that will be read by countless people the world over. I just felt like working in something about the first female recipient of the Nobel prize in economics this week. Congrats to both Olstrom and Oliver Williams, who shared the prize this year.

1 comment:

  1. I used to let myself only focus on absolute advantage too. I think it's easier for people to focus on absolutes than comparatives, especially when it's at a personal level, rather than in business deals or trade agreements. I also think that witnessing people with such amazing comparative advantages can serve as an inspiration for others to better themselves.

    And I read the Wikipedia entry about Elinor Ostrom and it was really interesting, so thanks!