Sunday, February 5, 2012

(Not So) Black & White

In the Darwin Economy, Robert Frank draws attention to an aspect of human nature, calling it "departures from rational choice without regret." When individuals do not regret their irrational choices they therefore, seem to lack any incentive to change those actions even when they present negative externalities to society as a whole. Therefore, regret, according to Frank, acts as a motivator so to speak, enabling and virtually hindering action based on whether an individual did or didn't regret those actions which will ultimately have some effect upon the collective. Yet, when individuals mindlessly impose externalities upon the collective, the unavoiable truth is that someone must pay.
This brings up the main point of Frank's argument. How are negative externalities placed upon society to be addressed? The author proposes that the government impose taxes upon behavior which is recognized as degrading to the general whole. Therefore, by imposing taxes on those who would continue to foster negative behavior, they might gain an incentive to learn from their own mistakes and protect the general public from selfish ambitions. But would they?

 I, on the other hand, am slightly skeptical. While I do not, in the slightest, doubt the good intentions of the book, I cannot help but think that there is more to the issue than the author directly admits. Many of the "harms" the author presents have not been recognized as an absolute evil within society and are based on a certain amount of speculation which is most likely why certain preventative actions have yet to be imposed.

For instance, the author brings up CO2 emissions. No one wants to breathe air pollution or to be victimized by preventable causes, I being one of them. Yet the author fails to speculate why these circumstances have come about in the first place. He seems to assume these issues are black and white, undebatable, and that those who don't feel these "evils" should be taxed, obviously fails to consider the good of the whole, as stated at the end of chapter 1. I for one believe the situations for which these harms arise are more complicated than just punishing ill intentions and therefore, must be addressed accordingly.

Take for example a highly controversial issue which effects all of us specifically as Alaskans, namely, particulates in the air from wood burning stoves...

According to the author, this would be considered an "indirect harm" which would require attention  immediately. But the individuals who use wood stoves do so usually because it is one of the only feasible methods available to them in providing heat in their homes, especially since fuel prices have steadily been rising. After all, when you live in a cabin at -40, your options are admittedly rather limited.
In addition, I do not believe these individuals desire to harm their fellow neighbors or to consciously impose negative externalities. Obviously, they are not bad people. It is only that the majority is often left with no other choice than to resort to the options with which their society has presented them, which is why I question the solution proposed in the book.
 Frank assumes that these issues have not been dealt with because of ignorance and a lack of regret. If there were additional options made available, then perhaps what may be regarded as irrational decision-making, based solely on negative externalities, would be considered more rational. In my opinion, I think it is only because these issues are more grey than either black or white, lacking in absolutes, which is why many of these issues, harmful or not, have failed to be addressed.
Of course, that doesn't mean the harmful particulates will simply go away or that I feel they should be ignored. On the contrary, it is simply that the problem must be dealt with more creatively if their is to truly to be a real solution void of extreme unintentional consequences.

Ultimately, we all have the potential to be the culprit by affecting those around us in potentially negative ways. Therefore, It is not so much about punishing "them" but about how it could so easily be us and whether the answer is simply to make money off the problem or to try to find a feasible solution.


  1. Your wood burning stove example is great Kristen. People are not competing to see who can be the warmest. They just want to be warm. What causes more harm, the externality of wood burning stoves or the extra cost of clean fuel on the lower income families of Fairbanks? We can see that even when put to a vote, people have declined wood stove regulation in Fairbanks in the past. This separates this example from the hockey helmet example.
    I believe Frank is a little quick to assign what is rational behavior and what is not.

  2. This is a thoughtful post. I think you are rightly pointing out the problem of subjective calculations of externality costs. From Frank's perspective the cost of the wood stove particulates are an evil blight on society which need to be taxed and regulated, but from the perspective of lower-class Fairbanks residents it's a cheap means towards winter survival. Who's benefit should win out? And how do we decide that? It's definitely not as straight-forward as it might appear at first glance (as you point out).