On the Krug again
I feel an urge to write about beer (which is unusual, because I usually prefer to drink it), and economics (which is just unusual). I know the rational response to this urge is to go and lie down in a darkened room until it goes away again (the urge, not the beer), but whoever said there was any rationality in me? Insert your own joke about rational expectations here, please, because I can't think of one.
This latest urge is as a result of re-reading some Paul Krugman, whose book "The Accident Theorist" I have borrowed off my brother, the bastard. (I was the one who bought it for him originally, and having discovered it in his bedroom at my parents' house, along with other long-forgotten delights such as The Beano Annual 1988, I can only assume that he enjoyed it as much as my other presents, such as the carefully chosen book "Croquet for the Advanced Player".) Krugman is a very good author whose declared aim is to make economics accessible to the layman without deluging it in maths. This suits me down to the ground as someone who is interested in economics but can't handle advanced maths. I did half of my first degree in economics and managed to write four economics finals papers without including a single equation. I'm interested in the theories, the aspects of human behaviour, and the reasons for people doing things at an individual level, and how that translates on an economy-wide basis. But I'm not interested in mathematics, beyond that which allows me to work out my change in the off-licence, and to use Pythagoras's Theorem to work out which croquet shot is the shortest. You think I'm joking about that, don't you?
And reading the Krugman has reminded me about one of my favourite concepts in economics, that of Pareto efficiency. A situation is Pareto inefficient where you can make an alteration that will make at least one person better off, while at the same time making nobody worse off. And similarly, if you can't do that then the situation is Pareto efficient. The trouble is that Pareto efficiency isn't actually a terribly useful concept in the real world (not that many economists live there, of course) because it's pretty damn hard to think of a situation where you could make somebody better off without making anybody worse off. I recall the Journal of Economic Perspectives (my favourite periodical by far at university because of the paucity of equations in it) asking its readers to come up with a real world example, and only getting one answer, which was allowing cars to turn left against a red light, which isn't allowed in the UK.
I couldn't come up with anything either. But I think something pretty close is my latest hobbyhorse, which is beer bottles without screw tops. And in England, that's about 99% of beer bottles. Why? I just don't understand it. In Europe a lot of beer has screw-top caps, and in Canada and America, from my recollection, almost all of it does. It doesn't seem to harm the beer. Heck, most wine these days has screw-top caps, and that's far more sensitive than beer (certainly the tasteless, sorry, crisp and cold, lagers I prefer). But the beer industry here still stubbornly clings to the prise-off caps just as stubbornly as the prise-off caps cling to the bottles. Which is fine most of the time, other than when you forget your bottle-opener at a picnic, or want to open a beer on the way to your poker game, or find that your cheap, rented cottage doesn't have a bottle-opener any more, or discover that your one-year old daughter has hidden your opener as part of her latest game, or any one of a number of other scenarios which don't arise very often but make you RAGE AGAINST THE MACHINE with demented anger when they do occur because of the sheer pointlessness of it. (Then you try to open the bottle with your teeth and you soon have something else to rage against.)
And yet even this isn't Pareto inefficient because if I became supreme dictator of the world and made screw-top caps compulsory (which believe me I would do almost immediately on assuming power, right after making blocking yellow-box junctions a capital offence and banning broccoli) then no doubt the manufacturers of bottle-openers would be quick to point out that there's almost always someone who is made worse off, whenever you make everyone else better off.
I'll just have to start buying my beer in cans.
Nick
Playlist: Mary Chapin Carpenter - Downtown Train (what a terrific version this is); Mary Chapin Carpenter - This Is Love; Shawn Colvin - Someday; The Kinks - Dedicated Follower of Fashion; Garth Brooks - What She's Doing Now.
This latest urge is as a result of re-reading some Paul Krugman, whose book "The Accident Theorist" I have borrowed off my brother, the bastard. (I was the one who bought it for him originally, and having discovered it in his bedroom at my parents' house, along with other long-forgotten delights such as The Beano Annual 1988, I can only assume that he enjoyed it as much as my other presents, such as the carefully chosen book "Croquet for the Advanced Player".) Krugman is a very good author whose declared aim is to make economics accessible to the layman without deluging it in maths. This suits me down to the ground as someone who is interested in economics but can't handle advanced maths. I did half of my first degree in economics and managed to write four economics finals papers without including a single equation. I'm interested in the theories, the aspects of human behaviour, and the reasons for people doing things at an individual level, and how that translates on an economy-wide basis. But I'm not interested in mathematics, beyond that which allows me to work out my change in the off-licence, and to use Pythagoras's Theorem to work out which croquet shot is the shortest. You think I'm joking about that, don't you?
And reading the Krugman has reminded me about one of my favourite concepts in economics, that of Pareto efficiency. A situation is Pareto inefficient where you can make an alteration that will make at least one person better off, while at the same time making nobody worse off. And similarly, if you can't do that then the situation is Pareto efficient. The trouble is that Pareto efficiency isn't actually a terribly useful concept in the real world (not that many economists live there, of course) because it's pretty damn hard to think of a situation where you could make somebody better off without making anybody worse off. I recall the Journal of Economic Perspectives (my favourite periodical by far at university because of the paucity of equations in it) asking its readers to come up with a real world example, and only getting one answer, which was allowing cars to turn left against a red light, which isn't allowed in the UK.
I couldn't come up with anything either. But I think something pretty close is my latest hobbyhorse, which is beer bottles without screw tops. And in England, that's about 99% of beer bottles. Why? I just don't understand it. In Europe a lot of beer has screw-top caps, and in Canada and America, from my recollection, almost all of it does. It doesn't seem to harm the beer. Heck, most wine these days has screw-top caps, and that's far more sensitive than beer (certainly the tasteless, sorry, crisp and cold, lagers I prefer). But the beer industry here still stubbornly clings to the prise-off caps just as stubbornly as the prise-off caps cling to the bottles. Which is fine most of the time, other than when you forget your bottle-opener at a picnic, or want to open a beer on the way to your poker game, or find that your cheap, rented cottage doesn't have a bottle-opener any more, or discover that your one-year old daughter has hidden your opener as part of her latest game, or any one of a number of other scenarios which don't arise very often but make you RAGE AGAINST THE MACHINE with demented anger when they do occur because of the sheer pointlessness of it. (Then you try to open the bottle with your teeth and you soon have something else to rage against.)
And yet even this isn't Pareto inefficient because if I became supreme dictator of the world and made screw-top caps compulsory (which believe me I would do almost immediately on assuming power, right after making blocking yellow-box junctions a capital offence and banning broccoli) then no doubt the manufacturers of bottle-openers would be quick to point out that there's almost always someone who is made worse off, whenever you make everyone else better off.
I'll just have to start buying my beer in cans.
Nick
Playlist: Mary Chapin Carpenter - Downtown Train (what a terrific version this is); Mary Chapin Carpenter - This Is Love; Shawn Colvin - Someday; The Kinks - Dedicated Follower of Fashion; Garth Brooks - What She's Doing Now.