Sunday, April 30, 2006

Revealed Preference

In an earlier post I mentioned Frans de Waal, author of the very interesting book Chimpanzee Politics. I just came across an online quote from him on a different topic—ending with:

"And so I usually use it as an example I don’t trust questionaires at all ... you need to pay attention to behavior, behavior is the only thing that tells us what the real preferences are."

So far as I could tell from his book, de Waal does not have a background in economics. He does, however, inhabit the same world we do, and so has reinvented the principle of revealed preference.

Which reminds me of a quote from another author I am fond of: "Any spoke can lead an ant to the hub."


At 3:16 AM, May 01, 2006, Blogger dave meleney said...

I like what Frans de Waal says: " need to pay attention to behavior, behavior is the only thing that tells us what the real preferences are."

How seriously, then, should we take the claims of anarchist -libertarians who teach at state schools like San Jose State, UCLA, George Mason, and Florida State? And other anarchists who seldom seem to use FedEx when the post office will do?

Could we reasonably expect these anarchist libertarians to offer more than stated preferences.... in support of their claims to be real living anarchists right here among us in 2006? What sort "behaviors" could one expect of them in this vein? In fact, what sort of "behaviors" would they probably need in order to convince themselves?

As America becomes more and more able to support a large public sector... could we someday find that most Americans are both public employees and avowed anarchists at the same time?

How do we know that we are more trustworthy than the questionaires that Dr. de Waal finds so useless?

At 9:18 AM, May 01, 2006, Blogger Mike Hammock said...

It's difficult for me to imagine how behavior of the sort Dave Meleney describes could reveal whether or not someone really holds the political beliefs one claims to hold.

One might as well ask "How seriously, then, can we take the claim of Dave Meleney to want to know whether we should take the claims of anarchists who teach at states schools seriously? Could we reasonably expect this poster to offer more in support of his curiousity than his post in the comments of this blog?"

You could argue that the fact that you took the time and trouble to post your questions suggests that you are genuinely curious. But then, one could make the same argument about anarchists who take the time and trouble to argue for anarchy.

Why, for that matter, would teaching at a state school be considered evidence that one does not believe that anarchy would be a desireable system? Why is use of the post office evidence that one does not really believe in anarchism? An anarchist might believe that a private post office would be better, or that a totally private school system would be better. (It's not even clear that Fedex is a good substitute for the post office in the case of letter mail, since the post office enjoys legal protections from competition that make Fedex unable to provide exactly the same service.)

Suppose I prefer Indian restaurants to other kinds of restaurants, but my town has no Indian restaurants. Does the fact that I occasionally eat out mean that, in fact, I do not like Indian restaurants more than other restaurants?

Revealed preference requires choice between available alternatives. It obviously cannot tell us much about preferences we cannot express.

I do not think it is impossible to conclude that a supposed anarchist is lying about his or her beliefs, however. For example, someone who claimed to be an anarcho-capitalist but who consistently voted for socialist candidates would be suspect, in my opinion. (I suppose they could be pursuing some complicated, contrarian strategy, but I don't find that persuasive.) Or perhaps the anarchist cannot articulate or defend his or her position; that would be evidence that this person is not familiar enough with the position to reasonably identify with it.

Perhaps some day there will be an anarcho-capitalist society, and anarcho-capitalists will be able to demonstrate their preferences by moving there.

At 1:22 PM, May 01, 2006, Blogger dave meleney said...

Mike: It seems we all make a lot of truck with the state, even the most radical among us.... and I don't presume to have this figured out myself so I am not calling anybody a liar or a bogus anarchist.....I was asking... at what point do our behaviors with the state reflect on our philosophical claims? For the anarchist (or even minarchist) society to evolve, don't most people have to eventually decide, for pragmatic or for moral reasons, that they just won't work for companies that compel payments from innocent strangers?

Wouldn't you agree that it is kind of a carefully stipulated anarchist who says: " I want anarchy ASAP, but right now I need the taxpayers to help me broadcast just how badly I want it and how carefully I have thought out how it will work?

Clearly there are both Indian restaurants and private universities around...if you choose to go.... but there may be remarkable costs for either one.... and I see very little discussion of the costs we expect ourselves to pay... forget FedEx, would you even pay an extra dollar to send a package by UPS instead of USPS ?

And, if not now, when?

At 9:19 PM, May 01, 2006, Blogger David Friedman said...

"Do business with the Authority. Do business with the law of gravity too."

(Manny in The Moon is a Harsh Mistress)

At 10:53 PM, May 01, 2006, Blogger James said...

dave meleney,

Revealed preference shows you what happens when a person optimizes acts a set of constraints. Not a bad way to find out what they prefer from within the constrained set of options. It doesn't mean that the same person wouldn't actually prefer to have a different set of constraints to deal with.

E.g., say someone mugs you and then offers to transport your mail for a penny. If you use their courier services rather than the USPS or UPS, does that mean you've reavealed a preference for mugging? Or does it just mean that given the constraints created by the mugger you still prefer to save on postage?

At 3:13 PM, May 02, 2006, Blogger dave meleney said...

Many of us have had Marxist professors... and they tend to claim that the state will eventually just wither away, they say: "the current policies I support don't reflect the eventual society I am trying to bring about, it is just a means to an end". Professor de Waal might then prefer to look at what they do rather than what they say they do, but we can't just dismiss their claim. Perhaps you come away thinking they are Marxist in a very stipulated way. But their self-description greatly effects the policies they advocate and the politicians they admire. And sometimes some of their students go and create a Cambodia or a Viet Nam..... or even a Singapore....

Could there be any part of that in us? If an anarchist libertarian believes the state is very bad at providing stable currency or educating our youngsters... and exceptionally bad at expressing our concerns for the plight of the oppressed citizens of Baghdad........ but it just so happens to be very excellent at providing a breeding ground for anarchist intellectualism....
How then is that anarchist, balanced so carefully among competing views of the state's current sure that institutions and behavior patterns will arise that will eventually enable his utopian world? At what point do the desired behavior patterns start to become commonplace among the anarchists themselves?

As it happens I believe that vegetarian food will eventually become so good and so healthful that I'll quit eating dead animals.... but wouldn't it be confusing if I called myself a vegetarian now?

At 10:21 AM, May 04, 2006, Blogger Mike Hammock said...

Dave, I think you're confused about what an anarchist is. An anarchist is (usually) someone who believes that anarchy would be a better system, not someone who "practices anarchy" (whatever that means). Similarly, a person who lives under a monarchy but would prefer not to have a monarchy could be called a republican (with a small "r").

Also, Anarcho-capitalism isn't utopian, or at least, not the flavor David Friedman espouses.

In any case, Frans de Waal's point, and I think Friedman's point, is about how we do science and economics. If we conduct a survey of environmental preferences, and people say they would pay tens of thousands of dollars to forego a one-in-four-million environmental risk, we take that with a grain of salt. Why? Because we know that in their personal lives they don't act as those they really have that preference. They don't spend that much additional money on a safer car to avoid much larger risks. They don't move to areas with cleaner air at great personal expense. Their behavior reveals their preferences in ways that surveys cannot.

I don't think that's the same as the anarchist who lives under a government.


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