…assuming that decision processes are reducible to one-size-fits-all sets of axioms has not and will not produce a descriptively adequate account of human behaviour under risk and uncertainty.
Researchers find that people’s risk preferences are not stable. How risk averse is an individual? That depends on the situation.
Via Gareth Morgan on twitter I spotted the following post from the University of Otago Public Health blog.
The money quote:
They found that the biggest impact of a minimum price policy was on “harmful” drinkers in the lowest income quintile (7.6% reduction in alcohol), whereas the impact on harmful drinkers in the highest income quintile was modest (1%). Consumption fell by 1.6% among “responsible” drinkers in the lowest income quintile. That is, the impact is concentrated among low-income harmful drinkers.
Moreover, this Lancet paper found that “Individuals in the lowest socioeconomic group (living in routine or manual worker households and comprising 41·7% of the sample population) would accrue 81·8% of reductions in premature deaths and 87·1% of gains in terms of quality-adjusted life-years.” In the public health field, we seldom see policy packages that have such a notable impact on reducing health inequalities. [** Further comment at end].
The gains come from putting a minimum price of alcohol that prices the poor out from consumption. Consumption that has a benefit – something that is ignored constantly.
I am not around. Over the next three weeks, there are a series of really rubbish auto-posts are coming up about “factor shares” – I normally write posts in advance, but it is unlikely I am going to add anything or move posts around to include new ones. During that time I’ll be reading and reviewing Capital and writing a summary document on income inequality measurement (both things I promise to share) – these are both sizable tasks I want to do, hence why I won’t be around too much.
However, this also means I can’t post on things I find cool. So I’ll just give you some links 😉
Offsetting recently posted about a tweet by Gareth Morgan on eating and control, including a reply I popped up. Essentially, Gareth’s tweet implied that the way individuals make choices indicates we have no choice over how much they eat. I disagreed talking about precommitment – he stated I assumed perfect information, which is both a touch untrue and (surprisingly to many) irrelevant.
@TVHE You are assuming perfect information
— Gareth Morgan (@garethmorgannz) February 23, 2014
It did get me thinking though. The two of us actually have almost exactly the same model of choice in our heads for this issue, and as a result any differences of view of on the appropriateness of policy that we might have are not due to differences in the underlying model. Read more
Mieke Welvaert recently discussed gift giving, pointing out that it was significantly more complicated than the “just give cash” statement Matt Nolan made a few years back. For example a gift is an inherently different good to the same self-purchased product – I good is not just the set of physical properties that constitute it:
There are some things people like to receive but probably wouldn’t buy if you gave them the cash to do so. Flowers and chocolate come to mind for this category. I personally, much prefer to receive flowers than to buy them for myself. I understand that many people enjoy a box of chocolates free of guilt if they were given the chocolates rather than if they bought them for themselves.
Furthermore let us not forget the importance of signalling – gift giving can be a signal, which may have value, or may in itself be waste. When it comes to gifts the key point that comes out is that “efficiency is a really hard idea”.
As you may or may not know, I am a vegetarian. As a result, occasionally I talk myself into needing more protein. To do this I eat cashews, which I think are actually just mainly fat, but are very yummy.
Anyways, I went along to the supermarket and purchased a small number of cashews. The checkout operator warned me “be careful, those are addictive”. I responded by saying “hey that is why I buy them is such small quantities”. We’ve talked about this idea in the past here and here.
Now what we really described there was a situation where the consumption of cashews is time inconsistent, and where I use a precommitment strategy of “buying less of them”.
This broad definition of addiction, which merely means that you are unable to commit to an optimal time path of consumption, is fine. But the cost of it is limited by the cost of precommiting.