Open Thread June 2010, Part 3

Kevin

This thread is for the discussion of Less Wrong topics that have not appeared in recent posts. If a discussion gets unwieldy, celebrate by turning it into a top-level post.

The thrilling conclusion of what is likely to be an inaccurately named trilogy of June Open Threads.

This thread is for the discussion of Less Wrong topics that have not appeared in recent posts. If a discussion gets unwieldy, celebrate by turning it into a top-level post.

The thrilling conclusion of what is likely to be an inaccurately named trilogy of June Open Threads.

Econ question: if a child is renting an apartment for $X, and the parents have a spare apartment that they are currently renting out for $Y, would it help or hurt the economy if the child moved into that apartment instead? Consider the cases X<Y, X=Y, X>Y.

Coming back to this question after a few years, I was able to find a surprisingly simple Econ 101 answer in five minutes. To zeroth order, there's no change because the amount of goods and services in the economy stays the same. To first order, allowing a deal to be freely made usually increases total value in the economy, not just the value for those making the deal; so this deal is good for the economy iff both sides agree to it.

That sidesteps all complications like "the parents are happy to help their child", "the apartment might have facilities that th

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0Mike Bishop16y

I recommend going to an econ textbook for good questions.

16SilasBarta16y

Good question, not because it's hard to answer, but because of how pervasive the wrong answer is, and the implications for policy for economists getting it wrong. * If your parents prefer you being in their apartment to the forgone income, they benefit; otherwise they don't. * If you prefer being in their apartment to the alternative rental opportunities, you benefit; otherwise, you don't. * If potential renters or the existing ones prefer your parents' unit to the other rental opportunities and they are denied it, they are worse off; otherwise, they aren't. ANYTHING beyond that -- anything whatsoever -- is Goodhart-laden economist bullsh**. Things like GDP and employment and CPI were picked long ago as a good correlate of general economic health. Today, they are taken to define economic health, irrespective of how well people's wants are being satisfied, which is supposed to be what we mean by a "good economy". Today, economists equate growing GDP -- irrespective of measuring artifacts that make it deviate from what we want it to measure -- with a good economy. If the economy isn't doing well enough, well, we need more "aggregate demand" -- you see, people aren't buying enough things, which must be bad. Never once has it occurred to anyone in the mainstream (and very few outside of the mainstream) that it's okay for people to produce less, consume less, and have more leisure. No, instead, we have come to define success by the number of money-based market exchanges, rather than whether people are getting the combination of work, consumption, and leisure (all broadly defined) that they want. This absurdity reveals itself when you see economists scratching their heads, thinking how we can get people to spend more than they want to, in order to help the economy. Unpack those terms: they want people to hurt themselves, in order to hurt less. Now, it's true there are prisoner's dilemma-type situations where people have to cooperate and endure some pain to be b

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Open Thread June 2010, Part 3

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Open Thread June 2010, Part 3

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