Vaniver comments on How I Became More Ambitious - Less Wrong

60 Post author: Swimmer963 04 July 2013 11:34PM

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Comment author: thomblake 16 July 2013 07:33:56PM 0 points [-]

Surely advantages can also be comparative advantages. If you're trading beauty for attention, then presumably you have a comparative advantage in beauty.

Comment author: Vaniver 16 July 2013 08:36:59PM 2 points [-]

Surely advantages can also be comparative advantages.

The modifier "comparative" is used to highlight things that are, in isolation, disadvantages, but which are advantages when all things are taken into account. The classic example is a lawyer who can type much more quickly than her secretary, but who hires a secretary to type because of the relative price of lawyering and typing.

Comment author: thomblake 17 July 2013 12:28:29PM 3 points [-]

The modifier "comparative" is used to highlight things that are, in isolation, disadvantages,

That's just false. If A can make wool for $2 and coffee for $3, and B can make wool for $6 and coffee for $5, then B has a comparative advantage in coffee (which is in isolation a disadvantage) and A has a comparative advantage in wool (which in isolation is an advantage). Being a disadvantage just isn't necessary for a comparative advantage.

Comment author: Vaniver 17 July 2013 05:28:56PM 0 points [-]

Being a disadvantage just isn't necessary for a comparative advantage.

The critical piece necessary for trade to be profitable is that each party can produce a good at lower marginal and opportunity cost than the other party. I was thinking of just the absolute advantage case (like the example you gave and the example I gave) where one party's disadvantage becomes an advantage in the presence of trade, but I believe it's correct to refer to two parties which each have an absolute advantage as comparative advantage. I'm not sure about that, though.