Wednesday, August 24, 2016

Bryan Caplan Please Show Us The Unseen

Yesterday Bryan Caplan blogged this...

Evaluate this simple cynical theory of what almost every politically aware person really wants: Minimizing the negative emotions they personally experience when they read/see/hear top news stories.  In other words, the politically aware strongly care about even objectively minor problems that get a lot of coverage, but barely care about even objectively major problems that get little coverage.  And almost all their political efforts - voting, arguing, slacktivism - revolve around their ill-considered emotions. 
Public obsession with terrorism but apathy about the global murder rate (over 1000 per day) is a prime example of what I have in mind.  Hideous headlines call for drastic action, but vastly greater evils the media ignores aren't worth worrying about. 
Please show your work. - Bryan Caplan, Headline Dismay Minimization

Shortly afterwards I noticed that he had tweeted this...

All Norwegian movies are good?  Ok.  That's pretty reasonable.  But are all Norwegian movies equally good?  Nope.  You can only have a "best of a best" if goodness is unequal.

Here's my simple and straightforward request for Caplan.  When he gets the chance, he should sit down and decide how, exactly, he'd divvy up his $10 dollar monthly fee among the movies and shows currently streaming on Netflix.  Then of course he has to use the data to create a chart.

A while back I did the same thing...

1. Amelie: $1.50
2. Black Mirror: $0.25
3. Castaway on the Moon: $0.25
4. Rake: $1.25
5. Shaolin Soccer: $0.50
6. Sidewalls: $0.25
7. Snatch: $0.25
8. Spaced: $1.00
9. The League: $0.75
10. The Man From Earth: $4.00

These are all movies and shows that I've given 5 stars to.  Clearly I think that they are all good.  What's also clear is that I don't think that they are equally good.

Hopefully this makes it abundantly obvious what's wrong with the media.  Just like with Netflix... the media can't see depth (preference intensity)... all it can see is breadth (preference).  So it caters to breadth rather than to depth.

Breadth = quantity = how many people like something
Depth = quality = how much people like something

The more valuable something is... the more breadth and depth it will have.  The more popular something is.... the more breadth and the less depth it will have.

The media is all about quantity because it has no idea what people consider to be quality.

Like Bastiat said, the good economist is more concerned with what's unseen.  What's unseen when it comes to scholarly papers, articles, books, movies, music, shows (digital goods) is the actual intensity of people's preferences.

In order for content creators, and consumers, to see the unseen... subscribers have to be given the option to allocate their fees.  I refer to this as the pragmatarian model.

If we applied the pragmatarian model to Amazon Kindle Unlimited (KU)... then if Caplan was a subscriber he could divvy up his $10 monthly fee among his favorite books.  Nothing would prevent him from allocating his fees to the same books each month.  Chances are good that he'd end up spending a lot more money on his truly favorite books than he would with the current system.  Caplan's willingness to continue paying would allow everybody to clearly see the intensity of his preferences for books.  We'd be able to see exactly how much he loves his favorite books.  This would make us curious to try and understand why, exactly, he loves them so much.

What's interesting about this system is that, for all intents and purposes, it would eliminate consumer surplus.  Nobody would get a really good deal on their favorite articles, books, music or movies.

It sounds very uneconomical to get rid of consumer surplus.   And maybe I'm missing something.  But it doesn't seem to make sense to hide our love away from content creators and other consumers.  Consumer surplus only makes sense if we assume that creators are omniscient.  This is a really absurd assumption to make.  Creators are not omniscient.  The only way that they can truly know how much we love their creations is by our willingness to pay for them.  So it seems pretty logical that consumer surplus is, at least in terms of digital goods, counter-productive.  

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