Friday, June 5, 2015

The Opportunity Cost Of Love

David Henderson just posted this excellent entry... Thaler Rediscovers Hayek?...


Thaler: Well the theory is really quite simple, at least in principle. If you are considering some risky option, look at the probabilities, compute the utilities, and calculate and pick the best thing.
Rosalsky: So Professor Thaler, relationships are big investments. And, umm...
Thaler: Yeah.
Rosalsky: Yeah. And I've been dating this girl for a few weeks now, and I'm thinking about using expected utility theory in order to decide whether or not to ask her to be my girlfriend. How would an econ go about making this decision?
Thaler: Well, now the first thing you would have to do is-econs always think about opportunity costs. So you have to compare this girlfriend to all the possible other girl friends. Now, you do have training in economics, right?
Rosalsky: Yeah, I do.
Thaler: So that may be a limited set because-right? Because this has to be a girlfriend that presumably wants to reciprocate this relationship. So there's a set of possible girlfriends, not all of whom you know. Economists have written down models about how you should search in a situation like this. So, you know, you've had other girlfriends in the past, and either you or they have rejected you. So the question of whether this is the right one depends on how likely it is you'd find somebody better. That's the first thing an economist would do.
Rosalsky: Right. And there's also other probabilities, right? I mean, you know, some day I want to get married, someday I want to have kids. And, you know, so that sort of- that upfront investment in her being my girlfriend, I have to have some sort of knowledge of the probabilities that, you know, I'm making the right investment here.
Thaler: Right, and presumably if you decide that this is your girlfriend and behave responsibly then you're going to be missing out on all kinds of opportunities for searching for better alternatives. And that will be another opportunity cost.
Rosalsky: Right, single life.
Thaler: That homo economicus will be considering every day. Each day will be another decision about whether to stick with this girlfriend or resume searching. I recommend strongly not playing this particular part of the interview to this prospective girlfriend.


It's kinda funny.  And it's about opportunity cost!

econs always think about opportunity costs

Yet... how many econs favor tax choice?  Clearly, when it comes to public finance... the opportunity cost concept is inadequate!

So you have to compare this girlfriend to all the possible other girl friends

All the other possible girlfriends?  How many is that?

Let's say that there's a pool of five potential girlfriends.  It stands to reason that, given that they are all different, they won't create the same amount of value for you.  One will create more value for you than the other four.

According to superstar theory though... larger pools increase the chances of finding a superstar.  The one in five girlfriend will be a pretty small superstar compared to the one in three billion girlfriend.

Finding the one in three billion girlfriend would be like winning the lottery!  Except... can you imagine what would happen to your productivity?  Winning the girlfriend lottery would significantly alter how you allocated your time.
Every animal, including the bête philosophe, instinctively strives for an optimum of favorable conditions under which it can expend all its strength and achieve its maximal feeling of power; every animal abhors, just as instinctively and with a subtlety of discernment that is "higher than all reason," every kind of intrusion or hindrance that obstructs or could obstruct his path to the optimum (– it is not his path to ‘happiness’ I am talking about, but the path to power, action, the mightiest deeds, and in most cases, actually, his path to misery). Thus the philosopher abhors marriage, together with all that might persuade him to it, – marriage as hindrance and catastrophe on his path to the optimum. Which great philosopher, so far, has been married? Heraclitus, Plato, Descartes, Spinoza, Leibniz, Kant, Schopenhauer – were not; indeed it is impossible to even think about them as married. A married philosopher belongs to comedy, that is my proposition: and that exception, Socrates, the mischievous Socrates, appears to have married ironice, simply in order to demonstrate this proposition. Every philosopher would say what Buddha said when he was told of the birth of a son: ‘Râhula is born to me, a fetter is forged for me’ (Râhula means here ‘a little demon’); every ‘free spirit' ought to have a thoughtful moment, assuming he has previously had a thoughtless one, like the moment experienced by that same Buddha – he thought to himself, ‘living in a house, that unclean place, is cramped; freedom is in leaving the house’: so saying, he left the house. The ascetic ideal points the way to so many bridges to independence that no philosopher can refrain from inwardly rejoicing and clapping hands on hearing the story of all those who, one fine day, decided to say ‘no’ to any curtailment of their liberty, and go off into the desert: even granted they were just strong asses and the complete opposite of a strong spirit. Consequently, what does the ascetic ideal mean for a philosopher? My answer is – you will have guessed ages ago: on seeing an ascetic ideal, the philosopher smiles because he sees an optimum condition of the highest and boldest intellectuality [Geistigkeit], – he does not deny ‘existence’ by doing so, but rather affirms his existence and only his existence, and possibly does this to the point where he is not far from making the outrageous wish: pereat mundus, fiat philosophia, fiat philosophus, fiam!… - Friedrich Nietzsche
Was Derrida a great philosopher?
By preferring my work, simply by giving it my time, my attention, by preferring my activity as a citizen or as a professional philosopher, writing and speaking here in a public language, French in my case, I am perhaps fulfilling my duty.  But I am sacrificing and betraying at every moment all my other obligations: my obligation to the other others whom I know or don’t know, the billions of my fellows (without mentioning the animals that are even more other others than my fellows), my fellows who are dying of starvation or sickness. I betray my fidelity or my obligations to other citizens, to those who don't speak my language and to whom I neither speak or respond, to each of those who listen or read, and to whom I neither respond nor address myself in the proper manner, that is, in a singular manner (this is for the so-called public space to which I sacrifice my so-called private space), thus also to those I love in private, my own, my family, my son, each of whom is the only son I sacrifice to the other, every one being sacrificed to every one else in this land of Moriah that is our habitat every second of every day. - Jacques Derrida
What about Erich Fromm?
If a woman told us that she loved flowers, and we saw that she forgot to water them, we would not believe in her "love" for flowers.  Love is the active concern for the life and the growth of that which we love.  Where this active concern is lacking, there is no love. - Erich Fromm, The Art of Loving
You can either love your greatness... or your girlfriend... but not both!

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