On reflection, I'm not quite sure I get the middle argument: why is the thing you have more of and can't trade away worth more than the thing you have less of and can trade away?
I think the argument is more that the thing you have more of and can't trade away is worth more than the thing you have less of because you have already traded some of it away.
Are you talking about the life valuation argument? I think this is meant to be an approximation of what economists call "revealed preference": but it isn't quite an exact duplicate, so I'm not sure...
eg, the classic example is two people looking for jobs that require similar skills, except that one is riskier than the other (eg, maybe a coal miner versus a copper miner, where the expected lifespan is a year less for the coal miner than the copper miner). In a perfect economists world, the coal miner will get paid more to work the riskier job because otherwise he would go and get a copper mine job instead. And that pay premium will be exactly equal the value of 1 year of life: if it was more, the copper miners would all switch to being coal miners.
But I think it falls apart because the prisoners _don't_ have a choice. Eg, it only works properly if both people can trade their good away.
But the King has the riskier job, in that analogy, so his day should be worth more than the prisoner's, not less. That is, the King should want more pay for one of his days than the prisoner. (Except that his days are *better* and fewer, so if one were buying a single day, one would be willing to pay more for the King's. But there, again, I come out with the King's day being worth more.)
The idea is that the King has traded some of his good (lifespan) away for a different good (pleasure), whereas the prisoners have more lifespan left. But the question wasn't about lifespan, it was about a single day. Head 'splode now. :)
Being once a scientist rather than ever an economist, it felt to me more like the prisoner was a control, to demonstrate Maximum Lifespan when you can't spend it on anything, and the king is the result of fiddling with one of the variables.
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marcusmarcusrc) wrote2010-08-02 04:40 pm
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Are you talking about the life valuation argument? I think this is meant to be an approximation of what economists call "revealed preference": but it isn't quite an exact duplicate, so I'm not sure...
eg, the classic example is two people looking for jobs that require similar skills, except that one is riskier than the other (eg, maybe a coal miner versus a copper miner, where the expected lifespan is a year less for the coal miner than the copper miner). In a perfect economists world, the coal miner will get paid more to work the riskier job because otherwise he would go and get a copper mine job instead. And that pay premium will be exactly equal the value of 1 year of life: if it was more, the copper miners would all switch to being coal miners.
But I think it falls apart because the prisoners _don't_ have a choice. Eg, it only works properly if both people can trade their good away.
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But the King has the riskier job, in that analogy, so his day should be worth more than the prisoner's, not less. That is, the King should want more pay for one of his days than the prisoner. (Except that his days are *better* and fewer, so if one were buying a single day, one would be willing to pay more for the King's. But there, again, I come out with the King's day being worth more.)
The idea is that the King has traded some of his good (lifespan) away for a different good (pleasure), whereas the prisoners have more lifespan left. But the question wasn't about lifespan, it was about a single day. Head 'splode now. :)
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It's a weird comparison.
Not unlike the last one, really ...