• When a Buffet Problem Becomes a Tragedy

    Dec 6 • Thinking Economically • 251 Views

    I just heard a perfect example of “the tragedy of the commons.” (defined yesterday) In a recent “Curb Your Enthusiasm”, during a dinner party, Larry David observed a friend depleting the caviar on a buffet table. Predictably, he complained to his hostess.
    Other examples:
    -underproduction in Plymouth Plantation, 1623 when everyone farmed together.
    -blue fin tuna depletion (http://dotearth.blogs.nytimes.com/2008/11/26/the-tuna-tragedy-of-the-commons/)
    Still more tomorrow…

    Negative Externality:
    When a “transaction” has a negative impact on an uninvolved party. For example, a polluting factory impacts people who live nearby. A loud music player affects others in the dormitory. Negative externalities are experienced through the tragedy of the commons.

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  • French Bicycles, Plymouth Plantation, and the Commons

    Dec 5 • Thinking Economically • 225 Views

    According to a recent NY Times article (10.31.09), the Parisian bicycle sharing program has experienced considerable vandalism. Although the article attributed the damage to gangs of unhappy immigrant youths, I wondered whether the tragedy of the commons was relevant. More tomorrow on this year’s Nobel prize winner and solving the “problem” of the commons.

    Tragedy of the Commons: When a resource is shared by many rather than privately owned, it tends to be “misused” or “overused”. For a pasture, “misuse” is over grazing; in the ocean, fish populations are depleted; in the air, factories pollute.

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  • The American Dream

    Oct 4 • Thinking Economically • 193 Views

    The precipitous current dip in housing is so explicit in the graphs at:


    Translating the lines into people and numbers brings to mind John Maynard Keynes. As much as Keynesians believe that the stimulus will take us out of the recession and reverse these dips, they have not cited empirical research on such fiscal policy. According to Columbia economics professor, Ricardo Reis (stated during an Econtalk discussion with Russ Roberts), there is almost no research that proves the Keynesian position.

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  • Listening to Picasso

    Oct 1 • Thinking Economically • 187 Views

    Pablo Picasso is quoted for (maybe) saying “Bad artists copy. Good artists steal.” Perhaps, when pondering health care reform, Congress should do more “stealing”. Looking at Switzerland’s health care model, we might “steal” their attention to incentives. Insurers, patients, and physicians each have incentives that achieve the model’s goals. With a much larger and more diverse society, their system might not be transferrable to the United States. However, we can learn from it. Similarly, are we learning from the problems being experienced by Massachusetts and its universal health care initiative? The link to the NY Times article about the Swiss health care model has been posted in today’s “Notes”.

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  • The Impact of No Impact Man

    Sep 28 • Thinking Economically • 191 Views

    Knowing that every decision has an opportunity cost, we can become “no impact” men and women…IF…we identify and accept the trade offs. Is it okay to give Starbucks less business? Then, who will absorb that impact? The stockholders? The employees? The suppliers? Each of us can decide the most ethical, practical, desirable choice.

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