Comment author: Halstead 06 January 2018 01:42:59PM 0 points [-]

They may well endorse that view of betterness, but I don't see how it lets them avoid the problem here. The people who disprefer a world with scalping to a world without are the people who would like tickets but can't afford to go.

Comment author: Paul_Christiano 06 January 2018 08:23:52PM 1 point [-]

This standard of betterness is all you need to conclude: "every inefficient outcome is worse than some efficient outcome."

Comment author: Halstead 06 January 2018 01:38:28PM *  0 points [-]

Thanks, I agree that opposition to all redistribution is an extreme outlier position among economists. I think the explanation is that the rationale that many of them accept for ticket touting is not carried over into other domains.

Some evidence that economists do make this argument. See this paper - http://www.jstor.org/stable/3216858?seq=1#page_scan_tab_contents in the Jnl of Econ Persp. In the first paragraph, Courty says "...economists usually argue that resale increases efficiency, because it channels tickets to those consumers who value them the most"

And the box in chapter 7 of Mankiw's principles of microeconomics textbook here - https://books.google.co.uk/books?id=xoztFMavGCcC&pg=PA148&lpg=PA148&dq=mankiw+ticket+scalping&source=bl&ots=5U_xzxQZvl&sig=T9PP88ufUkIFDPpR4j8kSG37kig&hl=en&sa=X&ved=0ahUKEwiPopLst8PYAhXJtxQKHZcpCrsQ6AEISTAF#v=onepage&q&f=false. I will quote in full: "If an economy is to allocate its scarce resources efficiently, goods must get to those consumers who value them most highly. Ticket scalping is one example of how markets reach efficient outcomes. By charging the highest price the market will bear, scalpers help ensure that consumers with the greatest willingness to pay for the tickets actually do get them."

I think one should interpret that as saying that those who are willing to pay more (in the actual world, not the hypothetical world after redistribution) value the good more. And that is the main argument appealed to in favour of scalping in one of the most famous textbooks on microeconomics. The main premise used in that argument is obviously false.

If they endorsed the view you say they do with respect to scalping, wouldn't they say "provided there was perfectly equitable distribution of incomes, scalping ensures that goods go to those who value them most". Missing out the first bit gives an extremely misleading impression of their view, doesn't it?

Comment author: Paul_Christiano 06 January 2018 08:21:44PM *  1 point [-]

If they endorsed the view you say they do with respect to scalping, wouldn't they say "provided there was perfectly equitable distribution of incomes, scalping ensures that goods go to those who value them most". Missing out the first bit gives an extremely misleading impression of their view, doesn't it?

When economists say "how much do you value X" they are usually using the dictionary definition of value as "estimate the monetary worth." Economists understand that valuing something involves an implicit denominator and "who values most" will depend on the choice of denominator. You get approximately the same ordering for any denominator which can be easily transferred between people, and when they say "A values X more than B" they mean in that common ordering. Economists understand that that sense of value isn't synonymous with moral value (which can't be easily transferred between people).

The reason that easily transferrable goods serve as a good denominator is because at the optimal outcome they should exactly track whatever the planner cares about (otherwise we could transfer them).

Expressing economists' actual view would take several additional sentences. The quote seems like a reasonable concise simplification.

Your version isn't true: an equitable distribution of incomes doesn't imply that everyone has roughly the same utility per marginal dollar. A closer formulation would be "Supposing that the policy-maker is roughly indifferent between giving a dollar to each person [e.g. as would be the case if the policy-maker has adopted roughly optimal policies in other domains, since dollars can be easily transferred between people] then scalping will ensure that the ticket goes to the person who the policy-maker would most prefer have it."

Immediately before your quote from Mankiw's book, he says "Equity involves normative judgments that go beyond the realm of economics and enter into the realm of political philosophy. We concentrate on efficiency as the social planner's goal. Keep in mind, however, that real policy-makers often care about equity as well." I agree the discussion is offensively simplified because it's a 101 textbook, but don't think this is evidence of fundamental confusion. If we read "equity" as "has the same marginal utility from a dollar" then this seems pretty in line with the utilitarian position.

Comment author: Telofy  (EA Profile) 04 January 2018 08:16:45AM 0 points [-]

What happened to this post? Is there another place where it is being discussed? It sounds very interesting. Thanks!

Comment author: Paul_Christiano 05 January 2018 09:58:00AM 0 points [-]

It's on my blog. I don't think the scheme works, and in general it seems any scheme introduces incentives to not look like a beneficiary. If I were to do this now, I would just run a prediction market on the total # of donations, have the match success level go from 50% to 100% over the spread, and use a small fraction of proceeds to place N buy and sell orders against the final book.

Comment author: Halstead 03 January 2018 12:07:50PM *  0 points [-]

On your last point about whether there are economists who hold this view, I'm not sure I agree. For example, if you look at that IGM poll of economists' views on scalping, of the eight people in favour of touting who gave a reason, one of them appeals to allocative efficiency, and Caroline Hoxby of Stanford says "Classic example in which good (tickets) are not allocated to those who value them most. Only exception:ticket-holder's identity matters." The remaining six don't say anything incompatible with the allocative efficiency argument.

I don't think it would be that hard to find lots of examples of economists defending particular policies on the basis that those willing to pay more should get the good.

Comment author: Paul_Christiano 03 January 2018 06:11:59PM *  3 points [-]

Economists who accept your crucial premise would necessarily think that there should be no redistribution at all, since the net effect of redistribution is to move goods from people who were originally willing to pay more to people who were originally willing to pay less. But "redistribution is always morally bad" is an extreme outlier view amongst economists.

See for example the IGM poll on the minimum wage, where there is significant support for small increases to the minimum wage despite acknowledgment of the allocative inefficiency. The question most economists ask is "is this an efficient way to redistribute wealth? do the benefits justify the costs?" They don't consider the case settled because it decreases allocative efficiency (as it obviously does).

I don't think it would be that hard to find lots of examples of economists defending particular policies on the basis that those willing to pay more should get the good.

People can make that argument as part of a broader principle like "we should give goods to people who are willing to pay most, and redistribute money in the most efficient way we can."

For example, I also often argue that the people willing to pay more should get the good. But I don't accept your crucial premise even a tiny bit. The same is true of the handful of economists I've taken a class from or interacted with at length, and so I'd guess it's the most common view.

Comment author: Halstead 03 January 2018 12:19:04PM 0 points [-]

Thanks for this. Option 3 "No matter what the producer wants..." is the only relevant world to consider because in almost all cases, the producer will not in fact compensate consumers or donate to charity. Could you then say more about why we as advocates for policy can do better by allowing the producer to sell at market prices?

Comment author: Paul_Christiano 03 January 2018 06:04:02PM *  4 points [-]

Obviously what is optimal does depend on what we can compel the producer to do; if we can collect taxes, that will obviously be better. If we can compel the producer to suffer small costs to make the world better, there are better things to compel them to do. If we can create an environment in which certain behaviors are more expensive for the producer because they are socially unacceptable, there are better things to deem unacceptable. And so on.

More broadly, as a society we want to pick the most efficient ways to redistribute wealth, and as altruists we'd like to use our policy influence in the most efficient ways to redistribute wealth. Forcing the tickets to sell below market value is an incredibly inefficient way to redistribute wealth. So it can be a good idea in worlds where there are almost no options, but seems very unlikely to be a good idea in practice.

Comment author: Paul_Christiano 03 January 2018 09:13:52AM *  6 points [-]

Here is a stronger version of the pro-market-price argument:

  • The producer could sell a ticket for $1000 to Rich and then give $950 to Pete. This leaves both Rich and Pete better off, often very substantially.
  • In reality, Pete is not an optimal target for philanthropy, and so the producer could do even better by selling the ticket for $1000 to Rich and then giving to their preferred charity.
  • No matter what the producer wants, they can do better by selling the ticket at market price. And no matter what we want as advocates for a policy, we can do better by allowing them to. (In fact the world is complicated and it's not this clean, but that seems orthogonal to your objection.)

This is still not the strongest argument that can be made, but it's better than the argument from your crucial premise. I think there are few serious economists who accept your crucial premise in the way you mean it, though many might use it as a definition of welfare (but wouldn't consider total welfare synonymous with moral good).

Comment author: Paul_Christiano 03 January 2018 09:24:04AM 2 points [-]

In actual fact, they are appealing to preference utilitarianism. This is a moral theory.

Economists are quite often appealing to a much simpler account of betterness: if everyone prefers option A to option B, then option A is better than option B.

Comment author: Paul_Christiano 03 January 2018 09:13:52AM *  6 points [-]

Here is a stronger version of the pro-market-price argument:

  • The producer could sell a ticket for $1000 to Rich and then give $950 to Pete. This leaves both Rich and Pete better off, often very substantially.
  • In reality, Pete is not an optimal target for philanthropy, and so the producer could do even better by selling the ticket for $1000 to Rich and then giving to their preferred charity.
  • No matter what the producer wants, they can do better by selling the ticket at market price. And no matter what we want as advocates for a policy, we can do better by allowing them to. (In fact the world is complicated and it's not this clean, but that seems orthogonal to your objection.)

This is still not the strongest argument that can be made, but it's better than the argument from your crucial premise. I think there are few serious economists who accept your crucial premise in the way you mean it, though many might use it as a definition of welfare (but wouldn't consider total welfare synonymous with moral good).

Comment author: persis 22 December 2017 02:37:51AM *  0 points [-]

I think the words 'write-up of their research and reasoning' in the OP imply something much more substantial.

Yes, you're right. I was thinking of a more detailed and substantial post on why the winner selected their charity / charities. Although it wouldn't have to be onerous, I expect one or two paragraphs with accomanying links to research would be good enough.

In either case, I agree that it'd be bad for this to feel like a cost that stopped people entering, so I'm endorsing your phrasing, and I'll edit my previous message to point this out.

While I agree that deterring people from entering because of social pressure is not a good outcome, I'm not entirely sure I agree that the conclusion is that there's no expectation for the winner to share their reasoning. I place more value on the upsides of transparency than the potential downside of feeling social pressure, and I wonder if there isn't another way to alleviate the social pressure while still maintaining something like a "low bar" expectation for the winner to share their findings.

For example, CEA could share the winner's reasoning anonymously.

Comment author: Paul_Christiano 22 December 2017 04:58:47AM *  2 points [-]

What are the biggest upsides of transparency?

The actual value of the information produced seems modest.

Comment author: Jess_Riedel 18 December 2017 04:18:24AM 0 points [-]

Could you explain your first sentence? What risks are you talking about?

Also, how does one lottery up further if all the block sizes are $100k? Diving it up into multiple blocks doesn't really work.

Comment author: Paul_Christiano 18 December 2017 06:41:14AM *  0 points [-]

You have diminishing returns to money, i.e. your utility vs. money curve is curved down. So a gamble with mean 0 has some cost to you, approximately (curvature) * (variance), that I was referring to as the cost-via-risk. This cost is approximately linear in the variance, and hence quadratic in the block size.

Comment author: Jess_Riedel 17 December 2017 06:00:05PM 1 point [-]

I'm curious about why blocks were chosen rather than just a single-lottery scheme, i.e., having all donors contribute to the same lottery, with a $100k backstop but no upper limit. The justification on the webpage is

Multiple blocks ensure that there is no cap on the number of donors who may enter the lottery, while ensuring that the guarantor's liability is capped at the block size.

But of course we could satisfy this requirement with the single-lottery scheme. The single-lottery scheme also has the benefits that (1) the guarantor has significantly less risk since there's a much higher chance they need to pay nothing, especially once the popularity of donor lotteries is more stable and (2) the "leverage" can get arbitrarily high rather than being capped by $100k/<donation size>. The main feature (benefit?) of the multi-block scheme is, as Carl says elsewhere in this thread, "the odds of payouts for other participants are unaffected by anyone's particular participation in this lottery design". But it's not clear to me why this non-interaction principle is better than allowing large leverage. We just want to be really careful about unintended incentives?

Comment author: Paul_Christiano 17 December 2017 07:21:15PM 6 points [-]

A $200k lottery has about 4x as much cost-via-risk as a $100k lottery. Realistically I think that smaller sizes (with the option to lottery up further) are significantly better than bigger pots. As the pot gets bigger you need to do more and more thinking to verify that the risk isn't an issue.

If you were OK with variable pot sizes, I think the thing to do would be:

  • The lottery will be divided up into blocks.
  • Each block will have have the same size, which will be something between $75k and $150k.
  • We provide a backstop only if the total donation is < $75k. Otherwise, we just divide the total up into chunks between $75k and $150k, aiming to be about $100k.

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