I’ve been watching and enjoying the Agnes Callard interview of Bryan Caplan. I don’t think I had watched a 2.5-hour interview in the last two years, but this was well worth it.
I’ll do more posting on it, but I want to highlight one thing that caught my attention and made me think of my own contributions to people’s decisions. At about the 36:25 point, Bryan makes the point that he has created enormous wealth by persuading over 100 parents to have more kids.
It got me thinking about my own life. I haven’t done anything as dramatic. It’s hard to measure my effect in the Reagan administration. The odds are reasonable that I lowered the probability of some megadollar spending bills by 1 in 10,000 and these mega dollars would have been annually. So I probably paid my lifetime income in an expected value sense.
The closest I can come to saying I had an identifiable impact was on a local issue in 2003. In expected value terms, my activity would have paid over 1/4 of my whole lifetime income. I wrote about it here, here, and here.
(In this one, by the way, I talk about how people came out of the woodwork to support me. I take that as evidence of Bryan’s point about social desirability bias. They weren’t outspoken in my favor, probably for obvious reasons: it seems so cruel to say no to a tax increase to pay for a government hospital. But they told me to my face that they liked what I was doing.)
So how did Bryan’s point make me think of this? To win the fight against a tax increase of $25 million annually, we needed to get a 33.4 percent or higher vote against. The present value of that increase over, say, 6 years (Why 6? Because eventually, I thought, they would get a tax increase for something) was about $130 million. Let’s say that my activity increased the probability of defeat by 1 percentage point. Then my expected value was $1.3 million. QED.
I anticipate that some commenters will argue that this saving in taxes is not a net saving. I disagree. As a result of the defeat, Natividad Hospital brought in consultants who proposed changes that were accepted and saving millions of dollars a year. As we said during the debate, in opposition to the claim of the pro-taxers, without the tax increase, Natividad would still exist 5 years later. It has now been 18 years and it still exists.
READER COMMENTS
Geoffrey N Brand
Jan 27 2022 at 9:49pm
I watched the entire 2.5 hours myself. It was interesting.
zeke5123
Jan 28 2022 at 1:11pm
I think it is a hard thing to measure. Perhaps one of your students (or reader of this blog) took something to heart and made a huge difference. Or maybe those same people made a million small differences.
David Henderson
Jan 28 2022 at 2:07pm
Thanks.
Philo
Jan 28 2022 at 5:23pm
It is hard to estimate your contribution to the totality of human decision-making: even when you were not especially trying to affect others’ decisions, your actions surely had such effects. Notably, the decisions of your children are partly based on your actions–those involved in rearing them and, especially, the very act of conceiving them; but there are innumerable less dramatic cases. Usually, it is hard to collect definite information about these effects. Probably your principal effect derives from the decisions you yourself have made, where you are not just a causal factor in the decision, but the entire cause. Many of these decisions will have been, at best, merely prudent, but that is not to be sniffed at: you can be more confident of their positive results than is usually the case with your attempts to do good to others–especially your attempts to affect others’ decisions.
Thomas Lee Hutcheson
Jan 31 2022 at 6:40am
I don’t quite follow the cost benefit analysis of your intervention. It seem to me the proper measure is the difference in the NPV’s of the two alternatives. The amount of the taxes involved feeds into that, but should not in itself be a measure.
Mark Brophy
Jan 31 2022 at 8:28pm
I liked Agnes and Bryan but couldn’t stand seeing masked college students. It’s a pity that sadists insist on torturing young people. Leave those kids alone!
David Henderson
Jan 31 2022 at 10:50pm
I agree.
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