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I Spend Therefore I Am

The True Cost Of Economics

Philip Roscoe

Until recent past, acquired stuff by barter and social interaction, incurring obligations on the way. Now, spending has decoupled the emotional aspect - purely a transaction.

Choice of taking the car or the bus ignores 'externalities' such as pollution and crowding roads. But introduce a pollution charge and it becomes a license to pollute - may as well do as you like because you have already paid. And besides the bus is inconvenient.

Gary Becker's insight that marriage can be interpreted as an economic decision - two people better off together. (Actual gains don't matter - fact that the two people believe that is enough) From that it follows that the highest productivity gains come from the highest quality partners pairing up (leaving the lower quality ones to fight amongst themselves).

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Then, Becker said, once in the marriage, the couple compete for the division of spoils. So the wealthiest man (usually) marries the most beautiful woman. But he may choose to marry a less attractive woman to increase his bargaining power.

Usually these economic considerations are invisible, and the actual qualities of a spouse may take years to emerge.

Except on online dating sites.

Those who use them lay themselves out for selection like goods on a market stall, labelling their statistics and qualities. And naturally they are prone to the petty dishonesties of the markets - they grow taller and slimmer and develop a universal desire for long walks on the beach. But they also get a good idea of their own value, particularly their value in comparison to the others on sale.

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Some see dating sites as just an extension of the traditional ways of meeting. But the old ways persist, and consequently, most people marry people of similar age, interest, social level and geography. But it's not so much the similarities that determine the success of these relationships, as the actual time you spend together. Relationships are successful in the long run because partners (putting the time and effort into) learning how to behave in an empathic and mutually supportive way.

Some people are good at relationships, irrespective of who they are paired up with. So basically, relationship 'science' says should find a kind-hearted partner, that you like in a fundamental way, and stick with them. Share experiences and be prepared to compromise and change.

Dating sites, in contrast, expect you to accept their best match right now, based on your likes and dislikes. Basically like shopping - you're looking for the perfect pair of shoes. Finding a partner is just an extension of the business of shopping.

Author compares dating sites to Ikea furniture. The sites put reasonably intelligent and motivated people together and leave them to do all the work. The matching algorithms are useless; you have to assemble the furniture/relationship yourself.

Look at them as pragmatic searches: people looking for best possible bargains, bearing in mind what they bring to the table.

Some dating sites let you choose from a menu: what qualities do you want from ideal partner - age, height, figure, hair colour, race, interests, marital status, religion, education, attitude to children, attitude to drinking and smoking. At the top of the screen a counter lists all the men or women who fit your criteria. Then as you design your perfect partner online, the counter clicks downward. Then, just as you select the last factor, the counter hits zero. So you must backtrack, making compromises and accept trade-offs.

So we choose someone because she is slim, red-headed and a rock-climber, a process very different to coming to love someone who is a slim, red-headed rock climber.

Relationships are like the stock market - we can predict how it will behave, up until it meets some external shock in real world. A questionaire designed to find people's similarities gives no indication of a couple's chances of surviving the ups and downs of real life.

Influence of economics politically - economic technocrats installed as head of govt departments, imposing harsh austerity measures. There are riots in the street and shortages in the hospitals. If a military despot had imposed these, there would have been stern speeches in international forums, and perhaps, interventions. But when it is imposed by economic thinkers, it's harsh medicine that must be taken.

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Frederick Hayek claimed that socialism always ended in despotism. Because socialist central planning was unable to manage the infinite supply and demand needed to manage a central economy, it ends up commandeering labour and resources to produce unwanted goods while failing to produce those that are greatly needed. It's organization is always mired by committees and bureaucracy, petty squabbles and power struggles. Sooner rather than later, the economy collapses, people demand action, and into the gap steps a despot.

"Democratic socialism, the great utopia of the last few generations, is not only unachievable, but to strive for it produces something so utterly different that few of those who now wish it would be prepared to accept the consequences."

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Prostitute who found that increasing her prices did not affect demand. At $300 an hour she was overwhelmed by demand, so increased in steps until got to $500 an hour and just as busy, but she was getting more dinners and having less sex.

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Frederick Taylor systematized work. He believed that workers guilty of 'soldiering' - deliberately taking their time over jobs and lowering production rates. His solution was to split up tasks as much as possible to take the skill out of them.

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Private investors in stock market get routinely shafted. They think they can develop clever strategies to beat the market, but they fail to understand the huge monolith they are up against - the sheer power of institutions with lots of capital and PhDs on tap, and the brokers who take their fees win or lose. The investors make up excuses about luck or conspiracy to tell themselves it's not their fault. The dream of retiring and managing a portfolio while sipping cocktails poolside sustains them.

WW Jacob's classic short story The Monkey's Paw. Mr White buys it after being told that it will grant it's owner 3 wishes, but at a cost, because fate rules our lives and those who interfere with it do so at their peril. Mr White wishes for £200 to pay off his mortgage. Next day the money arrives - as compensation for his son's fatal accident at work.

Working on a building site. Guy fell down a lift shaft but managed to cling to the edge until mates dragged him out. They stood back up on his feet but he was so shaken that he staggered sideways and fell down the shaft again.

Always a problem of deciding who receives treatment and who doesn't. If resources are scarce, should we focus on what is most useful for the money available? QALY score: Quality Adjusted Life Year. The number of years life they are expected to have, multiplied by the expected 'quality' of those years, with 1 being healthy, 0 being dead and -1 being worse than dead. Then have to decide what treatment would best improve the score, and which patients would show the most improvement per dollar spent. And then those patients/treatments get prioritized.

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Always problems. Seven men have zero life expectancy without surgery, but following the operation 6 of them live happily for a year while the 7th lives happily for 6 years. The last one is the one who gets the op because (cost of) one operation is much better use of resources than 6 other ones while delivering the same total benefit.

But we live in a finite world - every dollar you spend on one patient takes it away from another. And there is obviously some point at which treatments become prohibitively expensive. (What if a single treatment cost more than the whole Health budget?)

The scandals of NHS hospitals such as Mid-Staffordshire showed that applying economics was the cause not the cure.

Iran is only country to have a legal market in organ donors. But follow-up studies have found donors ill or too weak to work. A study of 300 found none who reported an improvement in their quality of life. The rich get more and the poor wind up with less.

Blood donations - when a country pays for them, the quality goes down, monitoring costs go up, and the supply stays much the same.

Economic assumptions have become so normalized that everyone accepts that them as the correct guide as to how to act.

Prostitution fascinates economists. Why, since you don't need any special qualifications, skills, experience or equipment to become a prostitute, are the wages so much higher than for other work? UK data shows that prostitutes earn 3 times as much as manual workers and twice as much as office workers. Can't be because of risk or unpleasantness of job, because lowest-paid are the ones working on the street. But clearly the work is uninviting.

Website Punternet rates sex workers. When analyse the comments the best paid women are 24 and thin. Longer encounters lead to happier clients, as do more experienced women - the highest ratings going to women average 31 or 32. Suggest that older women value repeat business more and so pay more attention to quality of service.

Highest prices charged by the least attractive women. Speculate that these women do not expect return customers, so charge most they can in hope that men will not walk away after having put in effort of arranging appointment.

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