Re: Market failure to sufficently weigh the future

From: Robin Hanson (
Date: Mon Oct 30 2000 - 11:45:36 MST

Hal Finney wrote:
> > Why don't you just bite the bullet and tell us that their theory doesn't
> > describe your preferences? How much are you willing to spend today to
> > give yourself in ten years $1 more to spend then, and how much would you
> > be willing to spend today to give yourself ten years ago $1 more to spend
> > then, assuming we could arrange a time machine to implement this choice?
>I don't think this is quite the right question to ask, in terms of
>evaluating their proposed remedy. You are asking about a one-time event,
>giving up something today for a benefit ten years ago that I might not
>remember. However their remedy would have continuous, long term effect.
>I might not remember a specific day ten years ago, but I would remember
>the overall tone of my life in those days.
>The real question is, it seems to me, is would I have been happier over
>the course of my life if I had generally saved more for the future ...
>This is what their remedy would do. It would coerce or persuade me
>to delay present pleasures into the future. Their claim is that most
>people would be happier, in general, if this were done to them.
>My answer to the question in this form is, no, ... this will come
>at a constant, gnawing cost, of giving up the pleasures which make life
>so enjoyable. ... A life of deferred gratification is a life
>of sacrifice and frustration. I believe that if we fully internalize and
>understand that cost, that we will come to understand that past pleasures
>are very worthwhile, even when we have forgotten the specific details.

The question I asked is exactly the right question to ask given the
formulation in the paper. If you reject that formulation, then if you
want to play the formal policy analysis game you are implicitly challenged
to come up with an alternative formulation which supports the alternative
conclusions you favor. Of course you could just reject this challenge,
and just declare that your wholistic intuitions tell you true that the
right sort of analysis would vindicate the conclusions you favor, and if
detailed analyses disagrees with that they must have the wrong details.
But then it would be hard to have much of a disciplined discussion with you.

I can't really make much sense of the extra costs of sacrifice and
frustration you speak of. But perhaps you could formalize it if you tried.

Robin Hanson
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-4444
703-993-2326 FAX: 703-993-2323

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