Saturday, July 10, 2010

Tyler Cowen Officially Joins The Ranks Of Pseudo-Economists Everywhere With LeBron Remark

Suddenly, all of the zany things Tyler Cowen has been saying lately about economics, free markets and the libertarian political theory derived from the two, makes perfect sense-- Tyler Cowen is not an economist, but a pseudo-economic utilitarian. In a recent interview at NPR, Cowen gave his thoughts on where LeBron James should've gone for "maximum utility"... notice his suggestion is not the same as the ultimate decision James himself made by following the "dictates" of the market:
LeBron, for added utility, should have gone to the New York Knicks. Because that's a big city with a terrible team, and they would have enjoyed him quite a bit. Number two choice would be Chicago. It's a big city. It's not a terrible team, it's a good team. He would have made it much better, maybe won a championship.

But to send him to Miami is almost the place that brings the least additional utility to the United States, as far as I can see. ...

They were already enjoying Dwayne Wade. Now they have three stars, and they’re not going to get three times the pleasure.

...who were the two players who handled the ball most lsat year? Numbers one and two were LeBron James and Dwayne Wade. So you don’t play the game with two balls. ... You would actually have more total social happiness if they played in two cities.
Message to Tyler Cowen, pseudo-economist: utility is not determined on some kind of aggregate level or by some majoritarian standard. No comparison can be made between the utility derived from three people who don't like basketball much watching LeBron play, and two watching him who are super big fans. The best and only interpersonal value comparison that can be made is that of observing value on a free market via money prices.

According to that comparison, it's clear LeBron made the right choice and will consequently maximize utility with his decision. And while LeBron is playing great basketball with his league-mates to the cheers of a thankful crowd of paying fans, Tyler Cowen will still be a pseudo-economist fraud of very "marginal" utility to the rest of society.

(Grazie mille to Skip Oliva for the link.)
Posted by Taylor Conant at 4:18 PM
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4 comments:

  1. LeBron may have chosen the value that ranked highest on his value scale, but after having made the decision to go to Miami he may discover that his decision was mistaken and that he perhaps should have chosen New York or Chicago. The money, of course, is only a part of the total good. He's choosing between different living environments as well.
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  2. Michael,

    I agree. LeBron might come to a decision later that he has made a poor choice. But that is something only he is able to discern. Meanwhile, at the time of his action, LeBron is in the best position to judge what decision would result in the maximal utility for himself.

    When LeBron makes his choice, he is choosing the highest subjective value for himself-- what decision leads to his maximal enjoyment in terms of a balance between his preferences of money made, living environment, social circle, practice schedule, etc.

    Cowen's pseudo-economic error is to look at LeBron's decision from the point of the view of the totality of fans, to create this arbitrary, weak and immeasureable scale of utility between the enjoyment of different groups of fans, and then to infer from it that LeBron could've made a different decision from the one he made that would've resulted in "added utility" as opposed to the one he made.

    Notice, someone could've made an equally arbitrary claim using Cowen's reasoning, that the decision LeBron made was actually the maximal utility one, without referring to LeBron's point of view and his value system or anything else like that. It's not at all ironic, of course, that Cowen, ever the contrarian, arrived at the conclusion that the choice other than the one LeBron made would've been superior.

    My point about money prices and action on the market was perhaps a bit confusing. I don't mean to say that LeBron only should've judged money prices when making his decision, or that that is the only value he could've been judging. Rather, I meant to say that in terms of getting an idea of how "society" does value different options an individual can make, money prices are the best estimate of "maximal utility" because money prices attempt to incorporate all values that are negotiable and tied to property. He ultimately could ignore money prices in favor of some je nais se quoi that was more important to him-- Tyler Cowen still would be floating on the deep blue sea of mystical pseudo-economics if he tried to make a serious claim about the effect LeBron's decision had on total social utility. Tyler Cowen seems to entirely discount/ignore LeBron's own happiness in calculating the total social utility of the groups of fans in the other markets! Maybe more utility would've been derived by the Knicks fans enjoying him over the Heat fans, but how does any of that compare to LeBron's relative lack of utility had he been forced to make such a decision? Cowen provides no reason or logic for why those utilities are more worthy than LeBron's.

    Does that make sense or do you still think I need some improvement here? I'm open to suggestions.
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  3. If, in fact, the money price was the most important factor in maximizing his personal utility, it was most likely significantly aided by the fact that Florida, unlike his other considered domiciles, does not tax income at the state level.
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