Interesting idea and it seems related to the Pareto frontier! One note: "Perhaps it would be better to restructure legislation around protecting individual rights, using things like the Pareto axiom as a guide for what should and shouldn’t be allowed. In the future, we’ll talk about h" Hate to be that guy 😂, but is there a typo here?
Aww darn, it looks like substack is having trouble updating. It should say "In the future, we'll talk about how to structure government decisions to follow these kinds of rules"
This is a really interesting perspective, and one I haven’t considered before. I’ve been thinking about Pareto and harm related to drugs, but more like 80% of incidents have low impact and the 20% that are less frequent have potential to be catastrophic. I’m saving this to reread and think about further- thanks for sharing!
That would be wonderful! Looking at my drafts, I think the series is going to be a bit messy, but I think by writing it out I can crystallize it into a better one-off post.
As you say, "no activity is truly private because every decision you make will have some influence on other people," so the policy proposals you put forward at the start of your post could be criticised for the negative externalities they may generate. However, it does not mean that "Somebody will always be slightly harmed by individual choices, so the Pareto axiom has no force," as I don't think there is anything that says every activity has negative externalities on others.
In the end, the Pareto principle is a principle of consensus. It won't help us choose between different possible compromises when compromises are necessary. However, there is a twist: if compromises have to be made often enough, there are different conventions we could adopt to settle compromises. Some conventions can make everybody better off in the long run. For instance, it is better if everybody stops their car at red lights (a rule to share intersections) than if nobody does and traffic gets jammed. In that perspective, "free lunches" appear (some changes in convention can be a win-win), and the Pareto principle has some bite.
Imagine all 8 billion humans in a hypothetical negotiation for a new set of conventions that benefit everyone. A true Pareto improvement is one that would theoretically pass even if every single human on earth had veto power. But someone will refuse any proposed out of sheer spitefulness, or bizarre idiosyncratic reasons. Somewhere out there is someone who dislikes Pareto improvements in general.
It's possible for something to be close to a pareto improvement, when you make some approximations.
Everything is a tradeoff. But when the gains are orders of magnitude bigger than the losses, it can look Pareto when approximated.
An interesting distinction is actions that influence others through market transactions (the last banana example) and those that affect others "directly/physically (punching someone in the nose, emitting CO2 into the atmosphere). The latter is still subject to the de minimis objection, but it is an important distinction to be made.
I didn't know about the term "de minimis"! Thank you.
Agreed. Thinking about this more, in the case of the banana, giving it to someone else just shuffles goods around without making society better off as a whole, while with the direct harm case, there really is an opportunity to make society better off by coming to some agreement or banning the harmful behavior.
I remember this post discussed this towards the end:
> It’s a pretty simple principle, few would disagree with it on it’s own terms. But applied broadly, it has pretty radical implications for public policy.
No it doesn't. It only applies to actions which no one in the world objects to. And for almost any possible action, some one would object to it just for the sake of being objectionable.
> It basically says to allow any action that someone wants to do, so long as it doesn’t affect anyone else.
Firstly everything effects everything if you look at all the subtle effects. What may seem like your personal choice that isn't effecting anyone might have a high carbon footprint. Your private tap dancing might be loud and annoying to neighbors. Your private decorative candle collection might be a fire hazard that marginally increases the chance of your neighbours house burning down. (As well as your house).
But lets ignore that. Put the people in separate parallel universes and guarantee that there is 0 causal influence. People can and do still care about things that don't effect them. People try to stop suicidal people from killing themselves, out of concern for the well being of the suicidal person in question.
Interesting idea and it seems related to the Pareto frontier! One note: "Perhaps it would be better to restructure legislation around protecting individual rights, using things like the Pareto axiom as a guide for what should and shouldn’t be allowed. In the future, we’ll talk about h" Hate to be that guy 😂, but is there a typo here?
Aww darn, it looks like substack is having trouble updating. It should say "In the future, we'll talk about how to structure government decisions to follow these kinds of rules"
Thanks for the heads up!
This is a really interesting perspective, and one I haven’t considered before. I’ve been thinking about Pareto and harm related to drugs, but more like 80% of incidents have low impact and the 20% that are less frequent have potential to be catastrophic. I’m saving this to reread and think about further- thanks for sharing!
I look forward to the discussion as to how government can be structured around the Pareto Axiom and possibly featuring this idea at Risk & Progress!
That would be wonderful! Looking at my drafts, I think the series is going to be a bit messy, but I think by writing it out I can crystallize it into a better one-off post.
As you say, "no activity is truly private because every decision you make will have some influence on other people," so the policy proposals you put forward at the start of your post could be criticised for the negative externalities they may generate. However, it does not mean that "Somebody will always be slightly harmed by individual choices, so the Pareto axiom has no force," as I don't think there is anything that says every activity has negative externalities on others.
In the end, the Pareto principle is a principle of consensus. It won't help us choose between different possible compromises when compromises are necessary. However, there is a twist: if compromises have to be made often enough, there are different conventions we could adopt to settle compromises. Some conventions can make everybody better off in the long run. For instance, it is better if everybody stops their car at red lights (a rule to share intersections) than if nobody does and traffic gets jammed. In that perspective, "free lunches" appear (some changes in convention can be a win-win), and the Pareto principle has some bite.
Imagine all 8 billion humans in a hypothetical negotiation for a new set of conventions that benefit everyone. A true Pareto improvement is one that would theoretically pass even if every single human on earth had veto power. But someone will refuse any proposed out of sheer spitefulness, or bizarre idiosyncratic reasons. Somewhere out there is someone who dislikes Pareto improvements in general.
It's possible for something to be close to a pareto improvement, when you make some approximations.
Everything is a tradeoff. But when the gains are orders of magnitude bigger than the losses, it can look Pareto when approximated.
An interesting distinction is actions that influence others through market transactions (the last banana example) and those that affect others "directly/physically (punching someone in the nose, emitting CO2 into the atmosphere). The latter is still subject to the de minimis objection, but it is an important distinction to be made.
I didn't know about the term "de minimis"! Thank you.
Agreed. Thinking about this more, in the case of the banana, giving it to someone else just shuffles goods around without making society better off as a whole, while with the direct harm case, there really is an opportunity to make society better off by coming to some agreement or banning the harmful behavior.
I remember this post discussed this towards the end:
https://www.economicforces.xyz/p/does-anyone-understand-externalities
> It’s a pretty simple principle, few would disagree with it on it’s own terms. But applied broadly, it has pretty radical implications for public policy.
No it doesn't. It only applies to actions which no one in the world objects to. And for almost any possible action, some one would object to it just for the sake of being objectionable.
> It basically says to allow any action that someone wants to do, so long as it doesn’t affect anyone else.
Firstly everything effects everything if you look at all the subtle effects. What may seem like your personal choice that isn't effecting anyone might have a high carbon footprint. Your private tap dancing might be loud and annoying to neighbors. Your private decorative candle collection might be a fire hazard that marginally increases the chance of your neighbours house burning down. (As well as your house).
But lets ignore that. Put the people in separate parallel universes and guarantee that there is 0 causal influence. People can and do still care about things that don't effect them. People try to stop suicidal people from killing themselves, out of concern for the well being of the suicidal person in question.