Fellow economist Susan Woodward despatched me this anecdote about Ronald Coase and playing that I assumed price sharing. It led me to recollect my very own attention-grabbing story about playing and one well-known economist.
Bob Corridor [her husband] and I had been speaking concerning the 1987 Coase convention at Yale, which I attended however Bob didn’t.
I used to be a serious buddy of John Peterman (then the director of the Federal Commerce Fee’s Bureau of Economics) who was a favourite pupil of Coase, and so I used to be seated by Coase on the dinner. We talked about what I used to be engaged on (on the Council of Financial Advisers) and I answered, “National lotteries.” I opposed them as a result of I assumed the authorities ought to lean towards all playing. (I used to be raised Protestant.)
“No, no,” stated Coase. His mom had had a really exhausting life, however she had purchased a state lottery ticket each week, and spent the weekend fantasizing about what she would do if she gained. It made her life significantly better! The utility acquire, he acknowledged, is highest from a low chance however excessive payoff lottery. Even when the odds are poor, state lotteries are good as a result of they’re trustworthy. That modified my view.
Susan’s story jogged my memory of my very own story. My mentor at Fortune journal once I began writing regularly for Fortune in 1984 was Dan Seligman, the guide assessment editor. [I’ve written about Dan’s mentoring here and here.] He additionally had a daily column known as “Keeping Up.” Moreover being an amazing author, Dan had an amazing humorousness and a stable understanding of economics.
Yet another factor about Dan is that he cherished playing. So when individuals criticized playing and, even worse, pushed to ban it, Dan didn’t like that.
MIT Nobel Prize winner Paul Samuelson had written a unfavourable assertion about playing. Samuelson acknowledged, simply as many economists and others preserve, that playing is zero sum; what one facet features is strictly what the opposite facet loses. However, as I stated, Dan understood economics. He understood that in the event you observe individuals doing something, they need to prefer it. In the event that they preserve doing it, that’s additional proof that they prefer it. The flamboyant time period economists use is “revealed preference.” Their actions reveal their preferences.
In essence, what individuals pass over after they say that playing is zero-sum is the pleasure individuals get from playing. Not everybody will get that pleasure and people who don’t have a tendency to not gamble.
In his column, Seligman might have used the argument I simply made. However he discovered a cleverer approach of responding to Paul Samuelson. Individuals who knew a lot about Samuelson knew that he cherished enjoying tennis. Dan was a type of individuals. So he turned Samuelson’s anti-gambling argument towards him. In tennis, argued Dan, when one facet wins, the opposite facet loses. So tennis is zero-sum. Ought to we then be essential of tennis and perhaps even ban it?
You would possibly reply that individuals take pleasure in tennis. Precisely.
