tag:blogger.com,1999:blog-2830084253401570472.post8059537195287375227..comments2024-03-28T09:22:36.967+13:00Comments on Offsetting Behaviour: Peer effects aren't an externalityEric Cramptonhttp://www.blogger.com/profile/15831696523324469713noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2830084253401570472.post-22103432090313744552011-04-27T13:39:01.359+12:002011-04-27T13:39:01.359+12:001) Imposing a policy solution on one dimension of ...1) Imposing a policy solution on one dimension of that kind of (perhaps implicitly) bargained outcome seems rather more likely to effect a transfer than to push towards efficiency.<br /><br />2) That kind of control isn't necessary for efficiency. You just need to be able to trade with them. And, both you and your colleagues are linked through a contractual nexus with your employer - the Department or the University - which presumably sets conduct rules to maximize aggregate surplus. <br /><br />3) Agreed on this one. But peer groups aren't imposed in the same way; we largely choose our friends and colleagues. The study finds big effects from forced repeated intense interactions over time. That tends only to be replicated in chosen peer groups, or among prison cellmates.<br /><br />4) It does feel more like a pecuniary effect where the relative costs of individual actions are affected by who else is in the group rather than that the individual's fitness production function is being directly affected. <br /><br />5) Agreed that it's more plausible than paternalistic or fiscal externality arguments. I'm less than convinced that the health nuts aren't imposing the larger burden on everyone else. <br /><br />6) I've been doing a lot of searching for an adequate treatment of these kinds of externalities but I've yet to find one. So much market failure theory hinges on externalities, but it's damned hard to find a solid canonical splitting out of what gets to count and what doesn't for efficiency purposes. Buchanan and Stubblebine give the framework, but the implications aren't adequately fleshed out anywhere.Eric Cramptonhttps://www.blogger.com/profile/15831696523324469713noreply@blogger.comtag:blogger.com,1999:blog-2830084253401570472.post-61377639061270620012011-04-27T13:13:15.241+12:002011-04-27T13:13:15.241+12:00Thanks for your thoughts.
1) If there are 'co...Thanks for your thoughts.<br /><br />1) If there are 'complex sidepayments' involved in a friendship, doesn't that just mean there are a complicated interacting set of externalities, rather than saying these are not externalities?<br /><br />2) I don't have perfect control over my peers. My office neighbours (and my living arrangement neighbours) are not really under my control.<br /><br />3) If I learned that the guy buying the house next to mine would (through some channel) cause my health damage, then I would likely pay to avoid that. We could both be made better off if such a compensation mechanism existed. How does this not under the 'missing market' view of an externality?<br /><br />4) Since the channel is through my own behaviour (that I choose) rather than the mere presence of an obese neighbour, one might argue that this is different. That makes some sense.<br /><br />5) I thought this paper was interesting because it was a more appealing (to me) hook for anti-obesity policy than the standard paternalistic or 'health $' arguments that one hears. Still not obvious one can make a solid case, but I think the externality argument is likely stronger than the paternal or health $ arguments. <br /><br />6) Thanks for helping me to think through this more clearly.Kevin Milliganhttp://faculty.arts.ubc.ca/kevinmilnoreply@blogger.com