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Rationally Gifting

Mainstream economists have argued that because people know their own preferences, gift giving is irrational. Behavioral economists have countered by claiming that gift exchanges can strengthen social bonds as well as make both members of the exchange feel better than they would have, had they purchased items on their own. Nobel prize winner Richard Thaler added to this argument stating that because people mentally divide their budget up into categories, such as 10% for clothing, a nice shirt that exceeds that mental budget is of immense utility. Behavioral economists give quite convincing arguments. But would there be reasons for exchanging gifts even if everyone was perfectly rational? There would be if information was incomplete. Specialization makes gift giving rational. Because it is impossible to know about every market in expert detail, people often make choices that are suboptimal. When a sommelier gives a bottle of wine, the receiver is not only given a gift; he is given pr

Taxi Incentives

Whether they show it or not, most passengers are suspicious of taxis. This is because there is a conflict of interest: needlessly roundabout routes drive up the taxi's profits, while they cost passengers time and money. Is there a way to line up the incentives of drivers and passengers? The solution is to pay taxis before the ride, not after. The cost would be based on the distance and the traffic situation. This pre-paid method would be better than the current after-pay method for three reasons. First, it would be in the best interest of drivers to take the passenger to his or her destination as soon as possible so that they can quickly find a new customer. Second, because the passenger knows this fact, there would be fewer arguments about the route the drivers take. A driver's mistake in taking a slower path could be mildly annoying for the passenger, but not irritating enough to incite major arguments. Passengers would also trust the drivers more when they claim t

Compulsory Organ Donations

More than a Nudge Robert Thaler, the soon to be winner of this year's Nobel Memorial Prize in Economic Sciences, wrote about how organ donation rates can change significantly when the question is asked differently to potential donors . In a nutshell, he differentiates the opt-in and the opt-out method, where the opt-out method gets more people to become donors, because the default choice is to be a donor. But he goes on to mention that the presumed-content law may be upsetting to some people, and that the Illinois system, which "makes one's wishes to be a donor legally binding . . . is a winning combination." Here, Thaler, in his strict adherence to libertarian paternalism, fails to consider a morally and economically superior policy: the policy of mandatory donations. It is not hard to see that mandatory donations are economically superior. To see why mandatory donations are morally superior, one need only consider the trolley problem. Here is the thought exp

Interesting, Unrelated Content

Youtube algorithms allow users to browse related videos. Recommendations are based on what other viewers, who have also watched the same videos, have browsed. This nifty feature has become an essential part of Youtube, where 300 hours of video are uploaded every minute. By clicking on a recommended video, the Youtuber can reach new content with expectations that it will fit one's taste. But what if a Youtuber wanted to learn something new? What if a Youtuber who only watches NBA highlights has an undiscovered desire to watch videos of a cobra fighting a mongoose? Though the sidebar recommendations are great at featuring interesting, related content, there is no way for interesting, unrelated content to show up. And while the Cobra v. Mongoose example is facetious and trivial to some people, the idea of unrelated recommendations can be applied in education. Picture a curious student who wants to learn about the world. One problem that the curious student faces is that he may no

Phaedrus' Philosophology

As I was reading Robert M. Pirsig's second novel, Lila , I came across the idea of "Philosophology". Philosophology, or the study of philosophy. This idea saved my life. One of my goals since graduating high school was to study philosophy, to get a coherent understanding of major ideas from major philosophers. I wanted to know enough to group philosophers, to concisely sum up their ideas, and to read their works in the original languages that they were written in. I, like the people Pirsig described, thought that knowing about philosophy was essential before pursuing my own philosophy. What if people already wrote down what I wanted to write down? What if strong counterarguments already existed? But Pirsig said the same thing that a professor from the Yonsei Philosophy Department had said to me a year ago: given our short lifespans, it would be impossible. "You can imagine the ridiculousness of an art historian taking his students to museums, having them wri

Getting Economists to Vote

The Freakonomics guys summed it up well: "... voting exacts a cost -- in time, effort, lost productivity -- with no discernible payoff except perhaps some vague sense of having done your 'civic duty.' As the economist Patricia Funk wrote in a recent paper, 'A rational individual should abstain from voting.'" -excerpt from a New York Times article This is unsettling, because many people consider the economic policies of candidates to be of the utmost importance. (According to the Chosun Ilbo article written on May 4th, 2017, polls revealed that economic growth policy was the most important factor of the 2017 Korean elections, at a rate of 28.5%. Policies regarding job creation came in second place, at 18.8%.) What to do, when the people who allegedly know the most about the economy take no part in shaping it? Surely, this major problem is difficult to remove without hurting democracy. Perhaps, then, hurting democracy is the best way to solve thi