We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
Our Recent Essays Behind the Front Page
Saturday, December 3. 2011
Economic Efficiency and Unintended Consequences
This past weekend, my elder son asked me to drive him to the outlets so he could get some Ralph Lauren shirts at a reduced cost. Frankly, I don't know where he got this penchant for name brand clothing, but it's his money, not mine. What is my money is the gas it takes to drive an hour to the outlets and the time I gave up to make the 2 hour (round trip) drive. I thought it would be a good lesson for him on 2 levels. First, I could teach him about opportunity costs by showing him why the trip was frivolous. Second, he'd get some driving practice so he could get his license in 2 weeks.
I wound up getting to fulfill my goals, he got his shirts, and we both learned a valuable lesson.
No good deed goes unpunished. In other words, Murphy was right. You can almost count on unintended consequences.
The first lesson was fairly simple. As he drove, I asked him how much it would cost to buy the shirts online. $72.00 was the response. I then asked how much he'd save by going to the outlets. He replied "$18.00." So this trip was designed to save money, right? He looked at me quizzically and said "Yes, why?"
I settled in and explained to him that while he was saving $18, there was the cost of 6 gallons of gas to get there, and the cost of our time (roughly 2 hours). I asked him what his current wage at work was. "$7.70."
I showed him that between the cost of gas, the cost of 2 hours of his time (about $15.40) and the cost of my time (which could have been spent cleaning the basement or something else), he had burned up more than his $18.00 in savings. Since he was planning to go to college and study Business Economics, this was a great lesson for him - that sometimes 'savings' are not savings, they are costs. Economic efficiency is about determining the total costs and balancing them against your expectations. Not all costs come out of your pocket.
Thankfully, he grasped the topic. I didn't expect him to turn around and order his shirts online at that point. Instead, we had a nice drive, and he got his shirts. His driving skills are definitely improving, so I was happy that the second lesson was a success. Overall, the trip had some value which made it worthwhile.
Then Murphy arrived. Just as I was feeling good about my boy's improved driving, he looked at me and said "We're out of gas."
I looked at him, shrugged, and said "Pull into the next station."
"No, dad, we're out of gas." Just then I felt the car make the final chugs of starvation. I was forced to push it to the side of a somewhat busy highway. We were still 40 minutes from home, but the nearest station was a good 2 miles away. It was easier to have gas brought from home than for me to walk to a station, fill a can, and return to the car. So we waited until my wife arrived, delivered a can, and got on our way.
Lesson Three - never assume things will go the way you expect. I had a long discussion with him about checking the gas, noticing the "Empty" light, and paying attention to the dashboard.
It was a lesson not lost on me, either. Sometimes the person in charge has to take the extra step. I should've known to double check what he was doing. It's something I do at work, why wouldn't I do it with him? I guess just faith in his ability to be a good, responsible driver? Maybe. Maybe it was laziness, too. Or too much focus on teaching him an economics lesson.
I can't say what the reasons for it that day. However, it's fair to say unintended consequences occur constantly. We hope to do the right thing, but something occurs to cause us more trouble than we intended and the outcome isn't what we'd hoped. People who engage logical fallacies fall victim to this regularly.
I've posted a picture below of a clothesline in my parents' backyard. In an effort to save some money and engage a bit of energy conservation, they installed it. It wound up costing them more than they expected. Without depth perception, it may not be easy to spot why. But I thought I'd present a challenge and see who can figure out what the unintended consequences of this installation were?
Posted by Bulldog in Fallacies and Logic, Our Essays, Politics at 13:07 | Comments (21) | Trackbacks (0)
Trackback specific URI for this entry
Display comments as (Linear | Threaded)
No depth perception here but it looks like the pole installation made a depression in the lawn that traps extra water making the dryer sit in a little lake. A pain to get the clothes on and off as well as creating a humidifier for the clothes, taking longer to dry?
Wee birdies marking and no sun when days are warm and leaves full on the branches -- the best days for outdoor clothes drying.
mitchel44 and Sgt. Bob got it with the birds.
Sun, apparently, was not the issue. Birds caused 3 loads to need a rewash.
They are in the process of seeking a new, better, location.
You forgot to mention one side benefit of the trip. Alone time with you son. This can make up for the difference and then some. Or, then again, it could be pure torture for the both of you, depending on your relationship
Good point. We have a great relationship, and you're right, it's always good to have time with him.
My father's 76th birthday was a few days ago. My brother and I took off from work to drive down and surprise him at lunch. At this stage in his life (as he says), you can't get him much that he wants or needs aside from time with family.
Outlets sell lower-quality goods that need to be replaced sooner. Whether they are economical is debatable.
Depends on where you go, what you buy, etc.
The outlet we went to is unsold inventory. The quality is excellent, the pickings slim. Out of date stuff, brands or styles that didn't quite 'make it'.
The outlets I used to go to in Reading were all incorrectly sized, or had small errors in the manufacture. You're right, they were lower quality.
Many outlets today exist to burn off excess inventory so the primary retail distribution lines can keep their prices high.
We us an indoor drying rack----works great and doesn't have those problems
What's the cost, including the car trip, for a trunk-load of bird-shot? Quality time with your folks AND target practice for the lad without skeet fees.
(A big new Gravely or John Deere could handle what shot falls in the grass, but EPA might frown on all those other pellets going into the lake.)
It is interesting that will all this talk about logical fallacies you fall into one of your own.
For one thing, you can't count his work wages against the two hours spent driving from here to there and back. If he took the time off from work, that is one thing. If this was his time, then it is totally non-relevant. Same with the cost of your time. I assume you wouldn't pay your son what you earn in an hour to clean your basement or garage so there isn't any economic relevancy.
Secondly, Frank W mentioned quality time with your son. If you are into quantifying the economic factors involved in a shopping trip, what is the relative worth of quality time with your son? I would suggest that it is worth considerably more than 6 gallons of gas and $7.70/hr. :>)
Funny you should have posted this though because we went through sometime similar yesterday. For some odd reason I cannot explain, I shot my mouth off a couple of times at the HOA meetings and found myself being at the forefront of a crusade to remove the current Board of Directors - as in running for the Board of Directors with a slate of new officers in tow behind me.
Ugh - Why God - why? Anyway, as events turned out, there were some shenanigans involving not printing our resumes and Statements of Purpose (as convoluted and silly as Statement of Purpose sounds, it actually focuses the mind on why one would want to run) in the local newsletter. Well, this started a fire storm among the supporters of a new board, so all the candidates got together and put out our own flyer. This is where the "lesson" in economics was valuable.
At first, the campaign committee wanted to buy ink carts and paper for the printer here in my office, print the five pages of the flyer, collate, fold and staple them - it came out to roughly 500 sheets of copy paper in total, two color carts, about four hours to print the five pages, another hour to collate, fold and staple the flyer using seven people and the materials were going to cost roughly $90 (I don't use refurbished carts - no, no, no). I got to thinking about this, so I called around to Staples, Office Max, Office Depot and got a quote for printing, collating and stapling the flyer from each. The best price was $105 from Office Max, it would be done in 30 minutes and I could transmit it to them - they are exactly three miles from my home. So for an extra $15, it would all be done, finished and just have to be folded and distributed which would take an hour.
What I didn't figure on was the social part of the equation. By the end of the evening, we had twelve people here who stayed for four hours, had a great time and it was a festive atmosphere. While I "saved" time and effort by going to Office Max, I didn't account for the good company, conversation, the women brought food and snacks, music and just plain old fun. There as a social component that I completely misjudged. If I were to do it over again, I would have spent the $90 and let the fun commence.
This also happened when I was on the Fire Department. We used to do a turkey supper, supposedly for fund raising, which actually cost us about .50¢ a dinner, but was an all day affair, almost everybody in town attended, great training for team work and the Auxiliary Cadets we had received some good valuable lessons in cooperation and hard work. So it all balanced out.
I don't like to put things in economic terms because that doesn't always tell the whole story or evaluate the intangibles that come with interpersonal communications and company.
I applaud you for getting on your HOA board. It's a big PITA, but local government gets ugly when sensible people avoid it too much.
I'm telling you flat out - these guys running the show here have been there for a long time (eleven years) and they are the most ill tempered people I've ever dealt with. If you don't do it their way, you're an evil "outsider" and not worth nuttin'. And when their perceptions are challenged? Holy crap, you'd think the freakin' world was ending.
The thing of it is after being involved in Town and Regional politics back in CT, I swore up and down I would never ever do it again - ever. How'd that work out for me. :>)
No, I didn't all into one. I explained to him the fact that neither of us were working meant that the time we spent wasn't worth the full money value of my time or his. It's time we can spend being productive elsewhere, however.
I can't put a dollar value on cleaning and reorganizing the basement, which needs to be done, but I can explain my point by telling him how much he earns at his job and using that as an example. The fact I didn't mention time together was specifically avoided because it was a lesson in economics, not sociology or family dynamics. I told him if it was just about money, I wouldn't have allowed him to go.
The fact is, unless you truly love shopping and use it as a means of entertainment (I don't, and neither does he - we went in, purchased, and left), then the time in the car is a waste which can be used productively elsewhere.
There was no logical fallacy, just an incomplete explanation on my part here - which I didn't really think was necessary as I was only making a point about wasting time to "save" $18. The cost of the gas, alone, would suck away his "savings".
I did tell him that, from my POV, the increased driving time he got was a "savings" to me - assuming I was to pay for a driving school - and that was how I was justifying it.
Another point I forgot to mention is that he's going to college next year and is going to study Business Economics. I have begun to teach him what I know, starting with the basics, such as "Opportunity Costs" and "Economic Efficiency". The stories may be imperfect, but they make a point.
I use economic efficiency to determine almost everything I do, and it pays off.
I agree there are social aspects of some activities which can't be 'quantified'. On the other hand, I can tell you as president of my condo board, I would avoid having social interaction with these people at all cost. I plan on resigning in the next year because the others on the board make decision making impossible.
Good points all. And you've obviously done him a favor and started him off on the right foot which is to your great credit.
I understand about the condo board thing - I swear to you if it wasn't too late and I wasn't forced into this by neighbors, friends and the spouse, I'd be fishing today instead of handing out flyers, shaking hands and introducing myself to the other owners. :>)
I understand that some do the whole economic cost thing, but I don't find that to be a huge factor in my personal life. Yes, we do budget our expenses, but there are certain things that you just can't put a cost to. I mean you can, but is it really a valid way of looking at certain features of social life? I don't think so.
Can you put a cost to time spent on your boat?
Doubt it. Well, you can put a cost to it, but it would be silly to do so.
I did an experiment once where I tracked my gas/oil/travel costs, averaged in all the lures, rods and reels, sonar, GPS, VHF radio, T-top, wax and polish - in short every single expense I had over a period of three months and compared that to the number of fish I caught.
It worked out to $327/fish.
It was even worse when I had the Contender. If you include slip fees, it came out to $480/fish.
Never did it again because I just don't want to know. Kind of spoils the experience 'ya know? :>)
#18.104.22.168.1 Tom Francis on 2011-12-04 16:54 (Reply)
If the fishing is a recreational experience or leisure activity, I'm not sure I'd do that, either. You can't really put a cost on serenity.
#22.214.171.124.1.1 Bulldog on 2011-12-05 10:45 (Reply)
One cost you failed to account for was the wear and tear on the car, which is estimated by the IRS now at almost $.50/mile.
There are a few costs I didn't account for, mainly because I was trying to keep it simple so he'd understand what I was trying to teach him.
The $18 "savings" evaporated quickly.
As Tom Francis mentioned, it's hard to count 'cost per hour' as a cost if you're not working. However, in economics, if there is other productive work you could be doing, you have to find a way to determine the relative value of one activity versus the other. As a result, I used his (and my) wage as a 'cost' determinant. Tom's right, they aren't technically accurate. The real cost is something less than the actual wage(s). But spending time explaining all the details to him, when I was really just trying to show him that driving an hour to a mall to save money isn't a savings at all.
The unintended consequence of running out of gas really added to the whole experience and lesson.
You could do worse than buying him some of Frederic Bastiat's books...