24 Aug 2011

Fairness, agency and bias

Economists often talk about the tension between efficiency and equity (aka, the size of the pie vs. how it's divided), and the topic is complex.

I recommend these Econtalk podcasts for a useful discussion of "fairness" in markets and the tension between freedom to trade and burdensome restrictions on trade:

Munger on Exchange, Exploitation and Euvoluntary Transactions

Satz on Markets

The Satz talk was particularly interesting in the idea of "agency," i.e., the freedom to participate and control that one has in a market. She uses the example of a child labor market as one in which children have very little agency -- in contrast with a market for apples in which both sides tend to have equal power.

This concept of agency is part of a much larger discussion of "principal-agent" problems that are very central to the management of water (are managers -- as agents -- working hard for customers who are their principals?), politics (politicians and voters), and so on.

One category that is not often seen as having strong principal-agent dynamics is the media in a country with free speech. We tend to believe, I think, that competition in the media will expose rights and wrongs and give us a broadly correct view of the world.

There are several problems with this rose-tinted narrative:
  • The media doesn't work when lazy "customers" merely want to be entertained and/or have their biases confirmed.
  • The media doesn't work when money (advertisements) changes opinions (editorial) -- as we see in beauty magazines.
  • The media doesn't work when the "news" contradicts their fundamental views (we understand what's going on and you are ignorant until we explain it) and/or conduct (certain institutions are PART of the media experience).
Thus, we see heavy media coverage of a guy who was eaten by a shark on his honeymoon but not of the other 75,000 men who die every day.

Even worse, we get the current, you must be kidding me, media blackout on Ron Paul as a Republican candidate for US President. Watch this amazing clip in which a media pundit speculates that the lack of reporting can be traced to reporters' need to have friends in government and dislike of Paul's libertarian (small state = less demand for media) views.

Bottom Line: Freedom, knowledge and the good life don't just to you. You have to work within the system to get them and work the system to improve what you're able to get!


Eric said...


I have to deal with principal-agent complications daily. These complications make predicting the economics for a company (creating accurate pro formas)much harder.

Brian Henkel said...
This comment has been removed by the author.
Brian Henkel said...

"small state = less demand for media" Really? Fat chance. Seems like a "media blackout" of Ron Paul as a Republican candidate would be counter to the idea that a small state would result in a lower demand for media. Ron Paul is a candidate that is focused on real issues and proposes actual solutions. Agree or disagree with his politics (I happen to disagree) but you can't argue that he is working very hard to talk about the issues and propose and enact his ideas for solutions. From what I have seen, the other candidates spend their time criticizing and pandering and then get all of the media attention. Since the media isn't spending time on someone that is talking about the issues (mostly due to a lack of demand for that media content) then the size of the government has little to do with the demand for media.

Eric said...

Pete Hamill's book "News is a Verb" argues convincingly that media consumers usually want content not fluff. Thanks to you I will track down more about Ron Paul's views.

David Zetland said...

@Brian -- you appear to argue that there's no coverage of Paul b/c there's no demand for his message, but I am talking about the supply of coverage, i.e., that media doesn't want to cover a guy that might reduce the scope of their coverage (legal drugs = no drug war = no stories of violence in MX/US/CA or death by addiction/OD)

Brian Henkel said...

I guess I misunderstood part of your post. You started by stating what you deemed was a falacy - competition in media will yield accurate and comprehensive coverage of the news of the world. You then explained several factors that impact media that support your proposition (the doesn't work sequence). You follow that with a "therfore" statement and another statement that starts with "even worse", which I assumed was another "therefore". So I assumed you were showing two examples of poor media, shark death on a honeymoon and pundit foolishness. Apparently you seem to believe the pundit's foolish statement because you created your own parallel statement, "legal drugs = no drug war = no stories of violence in MX/US/CA or death by addiction/OD". The legalization of drugs can certainly have an impact on the extent of the drug war and reduce the overall violence associated with it. Legalization can also reduce addiction rates and decrease the number of overdoses. The way in which legalization is done will have a dramatic impact on just how much reduction in violence, addiction and overdoses we see but you used equals signs and proposed complete elimination of the problems. Your blog is mostly about water issues and you often highlight problems with management of water which is often through some governmental or quasi-governmental agency. You cite example after example that illustrate the problems and the pitfalls with the way that governments manage resources (or other things) and then propose that they will get legalization so perfectly right that the whole war will go away! I say again, fat chance. Your glasses are no less rosy.

So back to the original equals statement, "small state = less demand for media". You mentioned another example of poor media, shark death on a honeymoon while 75,000 other men died that same day. The pool of stories is apparantly 75,000 deep. If we eliminate all of the shark death on honeymoon stories, or even all of the shark death stories or even all of the water related death stories, there are still plenty of stories about some dude dying to keep the media plenty busy. The media doesn't fear Ron Paul because he is for small government. I don't know whether they fear him or not but if they do it's not from his policies potentially reducing the size of government. Getting his policies implemented would yield a tremendously deep pool of stories. There will still also be an entire house and senate full of gaffs, nutcase proposals, scandals, shenanigans and amazingly enough real news. The media will be just fine and I am unconvinced that they are scared.

David Zetland said...

@Brian -- on drugs, see Prohibition, quasi-legalization in NL and PT. I know that there will still be problems (look at how the US screwed up RE-legalizing alcohol).

On Ron Paul -- why are they NOT covering him then, e.g., when he gets 2nd place in Iowa?

On media in general -- I see more bread and circuses than depth. I realize that their audience is perhaps not interested in depth, but I have a hard time with pandering (or people selling handguns "because there's demand).

It may be that we are talking mast each other, b/c I seem to be missing your point sometime. Maybe we can have a beer if we are within 100km of each other? I am in Berkeley just now. (Or, perhaps easier -- have a skype call...)

David Zetland said...

@Brian -- ps: I studied the drug war before water...

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