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Eduardo Porter : The Price of Everything

21 Feb 2011 · No Comments

There are a lot of intriguing concepts in The Price of Everything, but I was bothered throughout by logic that seemed sloppy. But on the other hand, I mistrust my judgement a little bit because I had a vehement, irrational, negative emotional reaction to some of the book’s content.

Porter’s key concept is that you can examine any decision in cost/benefit terms, and you can almost always find a way to quantify the cost and benefit in monetary terms (whether it’s explicitly transactional or not). For instance, here’s how Porter analyzes why the 55-mph national speed limit didn’t work: A 70 mile trip takes 16 minutes more at 55mph than at 70mph. At $4.30/hr (the average wage of “production workers in 1974″), that represents $1.15. At the time gas cost $0.53/gal, so to break even, the average driver would have needed to save 2.17 gallons for every 70 mile trip — substantially more than the fuel efficiency of 1974 cars would provide.

Porter doesn’t suggest that most production workers worked out this equation and made a rational, informed decision to disobey the speed limit — I infer that he thinks people made gut-decisions perhaps based on a subconscious sense of time-value lost at lower speeds. But I would argue (albeit without stacks of research to back me up, whereas Porter’s book is meticulously footnoted) that the psychological dimension was significant outside of economics; the 55-mph limit was an assault on macho cowboy car culture. (Consider: if economics were that much of a factor in velocity determinations, you’d see a lot fewer jack-rabbit start and sudden stops with current fuel prices, especially in sub/urban commuting, where it avails the driver almost nothing.)

Porter’s framing of the problem also ignores that travel at 70mph for sustained periods of time is a comparative rarity for most drivers. (With long-haul trucking one notable exception, and, other than cowboy culture, one reason always advanced for the trucker/cop cb/radar conflicts of the mid-late seventies was that the truckers’ work schedules required violating posted speed limits.)

Porter also ignores other factors which might reasonably be considered part of the valuation: reduced loss of life, reduced emissions, reduced engine wear, et cetera. (Although I think it’s fair to assert that many drivers would likely ignore these factors as well.)

Although Porter’s analysis of what to do about greenhouse emissions ultimately concludes that given the uncertainty of the models, voters might as well follow their guts, his analysis of the issue omits a very important factor. (It’s also quite different from traditional risk valuations.) He suggests thinking of the problem as balancing lives positively impacted now and in the future, the economic cost of curbing emissions now and in the future, and the potential impact of climate change on the economy. (I infer that he doesn’t discount “there is no more economy” as an outcome, but thinks it fairly unlikely.) It’s easy to tweak the model to suggest taking only limited action in the short, in effect “investing” funds needed to address the problem in the future: spending money on policies that promote economic development so there are increased financial resources to address global warming later on. But he ignores the opportunity cost of not taking action now. I think of it as the “toothache problem” — the longer you put off the dentist visit, the bigger the bill is likely to be.

However, I should probably admit that phrases like, “the standard family deal, in which women exchanged the service of their uterus, child care, and household chores for their husband’s wage,” get me spoiling for an intellectual tussle with their author, irrespective of how historically accurate they might be and what the author’s personal attitudes are. And if I sometimes found the book infuriating, it certainly challenged some of my attitudes and preconceptions, and made me think.

Aside: Porter is kinda in the Chicken Little camp as far as the future of paying for intellectual content goes, and seems to think more/stronger DRM may be part of a solution. So maybe this is relevant, not just petty: A glowing review called The Price of Everything to my attention, and if it had been priced like other e-books I’ve bought recently, I probably would’ve bought it on the spot. These days my determination of whether and how to read a book includes among other factors, the cost of physical storage, the ease of library access, my estimate of re-read/reference value, and whether an electronic version is DRM-encumbered. Half-again the maximum price I typically pay for DRM-trapped content? Not a winning strategy for publishers who want revenue from me.

needs more demons? I might’ve found the content I disliked easier to swallow if I thought the extrapolation had been a bit more rigorous throughout.

Tags: economics · p-author · p-title · sociology

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