David R. Henderson  

I Optimized

Thoughts on the Macro Paradigm... Book Update...

One of the conclusions that emerges from "thinking on the margin," one of the Ten Pillars of Economic Wisdom that I teach my students, is that just as you shouldn't underinvest in something, so also you shouldn't overinvest. In fighting Measure J, the measure on the Pacific Grove ballot that went down to defeat last night, I optimized.

The measure required a two-thirds vote and received 65.23%. Therefore it failed. Because October was the busiest month of my year, I did very little to fight the measure besides helping write the rebuttal in the voter's handbook and going with lawyer Carl Mounteer to make our case to the Monterey County Herald. I didn't do what I normally do, which is write a couple of letters to the editor. Nor did I set up a table in front of the Post Office, one of the things people traditionally do in my town. Nor did I spend money on signs: had I done so, my expenditure in money (excluding time to distribute signs) would have been about 1/4 of the present value of my stream of savings from defeating the tax increase.

This 65 to 35 outcome was a little too close for comfort; my gut feel had been that the final tally would be about 62 to 38. A swing of just 24 votes from No to Yes would have pushed the other way. Next time, I would invest a little more time in making arguments for how to extend library hours without the tax increase. Nevertheless, ex post, I optimized.

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CATEGORIES: Cost-benefit Analysis

COMMENTS (5 to date)
Douglass Holmes writes:

I'm disappointed that 65% of your community voted in favor of a tax increase. (We had a similar measure in the Louisville area, and it was defeated.) Libraries are nice. They aren't necessary. It just rubs me the wrong way to think that our elected representatives should have to balance the needs of the fire department, the health department, and the police, but that the libraries will always get their money. When Carnegie provided his assistance to communities to build libraries, books were precious things that most people couldn't afford. Now, you can get cheap books at several second hand book stores, and a huge amount of reading material is available through outlets such as half.com. It may seem heresy for any college educated person to question the need for libraries, and I'm not really saying they are obsolete. They just aren't as important as they once were.

The economist in me admires you for helping to defeat something with such measured effort. The military side of me would have used the principal of mass. In a conflict, you want to ensure victory through resources massed against the enemy.

David R. Henderson writes:

Dear Douglass,
Thanks. Ah, yes, the Lanchester equations. Here's the difference: when an army masses resources, taxpayers are paying for it. Any resources I put into it would be mine. :-)
BTW, I just learned that there are some uncounted absentee ballots that won't be counted until next week. I did a calculation, though, that still gives me some comfort. I think the upper bound on the number of absentee ballots is about 500. If I'm right about that, then 76% of these ballots must be Yes votes.

Publius writes:

Did anyone else write against the tax in the voter booklet? In my experience, somewhere between zero and one person will write against a tax increase, and that makes a huge difference, and the libertarian view is exposed to a much larger audience than a newspaper.

David R. Henderson writes:

My co-author, Carl Mounteer, and I were the only signers. We could have got others but because my quarter was so busy, I didn't want to take the time even to make phone calls and make a case. I agree with your observation. Have you noticed, by the way, that rebuttals are rarely rebuttals: they usually use the space to make other arguments or repeat their arguments.

q writes:

i don't see what would be so bad about, say, a library funding itself partially on a 'suggested donation' basis, as museums do.

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