David R. Henderson  

Dan Ariely: Where's My Quarter Pizza?

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Dan Ariely and Michael Norton write:

Picture three people splitting an 8-piece pizza. How should they divide it? The possibilities are endless, from the very unequitable -- one person eats the whole pie -- to the more equitable -- say, each person gets two pieces and two get one more each. How resources should be divided invokes our fundamental senses of fairness, justice and equity, and this is true whether we are dividing a pizza pie or a slightly larger pie -- say, the entire wealth of the United States of America.

So picture Dan Ariely and Michael Norton buying a delicious pizza from my favorite pizza place, Gianni's Pizza in Monterey, California and dividing it into 8 pieces.


What? You're reminding me that Dan and Michael bought it and that they should get to decide not only how much to give me but also whether to give any pieces to me?

And you're saying that that's because they bought it? You think that matters?

Oh, and they earned the money to buy it? And you think that matters too?

So you're saying it's not necessarily inequitable that they have decided not to give me any?

Hmmm. I'll have to think about that.

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CATEGORIES: Economic Philosophy

COMMENTS (9 to date)
MG writes:

Why do you have to assume that pizzas don't just appear out of thin air? In Ariely's and Norton's world apparently they do; so all you have to do is "picture it", and all you have to worry (and rationalize) about is how to cut it. Enlightening,

ThomasH writes:

If Michel and Arney made the rules that determine whether you can earn enough money for a pizza, [you were made unemployed by a minimum wage and they did not support an EITC as an alternative] there might be an argument for their having an obligation to give you some of the pizza they bought.

George writes:

This reminds me of solving some engineering problems where we just assume a convenient theoretical approximation to make our lives easier.

Assume history doesn't matter!

Charlie writes:

"How resources should be divided invokes our fundamental senses of fairness, justice and equity"

You are making their point!

Phil H writes:

[Comment removed. Please consult our comment policies and check your email for explanation.--Econlib Ed.]

James writes:

When Ariely and Norton talk about how to divide the physical pizza or the entire wealth of America, they have already made an unarticulated and undefended assumption that the opportunity to decide how to divide the pie belongs to the people who claim to be concerned with equality of holdings. I wonder if Ariely and Norton realize that this distribution of decision making authority is unequal.

I have never seen any of the economists concerned with inequality mention the possibility of a presidential executive order cutting wages on federal employees who work in DC. This could be implemented tomorrow and it would have a meaningful impact in inequality right away. Instead these economists love to propose taxes on classes of people who ought to be praised for bearing so much inequality by working in high inequality careers such as hedge fund manager and entrepreneur.

I don't think any politician would ever seriously want to reduce inequality due to the inbuilt progressivity of the tax code. So long as higher incomes are taxed at higher rates, politicians have an incentive to favor policies which lead to inequality (and also high variability of incomes over time) because it means higher tax revenues to spend. They can say what they like, but no one can pretend they are changing anything.

Swami writes:

The only reasonable and workable definitions of fairness which I am aware of are procedural.

One such rule of fairness is the person who created it gets it. Where multiple people create it, the fair terms are those they can get voluntarily among competing offers (how many slices will you competing pizza makers give me to help you cook it?)

I used to work with Ariely, and have great respect for him, but he is assuming that inequality is bad. It is not only necessary, it is good. Inequality in result is the system signalling us of our relative success at problem solving (aka pizza baking) for ourselves or others. If you are getting zero slices, you are not adding value. Do something different. If you are getting lots of pies, keep doing it, as you are adding value to yourself and others. Bake billions of pies and trade them to others in mutually beneficial ways.

Obviously this assumes a well functioning voluntary market, and does not apply to unfair and privileged systems. But again, fairness is procedural. The fairest economic and social system is the one we would choose voluntarily among competing alternatives. Ariely chose to live in the US. We know what he viewed as fair.

Charlie writes:

^^Isn't the point that his test subjects assume inequality is bad, at least beyond a certain point. They also don't know that inequality is generally pas that point.

3rdMoment writes:

I'm late to the party, but I just wanted to say that this is probably my favorite David Henderson post ever.

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