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November 07, 2005
The games economists play?
Here's Thomas Schelling, "Nobel" Economist and game theoretician, displaying a sample of his wares: "If I go downstairs to investigate a noise at night, with a gun in my hand, and find myself face to face with a burglar who has a gun in his hand, there is a danger of an outcome that neither of us desires. Even if he prefers to just leave quietly, and I wish him to, there is danger that he may think I want to shoot, and shoot first."Yeah, and if I go downstairs without a gun, there's an even greater danger of an outcome that I definitely don't desire -- regardless of what the home invader might have desired. Plus, it's my house, and the burglar entered it armed. The only desirable outcome for me is his death, before he kills me. While I would rather not have been put in the position of having to shoot him, it was he who broke in, not I. In today's Wall Street Journal, Schelling is quoted as saying that the threat from terrorism is a "minuscule" one: In an interview in The Wall Street Journal, Thomas Schelling, game theorist and co-winner of this year's Nobel Prize in Economics, asserts that "terrorism is an almost miniscule problem." He points out that more people die from car accidents in three-and-a-half weeks in this country than died in the World Trade Center disaster. Also, when terrorism is compared with the common ways of dying (accidents, drowning, heart attacks, etc.), it is down near the bottom.Lest anyone doubt that a leading economist would spout vintage Michael Moore nonsense, I've obtained the full quote (which I'm transcribing): Prof. Schelling: It is important for us, the potential victims, to recognize that with the exception of the Twin Towers in New York, terrorism is an almost minuscule problem. [John] Mueller, at Ohio State University, estimates that the number of people who die from terrorist attacks is smaller than the number of people who die in their bathtubs. If you take the Trade Towers, we lost about 3,000 people. Three thousand people is about 3 1/2 weeks of automobile fatalities in the U.S. If you rank all the causes of death in the U.S. or around the world, different kinds of accidents, struck by lightning, heart attacks, infections acquired during hospital surgery, terrorism is way down at the bottom.I placed "Nobel" in quotes because the "Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel" is technically not a Nobel Prize. But it might as well be the Nobel Prize. Because they're handing them out to people who make about as much sense as some of the people who get Nobel Prizes.... While I'm neither an economist nor a game theorist, I don't see what game theory has to do with how the number of people who are murdered in a given event relates to the future number of people who might be killed. Or whether the seriousness of the event can be measured by tallying numbers. Is jumping from a building to avoid being burned alive really comparable to "infections acquired during hospital surgery"? Fewer Americans were killed at Pearl Harbor than at the Ground Zero on 9/11; does that mean Pearl Harbor was more "minuscule"? Using the same logic, the number of Jews killed by Nazis before the Final Solution was implemented might have been described as "minuscule." Even on the night of the Nazi "Kristallnacht" pogram on November 9, 1938 -- an event said to mark the beginning of the Holocaust -- fewer than 200 Jews were actually killed. I realize this is unfair, but let's play 1938 retroactive game theory: "If you ranked all the causes of death in Germany or around the world, different kinds of accidents, struck by lightning, heart attacks, infections acquired during hospital surgery, Nazi pogroms would have been way down at the bottom."Yeah. And climate change was more important. Besides, weren't there more Iraqi babies killed by American bombs than there were Jewish babies murdered by Nazi doctor Josef Mengele? I'm sure I'm missing something, but I can't say I'm all that impressed with Professor Schelling, or his theory of games. posted by Eric on 11.07.05 at 08:51 PM
Comments
The magnitude of terrorism as a "problem" depends almost entirely on how the targeted state responds to it. If the leaders explain the problem honestly and unite the people behind a solution that works, and targets the actual perpetrators, then terrorism will indeed be "almost miniscule" in the long run. On the other hand, if the leaders panic, ignore the problem, don't face the people honestly, or play divisive politics to enhance their own power, then terrorism will become an insurmountable problem, possibly a threat to the state's very existence. Raging Bee · November 8, 2005 09:34 AM This is the first time I ever heard of this Thomas Schelling and already I'm tired of him. Climate change? Has he or some mad scientist he knows invented a weather-control machine he wants to sell us? Until that happens, weather is just something everybody talks about but nobody can do anything about. Terrorists we can do something about. As for guns and burglars and "game theory", there is this additional factor: if you're a woman and somebody breaks into your home, chances are he won't stop at burglary. Sounds like this Schelling is competing with Krugman to see who can make the worst arguments about non-economic issues. Makes me miss the days when the leading socialistic economists were Galbraith and Keynes. At least they mainly stuck to economics. Steven Malcolm Anderson the Lesbian-worshipping man's-man-admiring myth-based egoist · November 8, 2005 02:44 PM Dear Steven, your words echo my thoughts. Steven Malcom Anderson's economical lesbian admirer · November 8, 2005 09:58 PM Can we really be sure we CAN'T alter climate, either deliberately or as an accidental side-effect of our activities? That strikes me as an unprovable axiom... aand one that I don't think I believe. Eric Voorhies · November 21, 2005 04:33 PM |
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Well... let's put it this way... people are left with the idea that there's a grave new threat to their lives because of terrorism (it sort of plays into the hands of terrorists).
The point of the dicussion in probability terms is that if you were to die tomorrow you'd have more chances of dying in a car crash than bombed.
Re: the burgler... you have to understand that GT works under the assumption that what you want to do is to maximize your gains, and not to reduce those of other players. If have to take this as we take the ceteris paribus talk in econonics.
Anyway, the best outcome for you is to not get a burgler in the first place. Second best is for him to come, you to confront him and him to leave. The third best is for you to shoot him without getting shot yourself (this is worse than the previous because you might have to go to court, support an investigation, have to live with a killing, etc.) and so on.
And then the brilliance of GT is that it encourages you to think: what are the possible gains of the other players, what will they try to do, what should I do taking that into the account (Nash, baby!), how will they react to my reaction to their reaction? ;-)
I don't know much about Schelling, but as far as GT goes, it hold promise, especially in those "gray areas" of classical economics where the marginal thinking doesn't do it for us. Otherwise, marginalism is king ;-)