Half Sigma is retarded about value

Half Sigma has once again consulted his oracle of value. The oracle has spoken and determined the objective value of a Greg Mankiw speech. Bow to the wisdom of the oracle!

Here’s the situation. Some group is willing to pay Greg Mankiw $1,000 to give a speech.

Real life value is subjective. Thus, because someone is willing to pay $1,000 for a speech from Professor Mankiw we know that a speech from Professor Mankiw is worth $1,000. We have no alternative way of measuring value other than making it up – i.e. the Half Sigma method.

Half Sigma doesn’t think he’s making it up – he believes that he has discovered a true value (like the true cross?). This true value is objective, unfortunately the only way to get the true value is to wait for Half Sigma to speaketh it. I don’t know where he gets the true value, so I assume it comes from some sort of oracle that he consults. The oracle has spoken, and the true value is apparently $0. That’s right no one who would hear Mankiw’s speech would derive any satisfaction from it and no one would have lost anything in terms of opportunity cost or the satisfaction of those who enjoy would be perfectly canceled out by loss of those who don’t like it! The value is precisely $0.0000000000000!

Here’s Half Sigma:

Mankiw’s speeches are only valued because he’s a famous economist, and making money from speaking is a winner-take-all activity. There are a lot of economics professors making five figures who would love the opportunity to be paid to make a speech, and maybe if Mankiw turns down a speech, someone who needs the money more will have the opportunity to make some extra income and build up his resume to make more money in the future. This is why I call this a value transference activity: Mankiw’s loss is someone else’s direct gain. There is no value destroyed because Mankiw decides not to make a speech.

Value is subjective, so it doesn’t matter why something is valued. In fact, we can’t ever know why something is valued. Perhaps someone who hears the speech falls in love with economics and embarks on a career in economics (or perhaps someone is turned off from a career in economics). Does HS believe this can’t happen? Or that such positive value is precisely offset by someone who derived negative value from the speech? Is he unable to say because the oracle didn’t elaborate?

Again value is subjective so there are no winner-take-all activities. Perhaps our random participant who falls in love with economics derived $1,000,000 worth of enjoyment from the speech. Mankiw still gets $1,000. The pot is infinite as it reflects only subjective valuations. If Mankiw makes the speech, all we know is that he preferred $1,000 to not speaking and the payer preferred a Mankiw speech to $1,000. Those of us that do not have access to an oracle of value do not have any more information.

HS then goes on to suggest that the economy supplies a fixed number of "economics speeches by professors!" This assumption is implicit in his suggestion that if Mankiw doesn’t give the speech someone else will. What is his evidence for this? Does the oracle also provide information on economy-wide supply and demand? If so, us mortals who are left with only our ability to observe economic transactions are unable to know.

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9 Responses to Half Sigma is retarded about value

  1. red says:

    Half Sigma is the primary reason I have not embraced HBD. Someone that clueless can’t be an example of high IQ = good results.

  2. Tschafer says:

    What HS is doing, besides hating Sarah Palin, is trying to create some sort of HBD-informed, conservative Marxism, based on his own odd labor theory of value and on the existance of a class of parasitic “value-teansferrers” who in practice seem to be anyone who makes more money or gets more tail than HS. As we say, good luck with that…

  3. Remember that HS is talking in the context of tax policy. What policy should be enacted is always in the end a matter of subjective “oughts”.

    Mankiw’s point is that tax policy discourages him from making speeches. HS’s point is that since HS himself does not value Mankiw’s speeches, HS does not think it will be a terrible loss if Mankiw doesn’t make his speech. HS is fine with tax policy that discourages Mankiw from making speeches. Overall, I find HS quite reasonable on this point.

    • Foseti says:

      But he wasn’t talking about tax policy. He was talking about “value.” The argument that certain earnings should be taxed at 100% is a fine argument. But that argument can’t be based on “value.” Value is subjective – tax rates can’t be subjective.

      • Maybe I’m reading my own ideas into the post, but I think if you read Half Sigma’s post and mentally replace every instance of “value” with “value-as-subjectively-determined-by-myself-Half-Sigma” then it kind of makes sense.

      • Foseti says:

        I think you might be giving him too much credit. I’ll put up a post about value in a bit – I look forward to your input.

  4. […] of value I ripped on Half Sigma’s conception of value earlier in the week. I think it would be helpful to explain various conceptions of value, as misconceptions of value […]

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