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.