The Bigger the Group, the Less Likely Pareto Improvements?

All classes were canceled at the University of Texas one recent Tuesday because of a shooting at the main library. I already had a haircut appointment scheduled for 4 p.m. and suddenly had a lot of free time before then. I called the hairdresser and asked to come by at 2. She was free then. This gave me a preferable work schedule; and, as I had been her last appointment, she got off work early.

A clear Pareto improvement – if the relevant set of people is my hairdresser and me. If the set is expanded more broadly, students were probably better off; the administrators and police who had to deal with the crisis surely were not. In general, if you expand the set of concerned parties to any transaction even a bit broadly, I wonder how many cases there are when Pareto improvements are possible. We teach this concept to our freshman, but increasingly its usefulness escapes me.

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  1. Drill-Baby-Drill Drill Team says:

    Always have a plan B…that is the most valuable lesson your students could have learned that day.

    ie. in case of a a sniper attack, then…..

    Incidentally I like your picture…but is a hairstylist really justified with a pate? Perhaps you could substitute a refreshing head or neck message instead. It could lead to clear headed thinking.

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  2. Michael says:

    Except for any students who were shot, I guess.

    It seems to me that realizing Pareto improvements in large population sets is the goal of public policy. Assuming that – and that most policy is generally effective – we’ve probably picked a lot of the low-hanging Pareto fruit. I would argue that it’s useful to consider that without good public policy, we’d be forced to try to resolve Pareto inefficiencies in a very localized and self-organized fashion.

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  3. Michael says:

    Hah, well I should have read the article. That first part was obviously tongue-in-cheek anyway. I guess I subconsciously assumed that you wouldn’t be using this example to discuss Pareto efficiency if there were victims.

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  4. Richard says:

    Isn’t this dependent on what you define as the “action” is? It would be hard to ascribe a Pareto Improvement to the shooting, However, the improvement did come from your changing the time for your coiffure adjustment

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  5. Karen Tiede says:

    Please help me understand:

    Someone is shot (at). How is it that:

    >students were probably better off?

    I will admit to feeling relief at a snow day when I was in school, but I know I was not actually better off for missing class.

    Perhaps I’m missing some content I would have understood if I had been reading the same news you follow. Students miss class, theoretically catch up on work, and “get” to deal with the after-effects of a shooting, including fear, anxiety, and an increase in their sense that the world is not a safe place.

    yrs,

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  6. O'til says:

    I don’t get what he means. Can someone explain?

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  7. Tyler says:

    You view your classes as having so little value to your students that you believe they are better off when they don’t have to attend?

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  8. UT Economics Graduate says:

    As I understand the transaction one party commits suicide, so he perceives that he is better off. You claim other parties to the transaction:you, your hairdresser, and over forty thousand students are better off. You state that administrators and police were not better off, but arguably these events create their job. So it is Pareto Optimal if someone commits suicide in the university library? Having earned an undergraduate economics degree form UT, this is not the insight I would have gained from the transaction. My understanding is that transactions costs increase with larger groups, frequently limiting Pareto Optimal outcomes. If this is your point, ‘ The Bigger the Group, the Less Likely Pareto Improvements? ‘ I do not think you chose the best example.

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