What Happens When Nobody Is Better Off? Pareto Deterioration


A tenured senior professor at another university, one of his department’s top researchers and best teachers, asked his department chairman for a temporary one-course teaching reduction for this Fall. The chairman refused but offered a terminal three-year appointment that included this reduction for all three years, at the same salary as if this professor taught a full load each year.

The professor accepted the deal, as he desperately wanted the teaching reduction this Fall, figuring he could get a teaching job elsewhere after three years. But he tells me he would have been happier teaching a full load over the next two years, and would rather not have to search for a job in two years. He is worse off. The department and university are also worse off, since they lose his courses in each of the next two years, and thereafter will not get the benefit of his teaching and his research/publication luster; and students are worse off too.

Is this really a Pareto deterioration—a new economic phrase denoting a change in which at least one person is worse off, and nobody better off? And is the phrase Pareto deterioration the best name for this unusual phenomenon?

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  1. Boris says:

    It sounds like at least the chairman wanted this professor gone, so it’s not clear to me that _everyone_ is worse off…

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  2. Trevor says:

    Maybe I’m missing the point here – but why would either party offer or accept a deal that made themself worse off?

    In the example given, why would the professor accept a position worse than his current one, and why would the department offer the same?

    Surely the offer / acceptance indicates that each party (thinks he) is better off?

    And if it’s just people making the wrong decision, then does it really deserve a ‘new economic phrase’?

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    • Nate says:

      I agree. It’s more like someone making a short-term decision rather than thinking about the future. Not going to college and smoking cigarettes would both also be considered Pareto Deterioration. There’s no need for a new term, we already have “shortsightedness”.

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  3. Ahmed Zghari says:

    Darwinian Economics (can’t believe there is such concept coming through) would suggest that if there is:

    1) no progress;
    2) no improvement; or
    3) no inclination to improve on what went before,

    a Dodo’s fate awaits.

    When there are no beneficiaries and only losers, there is no (1) inclination to (2) improve on things, and there is no (3) progress. It is, therefore, only a matter of time before we go the way of the Dodo.

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  4. Ivan says:

    Best thing to do in this type of situation is to re-negotiate the agreement. That should be particularly do-able in this situation where transaction costs are minimal.

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  5. Eric M. Jones. says:

    Simple…I think this requires the services of a good negotiator. Maybe you can borrow one from the sports department.

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  6. DaveZ says:

    How about “lose-lose”

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  7. Rex McClure says:

    Pareto dysoptimal, pareto abysmal, pareto defective.

    Clearly, negative externalities abound in this scenario (including the time and trouble of finding a replacement, hiring a relatively unknown commodity, and paying ever increasing salaries to attract and retain new blood). Is anyboby better off? This is purely conjecture, but there may be an under current of departmental politics in the chair’s decision. The chair may see this as an opportunity to reshape the political/cultural landscape of the department (i.e., soldify power). If this is the case, the chair may view this as a zero sum trade-off as much as the professor does. Pareto neutral.

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  8. MikeM says:

    The university and students are only worse off if whatever or whoever he is replaced with is of lower quality, right? If they can offer a higher-quality course, then the univ. comes out on top for getting him to break his tenure.

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