MRU.org is just a magical website if you are a student of economics, and one of my favorite videos on it is the one below. It’s only four minutes long, please do watch it if you haven’t seen it already:
The noblest of intentions, you’ll agree – but one of the most important lessons of economics is that the principles of economics really and truly matter. And in this case, the noblest of intentions had one of the most tragic outcomes possible.
That’s slavery. Now let’s talk about elephant tusks. Specifically, burnt and powdered elephant tusks:
If you visit Nairobi National Park, you will see rhinos, hippos, and giraffes, all within sight of the city skyline. You also will see an organized site showing several large mounds of burnt and powdered elephant tusks. They are a tribute to the elephant, and along with the accompanying signs, a condemnation of elephant poaching.
https://marginalrevolution.com/marginalrevolution/2023/06/elephant-tusks-incentives-and-the-sacred.html
Starting in 1989, the government had confiscated a large number of tusks from the poachers, and as part of their anti-poaching campaign they burnt those tusks and placed the burnt ashes on display in the form of mounds. There are also several signs telling visitors that it is forbidden to take the ashes from the site. There have since been subsequent organized tusk burns.
In essence, the government is trying to communicate the notion that the elephant tusks are sacred, and should not be regarded as material for either commerce or poaching or for that matter souvenir collecting. “We will even destroy this, rather than let you trade it.”
If you have seen (or are already familiar with) the video, how might you make use of your knowledge to think about this problem? Will burning these tusks make the situation better, or worse? Tyler answers the obvious question in his post:
“The economist of course is tempted to look beneath the surface of such a policy. If the government destroys a large number of elephant tusks, the price of tusks on the black market might go up. The higher tusk price could in turn motivate yet more poaching and tusk trading, thus countermanding the original intent of the policy.”
Why does he say that the “higher tusk price could in turn motivate yet more poaching”? Why does he not say it will motivate more poaching? Well, he’d have to calculate the elasticity of the supply curve to make a definitive statement one way or the other.
Read the rest of his post for some typically delightful Tylerian takeaways, including an academic paper called “Elephants“.
But whether it is the poaching of elephants or the slave trade, there is a deeper question at play here which Tyler alludes to towards the end of his post. But before we get there, a little anecdote which I once read in a cookbook. I’ve forgotten which cookbook (of course!), but the idea was that while in the process of cooking dinner for everyone, the author would simply fry some onions and garlic to start with. The aroma of these ingredients being fried would let everybody know that dinner was Being Prepared.
That is, Something Was Happening, And That’s Good Enough For Now.
Why do I bring this up now? Because in some cases, under some time horizons, and for some areas of optimization, a non-optimal response from an economic theory perspective may actually be… optimal.
Should vaccines be free or not? Should healthcare be free or not? Should education be free or not? If this raises your hackles, go with these: should tusks be burnt or not? Should slaves in a slave market be purchased and then set free or not?
Well, in the first set of questions, ask these additional questions: should be free or not for whom? For how long? Are you optimizing for more people staying alive and healthy, or are you optimizing for the fiscal health of the government? What if the long term fiscal health of the government allows you to save more lives in the future? What if giving vaccines away for free allows you to save lives that are here and present now? Will the government be able to run such programmes efficiently? Is it worth running these programmes even after knowing that governments can’t run these programmes efficiently? Why? Why not?
Or as Tyler puts it:
Many non-economists think only in terms of the sacred and the symbolic goods in human society. They ignore incentives. Furthermore, our politics and religious sects encourage such modes of evaluation.
https://marginalrevolution.com/marginalrevolution/2023/06/elephant-tusks-incentives-and-the-sacred.html
Many economists think only in terms of incentives, and they do not have a good sense of how to integrate symbolic goods into their analysis. They often come up with policy proposals that either offend people or simply fall flat.
Wisdom in balancing these two perspectives, he ends his post, is often at the heart of good social science (and, I would add, therefore at the heart of good policymaking). Or, as I like to put it, the truth always lies somewhere in the middle.
Economists would be better off if they didn’t use only economic analysis all the time. Non-economists would be better off if they used economic analysis some of the time. The trick lies in knowing when to stop in the first instance, and when to start in the second instance.
If only we had definitive answers to both, life would be so much easier.
But then again, I would then have had no reason to write here on EFE either.
So it goes!
EconForEverybody 