Comments on: The Persistence of Poverty http://www.deeshaa.org/2004/05/22/the-persistence-of-poverty/ Mon, 13 Feb 2012 05:41:09 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Walker http://www.deeshaa.org/2004/05/22/the-persistence-of-poverty/comment-page-1/#comment-207 Walker Unknown, 30 Nov -0001 00:00:00 +0000 http://home.blogstreet.com/2004/05/22/129#comment-207 Can the concept of revealed preference be applied meaningfully to more than one person? Even with one person, the concept of revealed preference assumes that decision making capacity approaching omniscience is a reasonable approximation. Once the concept is applied to two individuals, it breaks down utterly, as there is no reasonable way to aggregate the subjective preferences of two individuals. One might say trade reveals those preferences, but trade (even accepting the simplistic models) can only reveal an equilibrium given initial conditions. It is the initial conditions that are really important not the subsequent trade. Applying revealed preference at the scale of a society or the global community, politics adds another level of complication. In particular what is optimal to the world at large (however you measure it) is not necessarily optimal to all factions. Particular factions can be at an optimal state in a sub-optimal world. Having said all that, there is a sense in which (non-metaphysical) "preferences" are being shown -- the poor, for the most part, would rather live in poverty than not live at all. People generally want to live. Can the concept of revealed preference be applied meaningfully to more than one person? Even with one person, the concept of revealed preference assumes that decision making capacity approaching omniscience is a reasonable approximation.

Once the concept is applied to two individuals, it breaks down utterly, as there is no reasonable way to aggregate the subjective preferences of two individuals. One might say trade reveals those preferences, but trade (even accepting the simplistic models) can only reveal an equilibrium given initial conditions. It is the initial conditions that are really important not the subsequent trade.

Applying revealed preference at the scale of a society or the global community, politics adds another level of complication. In particular what is optimal to the world at large (however you measure it) is not necessarily optimal to all factions. Particular factions can be at an optimal state in a sub-optimal world.

Having said all that, there is a sense in which (non-metaphysical) “preferences” are being shown — the poor, for the most part, would rather live in poverty than not live at all. People generally want to live.

]]> By: Jyoti Iyer http://www.deeshaa.org/2004/05/22/the-persistence-of-poverty/comment-page-1/#comment-208 Jyoti Iyer Unknown, 30 Nov -0001 00:00:00 +0000 http://home.blogstreet.com/2004/05/22/129#comment-208 Hi Atanu, That is astute reasoning. Could one call this passive acceptance , driven by the I, me, myself attitude of most people and their unwillingness to drive change? "Little drops of water make a mightly ocean" can be paraphrased as "Little drops of inertia make a poor world". Ultimately both parties (the poor and the rich) end up blaming each other for this condition. Hi Atanu,

That is astute reasoning. Could one call this passive acceptance , driven by the I, me, myself attitude of most people and their unwillingness to drive change? “Little drops of water make a mightly ocean” can be paraphrased as “Little drops of inertia make a poor world”. Ultimately both parties (the poor and the rich) end up blaming each other for this condition.

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