Thursday, January 6, 2011

Fallacy of Composition in Reverse

While I was running, I had an idea...we economists always teach the fallacy of composition as being the errant rationale that what's good for the goose is good for the gander. For example, if I stand up at a sporting event, I have a better view. However, if everyone stands up, then not only do I have the same/worse view as before, but now I'm standing and that requires more effort. Therefore, what's good for one person to do is not good for everyone to do.

Now let's reverse it. What if I do something that makes me worse off, but everyone else does that action too? For example, say I return an item that I have borrowed in better condition than when I first took possession. I may have had to put some effort into improving the object from its initial borrowed state, but everyone would be more willing to loan things out if everyone was a great custodian of the borrowed item. Having a culture where you can borrow items for temporary use instead of purchasing them would lead to lower waste, which is good for everyone.
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