Discussion: Revealed Preference Theory

Do we believe in it?

Well, if you want to throw money at the problem (and I agree, this is a plausible thing to throw money at), subsidizing fruit and vegetables is probably not such a bad thing to do. Even if the money ultimately goes in the pockets of the store owners, they have to sell the fruit and vegetables to get it, which is what you actually want.

Revealed preference logic here just tells you that people prefer cheap junk food to crappy expensive fruit, which isn't that much of a surprise.

Right, if I only have $5 to spend on a meal and my choice is 1 cabbage or 1 hamburger...
Subsidising fruit and vegetables and shipping stuff that actually ships well would be a start. It should be no surprise that a capsicum that's wrapped in plastic and stored at 'barge temperature' for four days is going to go rotten quickly, even if it's then refrigerated at the shop. Bananas, apples, oranges, corn, cabbage, celery, other vegetables that can be eaten raw, etc, would all be good choices.

Another thing would be to try to work out how the internal (partly non-cash) economy works in relation to the cash economy. Gambling is one of my pet examples of this, and I'd like to do some work on it (if there are any behavioural economists reading...) -- we all think of gambling as "bad" because it "loses money" but in these communities it's more like social security; the income redistribution through gambling interacts with the kin exchange networks.

As a research psychologist by training and social researcher by profession, with two years of undergraduate economics, I'm perhaps half way there.. Also halfway through the Bruno Frey opus pursuing leads for the policy warfare environment I work in. But I'm well past halfway through my career. I wouldn't advise waiting. But I hope to live to see the day that my colleagues (ex-Productivity Commission and agricultural by preference) absorb the insights arising in the behavioural economics stream and apply them in their advice to government. I fear it will be a long wait. In the meantime, they provide advice that is ignored, and then decry politicians for being politicians, rather than applying Revealed Preference Theory to political behaviour.

I wonder if that made any sense at all.

I like the concept of gambling as an extended form of the kinship exchange network.

Too much sense Neil. Of course, this gambling thing only works for card parties, not at casinos where the house takes the profits. But where all the cash keeps circulating and where anyone who wins will be bound to distribute a substantial portion of the winnings to various relatives, it's a different proposition. Though since it's technically illegal it's hard to get ethics clearance to study it.

Aside from problem gamblers I can't see too much wrong with casinos either. Most of the 'lost' money goes either back to government (to spend on welfare), or to employ generally low-skilled labour who would otherwise be on the streets.

There will likely be a few of them on the streets in Russia at the moment.