At play in the dismal fields. I will admit it; I am ... a ... Wikipedian, one of those thousands of anonymous electronic scriveners, laboring in our hidden mole-like way, creating the vast compendium of garbled falsehoods and uninformed opinion that is Wikipedia – no, no, wait, that didn't come out right. Let's start again – ahh, whatever.

Anyhow, I do occasionally dabble in editing Wikipedia, tossing in bits of information gleaned during all those years of excess post-graduate study. This means I usually manage to stay away from the dodgier and controversy-generating areas of WP. Nobody really cares that much about tarsal bones, for example, or the bones of the middle ear. (You wouldn't believe the fight over Chicago-style hot dogs, though.)

Recently I link-surfed further afield than usual, and found myself lost in a dark and rough thicket of economics-related Wiki pages. One page led to another, and I was soon confronted with the Liberal Paradox.

In its pristine form, the paradox apparently goes something like this:

[Amartya] Sen considered what Pareto might say thinking of two agents lewd and prude. Lewd wants to read porn but finds even more exciting the thought of Prude being forced to read porn. Prude finds porn appalling but is even more disturbed by the thought of Lewd reading and enjoying it. Freedom is not Pareto optimal in this case. It is Pareto better to block Lewd from reading porn and force Prude to read it. This is crazy. In any case it shows that liberalism and the Pareto principal might hypothetically be in conflict.

If you're mumbling to yourself, "Am I supposed to know what 'Pareto-better' means? Why is Fleck being such a pompous ass?", have no fear – it's economist-speak for "a situation where one person's well-being can be improved without reducing another person's well-being". I know this, because Wikipedia told me so.

So anyway, the point, I think, is that it is possible to construct a situation where granting people what they want ends up making everybody unhappy, at least if the people involved are assholes and what they really want is to control other people.
This doesn't seem like a stunning insight, and Amartya Sen is supposed to be a real smart dude, so possibly I'm missing something here. But the example given on the WP page doesn't help me, either:

Suppose Alice and Bob have to decide whether to go to the cinema to see a chick flick, and that each has the liberty to decide whether to go themselves. If the personal preferences are based on Alice first wanting to be with Bob, then thinking it is a good film, and on Bob first wanting Alice to see it but then not wanting to go himself, then the personal preference orders might be:

* Alice wants: both to go > neither to go > Alice to go > Bob to go
* Bob wants: Alice to go > both to go > neither to go > Bob to go

There are two Pareto efficient solutions: either Alice goes alone or they both go. Clearly Bob will not go on his own: he would not set off alone, but if he did then Alice would follow, and Alice's personal liberty means the joint preference must have both to go > Bob to go. However, since Alice also has personal liberty if Bob does not go, the joint preference must have neither to go > Alice to go. But Bob has personal liberty too, so the joint preference must have Alice to go > both to go and neither to go > Bob to go. Combining these gives

* Joint preference: neither to go > Alice to go > both to go > Bob to go

and in particular neither to go > both to go. So the result of these individual preferences and personal liberty is that neither go to see the film.

But this is Pareto inefficient given that Alice and Bob each think both to go > neither to go.

I'm still not seeing it. However, I think a big part of the problem is that I'm a die-hard empiricist, not a theoretician, and I just can't accept the axiomatic conditions here. Ok, I can accept that Alice most wants to see the film with Bob (first preference), then wants to be with Bob in any case (second preference), and oh, yeah, wants to see the film (third preference), but I think I can safely state that it makes no sense for Bob to really, really want Alice to see the film alone. Bob probably really, really wants to be with Alice, alone (first preference), and for this will put up with some stupid movie (second preference), which he would rather gouge his eyes out than watch by himself (third preference) and whether Alice sees it or not doesn't even factor in, just as Alice wouldn't realistically give a hoot whether Bob saw the movie or not. So the allegedly "Pareto inefficient" result of neither seeing the movie is in fact what Bob, the sly dog, had in mind all along! He's managed to dupe Alice, and the audience of onlooking economists, into thinking he's making some sort of sacrifice – "See? Neither of us got what we really wanted, so we're even" – when he's really achieved his main goal. And the economists all still think he'll respect them in the morning, too. Let's hope Alice knows better.

Posted by David Fleck at 02 September 2007 03:37 PM