The New York Court of Appeals — the state’s highest court –is about to consider an important property rights case, Goldstein v. New York State Urban Development Corporation. The case involves a challenge to the condemnation of large amounts of property for the purpose of transferring the land to influential developer Bruce Ratner, who plans to use most of it to build a stadium for the New Jersey Nets (which he owns), and “luxury housing.” The targeted property owners argue that these takings are not for a “public use,” as the New York state constitution requires. Certainly, the case is a fairly egregious example of the use of eminent domain power to benefit private interests. I wrote about this taking in a 2008 post addressing the federal court case in which the Second Circuit Court of Appeals upheld these condemnations under the federal Constitution (as it was required to do, given the Supreme Court’s decision in Kelo v. City of New London):
...[T]he fact that much of the condemned land is to be used to build a sports stadium raises serious red flags about the true likelihood that the general public will benefit from the condemnation. Numerous studies by economists show that public subsidies for stadium construction create no economic benefits for the general public....
Second, the court claims that the creation of “affordable housing” for the poor is one of the public benefits to be expected from the project. The project will indeed create some new housing units (in addition to the stadium). However, as the Second Circuit opinion concedes (pg. 15), almost 70% of the new housing units will be “luxury” units for the wealthy, and the remainder is mostly not guaranteed to be ever built and is still intended for the “middle class” rather than the poor. Like the stadium, the housing portion of the project seems likely to be a straight redistribution of wealth from the current residents of the area to the very wealthy Mr. Ratner and the types of wealthy people who will be able to afford to buy the luxury housing he intends to build. To say the least, it is hard to discern any genuine public benefit here.
The Second Circuit also justifies the takings on the basis that they will serve to alleviate “blight.” New York City has indeed designated much of the area condemned area as blighted. However, the validity of this designation is debatable at best (the plaintiffs pointed out that much of the land in the area is among the most valuable in Brooklyn). . . . New York is one of many states with a definition of “blight” so broad that it can encompass virtually any property. Even if the area really is “blighted,” it doesn’t necessarily follow that the current owners and residents should be expelled and their land transferred to a politically powerful developer. Cities have many other options for alleviating genuine blight that do not infringe so greatly on property rights. At the very least, there is no good reason to condemn the 50% of the project area that even the city acknowledges to be free of blight....
In this case, as in Kelo itself, the court took account of the claimed benefits to the general public, but explicitly refused to consider the massive costs (pp. 13–15). Ignoring cost is a requirement under Kelo. But it is not a good way of determining whether a planned condemnation is actually likely to serve a “public use” — even if “public use” is defined broadly to include indirect public “benefits....” Ignoring costs is a blank check for local governments to undertake condemnations that benefit politically powerful interests while imposing the costs on taxpayers and the politically weak.
Finally, the Second Circuit notes that “Ratner was the impetus behind the [condemnation] Project, i.e., that he, not a state agency, first conceived of developing Atlantic Yards, that the Ratner Group proposed the geographic boundaries of the Project, and that it was his plan for the Project that the ESDC [government agency undertaking the condemnations] eventually adopted without significant modification.” The court is probably right to conclude that this is not enough to prove that the taking was a “pretextual” one under Kelo. At the very least, however, such a pattern of events should trigger heightened judicial scrutiny of the government’s true purposes in undertaking the condemnation.
Damon Root of Reason has some more details here:
In December 2003, Bruce Ratner, a New York real estate tycoon and owner of the New Jersey Nets basketball team, announced his long-simmering plans to build a 22-acre “urban utopia” in central Brooklyn, featuring more than a dozen office and apartment towers rising as high as 60 stories, a 180-room hotel, and a fancy new basketball arena for Ratner’s Nets to call home.....
So Ratner did what most politically-connected elites do when they run into trouble: He turned to the government—including his old Columbia law school pal Gov. George Pataki—for a bailout. More specifically, Ratner partnered with the Empire State Development Corporation (ESDC), a controversial and embattled state agency with the power to bypass zoning laws and seize private property via eminent domain.
It’s a classic case of eminent domain abuse. Ratner isn’t planning to build a bridge or a road or any other legitimate public project that might permit the forceful taking of private property. He wants to build a basketball arena, sell tickets to the games (not to mention sell broadcast rights, advertising space, concessions, and merchandise), and make a big fat profit. That’s not public use, it’s private gain.
Furthermore, state officials have gone out of their way to put those profits in Ratner’s hands. Consider that when the project was officially announced in 2003 there was no mention of blight, which is the state of extreme disrepair frequently cited by the ESDC to trigger an eminent domain taking under state law. Two years later, however, Ratner and the ESDC started claiming that the neighborhood was “blighted.” Yet by that point Ratner had already acquired many of the properties he wanted (thanks to eminent domain) and left them empty, thus creating much of the unsightly neglect he now cites in support of his project.
Moreover, the ESDC report counted minor things like “weeds,” “graffiti,” and “underutilization” as evidence of blight....
New York case law is among the most hostile to property rights in the entire country, allowing the condemnation of virtually any property for any reason. For example, a 2001 state appellate court decision ruled that Times Square was blighted, allowing the condemnation of property there for the purpose of transferring it to the New York Times to build a new headquarters. New York is also one of only seven states that have enacted no eminent domain reform law whatsoever since the Supreme Court’s controversial 2005 decision upholding “economic development” condemnations in Kelo. For these reasons, I am not optimistic about the property owners’ chances in this case. However, the litigation might still do some good by focusing greater attention on eminent domain abuse in New York. Moreover, there is always the possibility that the state supreme court will change its ways, as several other state high courts have done in recent years.
Martinned says:
Apologies for the OT, but I have to say I always get a kick out of the names of the courts in New York. They have a refreshingly old world absence of logic to them.
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October 9, 2009, 3:37 pmA.S. says:
…[T]he fact that much of the condemned land is to be used to build a sports stadium raises serious red flags about the true likelihood that the general public will benefit from the condemnation. Numerous studies by economists show that public subsidies for stadium construction create no economic benefits for the general public….
This is not persuasive at all. Why is the analysis limited to economic benefits? What about the enjoyment of millions of fans of the Nets?
What if the land was being condemned to sell to Ratner and he wanted to build a park? No economic benefits to the public, but a lot of enjoyment for a lot of park-goers.
The focus on mere economic benefits is unjustified.
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October 9, 2009, 3:54 pmMark N. says:
Ratner’s been up to this kind of thing for quite some time. He was one of the main developers behind the MetroTech Center, also a “public-private partnership” built via extensive use of eminent domain, not to mention taxpayer subsidies. He also gets a lengthy treatment in Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit (starting around p. 279).
As a side note, his politics are pretty flexible too, as far as parties go. He was a large financial backer of David Dinkins (D) against Rudy Giuliani (R) in 1993; then in 1997, was a large financial backer of Giuliani against Ruth Messinger (D).
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October 9, 2009, 3:55 pmShelbyC says:
Who have to pay Ratner ~$80 a pop for said enjoyment?
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October 9, 2009, 3:57 pmNickM says:
IMO the New Jersey Nets qualify as blight.
Nick
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October 9, 2009, 4:04 pmA.S. says:
“Who have to pay Ratner ~$80 a pop for said enjoyment?”
I’m a Nets fan and I dont pay anything for that privilege (well, it was a privilege in the Kidd era).
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October 9, 2009, 4:21 pmLaw Student says:
Is enjoyment by millions of fans really enough to make the project worth seizing private property over? Millions of fans would surely enjoy a new stadium here in San Diego, but using the power of eminent domain to do so just aint right (besides, for those of us who are too busy to bother much with sports, it is not a benefit). But the most important point is this: for the same reason fans may “enjoy” a sporting event, home-owners may “enjoy” their property just as much if not more. The value in one’s property goes beyond its economic worth in most instances
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October 9, 2009, 8:30 pmloki13 says:
Well, that’s kind of the whole eminent domain issue in a nutshell.
1. Despite what (neo) classical economists and some libertarians like to model, people aren’t rational economic actors.
2. Therefore, despite the fact that people should view property as any other economic entity, they don’t (I won’t sell my land for a million dollars!).
3. Land, in some areas, is scarce, and as society changes the need to use land for new purposes (mills, railroads, factories, malls) changes.
4. Therefore, eminent domain is an attempt to allow some rational way (FMV) to resolve intractable irrational problems (hold-outs, irrational attachment to property against financial interest).
Now, you might disagree with some of that (Prof. Somin doesn’t believe there is much of a holdout problem) or you might think it’s abused (reaching for ED as a first, instead of a last, resort), but that’s why it’s there.
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October 9, 2009, 8:45 pmDavid Nieporent says:
1) Because it’s the Nets.
2) Because the project was sold based on economic benefits.
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October 9, 2009, 8:53 pmloki13 says:
DMN,
A few things. First, I agree– it is the Nets (or Nyets), and therefore I am thinking either Riker’s Island or Fresh Kills would be the best place for them.
But there is a more subtle point to be made on the second issue. This is always a concern when doing cost-benefit analyses. There are things that are easy to measure (how much will the stadium cost? how many workers will be employed to build it?). There are things that are hard to measure (how many additional jobs will be gained/lost in 25 years if the Nets are in Brooklyn?). Then there are things that are *really* *really* hard to measure– what is the benefit, in dollar terms, of the additional happiness gained by people from having an NBA franchise in Brooklyn? What is the detriment, in dollar terms, of the erosion of certainty people will have in their own property rights if this is allowed to go through? And so on.
I like cost benefit analyses. Unfortunately, they are bad at the things that are hard to measure. They are terrible at the really really hard things.
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October 9, 2009, 9:04 pmM says:
If mere “underutilization” qualifies as blight, one wonders why New York doesn’t just institute some sort of land value tax to generally discourage the inefficient use of property.
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October 9, 2009, 9:11 pmloki13 says:
That’s sensible. You could also change the SOL so that adverse possession occurs after, oh, two years. I think both changes have a snowball’s chance in hell of happening.
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October 9, 2009, 9:16 pmAllan Walstad says:
loki13: I tend to agree with you on the shortcomings of cost/benefit analyses, but how do you know that attachment to one’s property is “irrational” while rooting for some sports team just because it plays its games nearby is rational? The whole point of private property is that if it’s mine it’s mine, and no number of pols or well-connected big shots get to say otherwise. Granted, if a large parcel of land is needed for some truly necessary installation like an airport or train route, there’s some rationale for taking the land of holdouts coercively. But when we allow it for something so frivolous as a sports team, we’re getting pretty close to a denial of private property altogether. The Nets already have a place to play, don’t they? If it’s not fancy enough they can tear it down and build it better on the same spot. If land is so scarce where they want to build a new facility, maybe that’s just a sign that they should look farther out in the country.
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October 9, 2009, 10:38 pmloki13 says:
Allan,
I only mean irrational from the sense that it is not an economically rational decision. For example, if you have a piece of property valued at $10, and someone offers you $15 (let’s ignore transaction costs, moving etc. for now) then standard models say you should take the $15. Perhaps we can factor in intangibles (such as your happiness from the land causes you to overvalue it). However, it is sometimes the case that will people will place value on things, especially property, far higher than what is “rational”. It’s not wrong– it’s human.
This is neither to advance nor to denigrate the concept of eminent domain, but, rather, to explain why it is a concept so well-understood throughout history that it was even put into the Constitution. The fact that people such as law student (above) immediately go to “but it’s worth so much more that money” as their explanation is precisely why there is eminent domain; feel free to argue about whether its abused etc.
IOW, if we were all economically rational actors, we wouldn’t really need ED, would we?
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October 9, 2009, 11:07 pmMark N. says:
That sort of claim is considerably outside the mainstream of neoclassical economic thought, which considers the market value (“economic worth”) of a commodity to correctly capture its value. It’s possible to distinguish between, say, exchange value and other kinds of value, but generally only Marxian economics does so.
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October 10, 2009, 1:50 amTim says:
It’s a shame that Justice Cardozo no longer sits there.
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October 10, 2009, 4:42 amTim says:
I might correct this to say not just neoclassical economics, but ALL mainstream economics (of which Marxian economics is not a contributor)
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October 10, 2009, 4:43 amMartinned says:
Indeed. The distinction between value in use and value in trade is very old, and theoretically the former should be greater than the latter, since if it wasn’t, the rational actor would trade.
This is a separate issue from the endowment effect, which is what loki13 was talking about.
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October 10, 2009, 8:13 amAllan Walstad says:
“Value” has a long history of differing definitions. As far as “market value” is concerned, let me point out that there’s no reason for market transactions to occur at all, if all people place the same value on goods. The only reason trade takes place is because different individuals place different values on the same things at the same place and time. I have an apple but value an orange more; with you, it’s the reverse. By trading we both gain value.
So I’m with the Austrians: non-mainstream but neoclassical. Value is not something that property objectively has; rather, “value” is foremost a verb. People value things. Individuals pursue their own individual goals and purposes according to their own individual valuations. Just because other properties like mine are selling for $50k does not mean there is anything irrational about my being unwilling to part with mine for $1M. In fact, even in the neoclassical mainstream, market prices settle to the intersection of supply and demand curves that are themselves the composites of many DIFFERENT individual supply and demand curves. Just because trade is taking place at the market price does not mean there’s anything irrational about the preferences of all those who aren’t buying or selling.
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October 10, 2009, 11:04 amMartinned says:
@Allan Walstad: What about someone who refuses to pay more for a coffee mug than $ 5, but also refuses to sell an identical mug for less than $ 10?
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October 10, 2009, 1:45 pmroad2serfdom says:
Martinned:
Diminishing Marginal Utility. His marginal value from the second mug is less than the value from the first that he owns.
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October 10, 2009, 6:33 pmroad2serfdom says:
You are butchering the term “rational”. It does not mean what you think it means (as an economic term). There is nothing “irrational” about “happiness from the land” causing a person to value something more than the price other people recently traded a similar plot. As pointed out by Allan, the “market value” is just the price that two people recently traded; it has nothing to do with an individual’s valuation on their own similar piece of property. If a requirement for rationality was to value things equal to the market price there would be no consumer surplus or gains from trade.
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October 10, 2009, 6:45 pmMartinned says:
You misunderstand the nature of the experiment, probably because I didn’t explain it carefully enough. Here’s another one:
The endowment effect is a wonderful thing.
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October 10, 2009, 8:07 pmAllan Walstad says:
How much I’m willing to pay depends not only on how much I’d like a ticket but also on how big a hole the price will put in my finances. Most likely the typical student did not have $2400 to pay for a ticket, but once in possession of one, wouldn’t let it go easily. Analogy: If I’m dirt broke, I’m not going to pay $5k for a diamond ring for my girlfriend, even if it’s marked down from $10k. But give me the ring for free, and I’m not going to part with it for $5k or $10, I’m going to give it to her.
Have I misunderstood something about this experiment and its interpretation, or is it as idiotic as it appears?
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October 10, 2009, 8:24 pmloki13 says:
in response to road2serfdom,
I am not even sure where to begin. I am using “rational” exaclt as I mean to; I think you are trying to substitue “understandable” or “reasonable” which is different. My only point is that people don’t behave rationally in an economic sense; in addition to common effects (endowment effect, wealth effect) we get other problems, the simplest to understand is that people can’t often measure (or appropriately price) the future costs/benefits of events’ to give you an easy example, ask someone (especially a teenager) who was just dumped how bad they feel (the cost) and how long that feeling will last. They are likely to overestimate both how badly they feel and how long that feeling will last (set point of happiness, which has a real-world impact when calculating hedonic damages in litigation).
Anyway, there is a problem with people behaving in an economically rational manner. While you can certainly ascribe a value (cost) to “the view that I get from this property” the fallacy is that the person will overvalue the view that they have now and undervalue what they could acquire in the future.
But people aren’t economically rational. It’s funny, to me, that libertarians love to assume this except when it comes to property rights, and then we just have to accept their irrationality.
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October 10, 2009, 8:25 pmloki13 says:
Allan,
It’s not idiotic. If you know about Coase, think about the initial assignment of rights. If the rights are in equilibrium, then the initial assignment of rights (by, say, a court) can make a huge difference. Let’s say the court assigns it to the person who values it less (and will make less of a productive economic use of it). Normally, after the decision, the loser could bargain for the rights. The endowment effect, however, will cause the winner of the rights to overvalue what they have, increasing transaction costs and making it likely they will chose to retain the right. Which is unfortunate.
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October 10, 2009, 8:28 pmNickM says:
loki — in addition to the measureable transaction costs (hiring a mover, etc.), there are significant other costs associated with vacating your home and moving somewhere else. People place a value on being familiar with their neighborhood and surroundings, being near friends, and everything else that is gained by having resided somewhere for a while. Move across the street and you lose very little of that. Have your entire neighborhood turned into an arena and parking lots and be uprooted to move to who-knows-where, and you may lose much of that knowledge, which took time and effort to acquire. Eminent domain doesn’t compensate for that opportunity cost.
Nick
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October 10, 2009, 8:36 pmAllan Walstad says:
loki: I’m aware of the Coase theorem,that in the absence of transaction costs a modern mainstream neoclassical “socially efficient” result can be reached via market transactions regardless who has the original right. The experiment you quote has nothing to do with this. The whole question is whether students are irrational to refuse less the $2400 for a ticket that they wouldn’t pay more that $170 to purchase. They are not, for the reason I gave.
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October 10, 2009, 8:51 pmloki13 says:
Allan,
Um, no– you miss the point entirely. Let me simplify it for you.
A values X at $5.
B values X at $10.
Court assigns X to A.
A then values X at $11 (endowment effect), even though *no increase in value to him has occured except the assignment of the right*. B can no longer acquire X in what would have been a mutually beneficial exchange.
Absent this (psychological / non-rational) effect, B could offer A anything from $6 to $10 and both would have gained.
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October 10, 2009, 9:52 pmAllan Walstad says:
Right, so in that case A decided to charge what the market would bear, and that says whatever it says about Coase’s theorem. But that’s not really what we were talking about with the students and tickets, or at least not necessarily. There’s nothing irrational for an impecunious student to refuse to pay more than $170 for a ticket, yet, having won one, being unwilling to sell for less than $2400. Nor is the student necessarily trying to take advantage of someone. I would not buy a house for $500k because I couldn’t afford it. Maybe I’d pay 150k, because that’s the most I could reasonably afford. But if I won the house, I wouldn’t take $150k for it. I’d want the $500k if that’s what such homes were selling for, or even more if I didn’t want to go through the hassle of house-hunting and moving again.
Let me put it this way. Things are not valued in the abstract. The question is what I’d be willing to part with to get what. If I’m a student, giving up $2400 might mean having to drop out of college altogether, or sell my car and move back in with Mom & Dad or whatever. Pretty serious consequences. As much as I’d like to be at the game, it’s just too much. But if I WON the ticket, my usual expenses are still covered and I can enjoy the game without suffering. Sure, the extra money I could get selling it would be nice, but I don’t need it to stay out of the hole.
Suppose my house would only fetch $150k on the market, but it’s been in the family for generations and my old pets are buried in the back yard and I’ve spent many years fixing it up just right. Suppose I feel like my very heart is tied up in this house. Is it really irrational for me to refuse $150k, or even 1M? I don’t think so.
I don’t know what you do for a living, but suppose you are a teacher making $60k, and you’re willing to work for that much, and now suddenly there’s a shortage of teachers and other schools are bidding $100k for your services. Is there something wrong with taking the $100k and refusing the $60k? I don’t see it. The value you place on your time is not unrelated to what you can get for it.
I’ve worked as hard as I can on this and my wife is getting annoyed. Gotta go.
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October 10, 2009, 10:51 pmroad2serfdom says:
Your the one substituting “reasonable”. Rational means a person weighs costs and benefits. That is all. It does not mean the person estimates perfectly. I fact, it is rational to make decisions witout wasting too much money obtaining information.
Allan expained perfectly why the students could behaivor could be rational. In addition, asking someone what they would accept is a lot different than observing market transactions. Offer the students $1000 cash on the spot, and how many of the “Not less than $2500″ responders would have taken it?
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October 10, 2009, 10:54 pmroad2serfdom says:
I knew what you were trying to say, I just found it funny in that the way you worded it it was a perfect example of diminishing mariginal utility.
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October 10, 2009, 11:04 pmloki13 says:
Ummmmm.....
We’re talking about economics, right? You do understand this, right? Modeling based on perfect information? No? Not so much?
Then the person who is not estimating perfectly isn’t a rational actor. But their actions are understandable.
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October 11, 2009, 12:01 amDoc Merlin says:
NO! NO! NO! NO! NO!
How many times do we have to say it!
Value is completely 100% subjective.
The models don’t say you should take it, they say you will take it if the value to YOU is less than the value of $15 to you. Thinking value is objective is one of the most common mistakes non economists make.
1) Value is completely up to the individual and its almost impossible to make a cardinal comparison between the two. You can make ordinal comparisons, for example, do you like $15 more than the land, or the land more than $15.
2) To an economist, rational means the person has reasons for what they did. It doesn’t mean they are operating according to the models. The models exist to try to predict/model human behavior; if they do behavior that the model doesn’t predict, then the model is wrong, not the person.
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October 11, 2009, 12:50 amDoc Merlin says:
No, only some models are based on perfect information, we used them because they are easier to understand/use. Rational means they have reasons for what they do, that is all.
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October 11, 2009, 12:52 amroad2serfdom says:
Thanks Doc Merlin, everything you said is correct.
A person who always estimates perfectly is very likely spending and so much time, money, an effort that he could increase his utility by spending less effort estimating and accepting being wrong sometimes. Information is costly, and people will choose the efficient level of information to obtain based on the importance of the decision and the opportunity cost of obtaining the information. Ever hear of rational ignorance? Economics? No? Not so much?
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October 11, 2009, 1:14 amloki13 says:
To answer both of your silly claims (Doc Merlin and road2serfdom):
1. I don’t believe there are *any* rational actors. I’m much more of a fan of behavioral economics (aka, watching what people actually do, instead of positing how they should act). However, most of our models presuppose that people are acting rationally. It started with the assumption (classical economics) that people were rational actors (perfect information, time to make the decision) to make the models work. Now, of course, there is an attempt to collapse what we observe into further digressions about how choices are “rational” (reasonable) by building in more assumptions about the ephemeral values we gain from some transactions when a much better explanation is that... well, we’re not hard-wired to be rational. Unfortunately, people like you keep trying to plug real-world evidence into your a priori theories.
2. There is a more interesting question about whether, in aggregate, we can assume rationality.
3. Finally, Doc, you completely misunderstand what I wrote. Perhaps I wrote it too quick. I like how you chose the first post instead of the more detailed followup. Please continue to pick nits by looking at earlier, quicker posts instead of what I wrote directly above your post:
A values X at $5.
B values X at $10.
Court assigns X to A.
A then values X at $11 (endowment effect), even though *no increase in value to him has occured except the assignment of the right*. B can no longer acquire X in what would have been a mutually beneficial exchange.
Absent this (psychological / non-rational) effect, B could offer A anything from $6 to $10 and both would have gained.
Notice– *A VALUES at” “B VALUES at”. Enjoy your selective misreading.
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October 11, 2009, 3:03 pmloki13 says:
BTW,
Under the wonderful reasoning of road2serfdom, everything everyone does, ever, is rational.
Did you vote? Rational. You didn’t vote? Rational. You turned left today? Rational. You turned right? Rational. You accepted $8 for your widget when you just turned down $10 two minutes ago? Rational. Everything is rational because *otherwise you wouldn’t have done it*.... clearly you either priced it correctly, or you rationally remained ignorant of what you needed to know, or you chose to save time by making a poor decision, or you value being miserable, or.....
It’s the theory of everything, and it explains nothing.
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October 11, 2009, 3:14 pmroad2serfdom says:
Your beginnning to understand. Yes, if it was not rational they would not have done it. Saying a person’s actions was irrational is giving up trying to explain why they did it. Your are basically saying they had no reason for doing what they did. Economics has to allow people any preference set. We don’t say someone is irrational because we don’t agree with how they value things. Behavioral economists do that often, but not economists.
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October 11, 2009, 8:15 pmloki13 says:
road2serfdom,
Um, yes. Works wonderful *in theory* and less well *in actuality*. Which is what I explained, before. The problem, of curse, is that the theories all start with the idea that people were rational (were always trying to choose the action that is best according to preferences and constraints, or, if you monetize this, getting the highest value). Then, when any idiot with eyes could see that people often do things that don’t maximize what would objectively be the best course of action for them, the idea that we were working with individuals imperfect knowledge and subjective preferences became widespread. Fair enough. Of course, we could look around and see that people often don’t choose courses of action that would maximize their own individual preferences– so they’re being rationally ignorant. Or sometimes people have the knowledge, and still chose something that doesn’t match their preferences. Um– they value their misery! And they do something that doesn’t gain anything. They value their altruism! And... they do inconsistent things. They value the (millisecond) in not making a decision!
In short, the theory has been modified so many times to match the real world that it explains nothing, except for a continuing attempt to explain everything in terms of what the person actually preferred, instead of realizing that people are hardwired to do stupid things sometimes.
BTW– nice insult to behavioral economists! How’s this for a conversation:
Beahvioral Economist: Here’s my new paper, with an extensive study over 5 years involving the way 10,000 people actually made decisions.
road2serfdom: Well, that’s fascinating in practice, but how does it work in theory?
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October 11, 2009, 8:52 pmBobbo says:
“...And if we can get smaller angels, or just angels who can pay more taxes, or the head of the pin is underutilized...”
Come out of the theory ether and look at the facts of the case, for god’s sake, or just close your door because no one wants to see you when you’re doing THAT!
Read the case and you’ll see that the application of ED for this particular development is in violation of the New York State Constitution. This is a continuation of the persistent violations perpetrated on landowners by the Urban Development Corporation, which earned such a bad name it now goes by the Empire State Development Corporation.
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October 12, 2009, 11:45 amroad2serfdom says:
So 10,000 make decisions and the behavior economist explians why 10,000 people are wrong and he is right. Much of behavioral economics is like that recent “Publish or Peril” gun study posted here. Do an experiment, analyze the data, and make huge sweeping conculsions that have nothing to do with what was acually studied.
Anti-Economist: Economists believe everyone maximizes their welfare, but they give charity. People must be irrational.
Economist: People derive utility from giving to charity. It makes them feel better.
Anti-Economist: But people don’t save for retirement to the correct degree.
Economists: Many peple discount the future more heavily that you or I would like, but that is their preference. We don’t make normative judgements about people’s preferences, we just try to explain their behavior.
Anti-Economist: But a fat person who keeps eating ice cream. They would be better off giving up ice cream and living longer. Eating ice cream is irrational.
Economist: They really, really like ice cream.
Anti-Eonomist: But they are objectively better off living longer ‚we need to ban ice cream.
Economist: I don’t think objectively means what you think it does. Maybe we should ban ice cream, that is a political opinion. But if we do, it is not because eating ice cream is “irrational” it is because we decided that the ratinal actions of other people to eat ice cream need to be stopped because we beleive is it for their own good.
Here is a test for you. Bob drives to the intersction and turns right beliving that is the best way to his destination. In reality, his destination was to the left, and he gets lost. Was his decision to turn right rational? (Get this wrong and I won’t be posting back.)(But don’t get it wrong on purpose to stop me, even though that might be rational.)
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October 12, 2009, 11:51 amroad2serfdom says:
Bobbo,
Your right, thank you. (I saw your post after I posted my last post.)
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October 12, 2009, 12:15 pmThe Volokh Conspiracy » Blog Archive » New York Court of Appeals Upholds Atlantic Yards Condemnations says:
[...] Jersey Nets and to construct “luxury” housing. This outcome is not surprising. As I explained in this post, where I predicted the result, New York law is among the most hostile to property rights of any in [...]
The Volokh Conspiracy » Blog Archive » George Will on “Blight” Condemnations in New York says:
[...] upholding the Atlantic Yards condemnations in this post. For my earlier analyses of the case, see here and here. Will’s column also discusses the recent court decision striking down Columbia [...]