A false Pareto improvement
January 21, 2013 3 Comments
Question 1: When David, a lottery winner, sells his ticket to Ann, both David and Ann are better off. Who is worse off?
The answer is obvious: Chuck, the member of Congress, who wanted to maintain absolute control over the ticket-allocation process (even if this just means a lottery), is worse off. I mean, just listen to him. He perceives, not necessarily incorrectly, such a re-sale as a personal loss of power and influence i.e. if only via the ability to ensure all requests for such a thing are routed through him and his empowered clique.
True Pareto improvements are difficult to identify once you bring a corrupt, self-aggrandizing ensconced overclass into the equation.