Monday, October 18

A conflict between externalities and libertarianism

At the University of Victoria, my alma mater, there are no fraternities or sororities. Last week, students voted to keep things that way.

I like to think of myself as a libertarian. I have no interest in joining a frat myself, but if someone else wants to join one, I wouldn't want to stop him or her. One of my friends was in a fraternity at another university, and the beer-drinking, crazy party stereotypes are a little overblown; they do some good charity work.

So when one of my left-leaning Facebook friends, Shamus Reid, posted on Facebook in support of the ban ("Today, 64.5% of UVic students voted at their students' union's AGM to oppose frats and sororities on campus. I'm proud to own 42.5% of a degree from that fine institution."), I set out writing a snide retort on his wall accusing him of paternalism. It irked me that Shamus sees it as a good thing that UVic is preventing people who want to join a frat or sorority from doing so, just because some students don't like the idea. If you don't like frats, don't join one, I thought, but don't stop someone else from signing up if they want to.

But as I was typing my retort, it hit me: maybe Shamus and the UVic students got it right. Sure, you could just ignore the frat house on the edge of campus if you don't approve of frats. But if it makes you grumpy every time you walk by it, it's imposing a cost on you — what economists call a negative externality. If enough students get a distasteful feeling in their mouth every time they see a frat house, then it might be an efficient outcome to bar others from joining a frat.

We do this all the time in society. Smoking restrictions are an extremely common example (and one where the negative externality of second-hand smoke is much more vivid than the frat-house example), but there are others (polygamy, zoning bylaws that protect the views from our balcony and restrictions on what kind of words can be put on novelty license plates are other examples that come to mind). Still, sometimes libertarianism wins. Women are allowed to breastfeed in public, even if it sometimes draws vehement, well-publicized objections.

At any rate, reaching an efficient outcome is difficult. Ideally, one would add up how much pleasure all the frat-lovers get from having a frat, and add up all the displeasure frat-haters get from having frats around, and compare the two. A simple majority vote on whether or not to have a frat wouldn't necessarily reach an efficient outcome if, for example, the minority of people who want a frat really, really, really want it, while those who oppose it only mildly dislike having frats around. But it's hard to figure out people's intensity of preferences, so a majority vote might be as good as it gets in practice.

If that's the case, UVic students reached the proper, efficient outcome.

4 comments:

  1. I derive dis-utility from left leaning organizations preaching to me. Or the group of pot smokers that congregates by the library.

    I would point out that in the western world we have largely committed to individual liberty; the freedom of association in my view should be bounded only by demonstrable harm to person or government.

    What I take offense to is not that UVIC does not sponsor frats, it is that they have the ability to punish students who engage in frat activity.

    There is no feasible mechanism to assign value of those intangibles in this case. Individual liberty and freedom of association create positive externalities in and of themselves in my model of the world.

    A stern disciplinary system on a case by case basis should mitigate the negative externalities.

    Punish wrong doers when they commit wrongs.

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  2. I wonder what Shamus was saying after the last SAGM where over 75% of students were pro-frat.

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  3. I'm not sure this is really a conflict between libertarianism and externalities. I would suggest that a suitable libertarian solution to this matter would be to get government funding out of schools, allow schools to choose whether or not to allow frats (and choose their decision making process - be it a vote or the pronouncement of a dean), and then let students take these things into account when choosing where to study.

    This should help balance out the the importance different people give to their preferences.

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  4. @Andrew:

    "What I take offense to is not that UVIC does not sponsor frats, it is that they have the ability to punish students who engage in frat activity. There is no feasible mechanism to assign value of those intangibles in this case."

    Isn't a vote in favour of frats a mechanism through which you can express your preferences?

    @Jonathan:

    I see your point. I guess it depends on what you assume as fixed. If you assume that students can freely move between universities, you're right. But this is a bit of an iffy assumption, since there would be significant transaction costs for existing UVic students to change schools, and there are constraints when people select universities (individual portability -- there's only one major university in Victoria, degree offerings, desires to study with a specific prof, etc.) If you assume that UVic students have no choice in whether or not they are UVic students, then there is a conflict between libertarianism and preferences. Maybe you're right that a university is too narrow since people can choose a different university, but the substance of my argument would hold for bigger picture stuff, like national policies, where people have way less control over their citizenship than they do university enrollment.

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