Spoons and the Social Discount Rate
There's an economist, Tyler Cower, with a blog, known for throwing out interesting / contrarian opinions, often on commonplace things. It's generally interesting reading, but last week, his twitter account was hacked:
Tyler’s twitter account was hacked yesterday for the most pedestrian of motives:
An amazing new weight loss product! It worked for me and I didnt even change my diet! [link redacted] — tylercowen (@tylercowen) May 31, 2012Justin Wolfers tweeted that this was rather unimaginative and following a challenge from Eric Crampton at Offsetting Behaviour a new meme was born, #tylertweets. First the honorable mentions:
Although gas station tacos are generally excellent you should never get carnitas at a gas station that has clean squeegee water #tylertweets — Gabriel Rossman @GabrielRossman
#tylertweets New in my pile: “50 Shades of Grey”. Self-recommending. — Robert Guico @lpangelrob@ModeledBehavior truly rose to the challenge:
Its hard to imagine spoons will exist in their current form in 30 years. What does this tell us about the social discount rate? #tylertweets — Modeled Behavior (@ModeledBehavior)
Yesterday, Tyler responded to the spoons tweet:
@Tyler Cowen said:
The comments read like something you'd get around here. Sorry, I didn't find any potty humor or video game discussion, but I LOL'd.
Let’s assume an intertemporal equilibrium. The rate of return on buying consumer durables ought to equal (risk-adjusted) the rate of return on capital. Spoon improvement means a lower rate of return on holding spoons, which means a lower return on durables, which in turn means a lower rate of return on capital investment. For a given set of interest rates, that implies a higher rate of social discount.
That said, I find it easy to imagine spoons will exist in their current form in 30 years. What if I were wrong? I would be overestimating the MU of money in future periods and thus saving too much. I ought to buy more non-spoon items, renting my current spoons, knowing that spoon improvements will glide me into a cushy retirement.
Economy is hard! Let's go shopping!
Economy is hard!It is! Just ask (on this side of the pond) for example Richard "cunt" Murphy - retired tax accountant of Wandsworth who has an unwholesome grasp of government procedures but is sadly lacking in econimics nous. Regularly ripped apart by another (yes, the twat also blogs - I got 'banned' for asking where his numbers came from) blogger Tim Worstall. Not that this seems to stop the Retired Accountant of Wandsworth spouting his bollocks.
Yesterday, Tyler responded to the spoons tweet
That reads like a Private Eye spoof, "me and my spoons".