Poverty does not respond to incentives

post by KatjaGrace · 2010-10-08T14:19:36.000Z · LW · GW · 0 comments

I wrote a post a while back saying that preventing ‘exploitative’ trade is equivalent to preventing an armed threat by eliminating the ‘not getting shot in the head’ option. Some people countered this argument by saying that it doesn’t account for how others respond. If poor people take the option of being ‘exploited’, they won’t get offered such good alternatives in future as they will if they hold out.

This seems unlikely, but it reminds me of a real difference between these situations. If you forcibly prevent the person with the gun to their head from responding to the threat, the person holding the gun will generally want to escape making the threat, as now she has nothing to gain and everything to lose. The world on the other hand will not relent from making people poor if you prevent the poor people from responding to it.

I wonder if the misintuition about the world treating people better if they can’t give in to its ‘coercion’ is a result of familiarity with how single agent threateners behave in this situation. As a side note, this makes preventing ‘exploitative’ trade worse relative to preventing threatened parties acting on threats.

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