Addiction, Stress and Poverty

Last term, I taught Economics 349 "The Economics of Social Problems." In that class we discuss a host of topics, including the inter-relation between stress and addictions (and how these relations are potentially magnified among the poor). Today's episode of Democracy Now features Dr. Gabor Mate discussing many of these issues. Dr. Mate is best know for his research and books on the relationship between physical and mental health.

The "Heart of Economics"

I'm currently teaching a course on "the economics of social problems." It can be a tricky course because I need to communicate to students that, for example, poverty is about more than low income. Its also about opportunities, happiness or well-being, cognitive adaptations (i.e., beliefs) and more.

With this in mind, I found today's piece in the NY Times by Ed Glaeser interesting. He writes:

Teachers of first-year graduate courses in economic theory, like me, often begin by discussing the assumption that individuals can rank their preferred outcomes. We then propose a measure — a ranking mechanism called a utility function — that follows people’s preferences.

But then we turn to welfare, and that’s where we make our great leap.

Improvements in welfare occur when there are improvements in utility, and those occur only when an individual gets an option that wasn’t previously available. We typically prove that someone’s welfare has increased when the person has an increased set of choices.

When we make that assumption (which is hotly contested by some people, especially psychologists), we essentially assume that the fundamental objective of public policy is to increase freedom of choice.

Economists’ fondness for freedom rarely implies any particular policy program. A fondness for freedom is perfectly compatible with favoring redistribution, which can be seen as increasing one person’s choices at the expense of the choices of another, or with Keynesianism and its emphasis on anticyclical public spending.

Health Codes Violations, Single Motherhood, and the Breakfast I had Last Week

I'm currently teaching Economics 349: the Economics of Social Problems. I thought I'd use our department blog to help raise some examples of the types of issues that arise in the Calgary area which relate (even tangentially) to the course. (To those students in the course, some of this stuff may serve as fodder for term papers.)

Last week, some friends and I had breakfast at Nellie's Cosmic Cafe on 17th Ave SW in Calgary. We were pretty shocked to learn a day or so later that the restaurant chain had been fined $60,000 for health code violations. We all had the same thoughts: Eww! This was one of our favorite restaurants. (Note: In the sense of fairness, I want to mention that according to news reports nobody reported getting sick from the food at Nellie's and no personal claims were filed. The fines were based on the findings of health inspectors.)

Among my friends we talked quite a bit about this case (waiting a requisite 48 hours before making any jokes about it). When we thought about the problem, there are a number of things that struck us.

Basically, the health code protects "the public" from the externalities associated with poor workplace practices in a restaurant. However, we had a couple of questions about the chain of events. I'm sure there are others, but these jump to mind as worthy of discussion.

First, the restaurant had apparently been warned for over a decade. Why did it take so long for investigators to act? It raises the issue as to whether the law is being equally applied to all. A local eatery in my neighborhood received a fine after one visit by an inspector last year, and for something more innocuous than what Nellie's was apparently fined for. What does this say about the application of these laws?

Second, in her statement the owner of Nellie's mentioned "she was devastated by the charges and that it was difficult for her, a single mother, to keep proper monitoring of all the locations." I know of several single-mothers who were somewhat insulted by this statement. At the risk of sounding like a real jerk (which I probably am), it suggests that single mothers are less able to, in this case, manage a business than other individuals i different circumstances (e.g., married mothers). We often see examples of certain groups (here, single mothers) being stereotyped by more salient and visible examples of individuals of their "type" (e.g., the single-mother owner of Nellie's). In making this statement, what information is communicated and what inferences might others make about single mothers writ large?

Discuss.