Economics: Two Statistics I'd Like To See

Today's post is going to be largely about two statistics I'd like to see calculated at some point in the future, and that I may, at some point, attempt to calculate myself, if I have the time, money, and motivation to do so.

Also, if it so happens that anyone knows of a paper or somesuch talking about or calculating these statistics, I would love to see it.

First, the value of a statistical job, or VSJ. Before continuing, get the gist of this. No need to understand exactly how it is calculated or any of that jazz, but you have to understand what it is.

So, VSL is the value of a statistical life, estimated through the use of cleverly designed surveys and some mathematical voodoo.

VSJ, then, would be the same thing, but for jobs - the statistic itself would be an estimate of how much the average person values the creation of a single job, probably as a function of some particular qualities of the job, such as salary.

Why would this statistic be important? For making policy, of course! If you knew how the average person valued the creation of a job, and you had some estimate of how many jobs could be created by taking a particular course of action, you'd be able to weight the cost of the policy against the reward.

Results would be far from perfect, but having some sort of method to estimate the gain from a policy aimed at creating more jobs seems more useful than having no estimate at all.

The second statistic is the socially optimal amount of wealth distribution. First of all, read this.

After getting done with that, let's review - because of the diminishing marginal utility of money, incredibly rich people get less out of money than incredibly poor people do. This means that, to some degree, it is socially optimal - at least from a utility standpoint - to take money from rich people and give it to poor people, a process known as wealth redistribution.

I'm sure we can all agree that wealth redistribution is good to some extent. You don't see many people arguing against progressive taxation, for instance, or programs to help feed the hungry children in poor families. Or, at least, the arguments aren't usually on the principles of the program, but the specifics.

Anyways. Calculating this statistic is significantly more difficult than calculating the VSJ. Contingent valuation and related techniques - unfortunately relegated almost entirely to environmental and healthcare economics - would seem to be able to yield the best results, but even these would require a very intricate and well-crafted  survey to create data, and, more than likely, a fairly complicated maximum-likelihood model.

Why would this be important? Well, again, policy could be guided by such a calculation. If you were capable of performing a rough estimate as to the socially optimal degree of wealth redistribution, it would be a great number by which to guide any number of important policy decisions.

On a side note, I can almost guarantee that the socially optimal amount, calculated by this method, would be higher than the amounts in virtually any nation in the world. Why? Because thievery still occurs and private charities still exist, and these are the natural ways by which society attempts to correct a non-optimal distribution of wealth.

A side note to that side note: I don't necessarily believe that the socially optimal degree of wealth distribution is the correct one. As much as it would create a great amount of utility when taken in at a glance, you still have to consider the ramifications of extensive wealth redistribution as a policy, especially in a nation like America which is, in part, built upon the principles of the free market.

Also, I'm not in favor of thievery or in any way justifying its occurrence. It just so happens that one could, from an economic standpoint, consider it an attempt to solve wealth redistribution issues outside of the market. I mean nothing else by mentioning it.

And done. Hopefully you all enjoyed the read, even if it was a mite technical. If you have any sort of information on, questions about, or other comments related to the two statistics I listed, I'd love to hear them!

Pun of the Day: This one's complicated, and not necessarily funny to anyone but me. I'm still putting it here.

A friend and I were making some toast. She mentioned how she was the 'breadmaster.' I immediately thought, of course, of the Ghostbusters, and then went on to imagine a remake of the movie where every character was a piece of bread. The name of the movie? Toastbusters.

Who ya gonna call? Toastbusters!