Naked Economics Read Online Free PDF

there are many examples of environmental degradation that will make poor countries even poorer in the long run. Cutting down those forests is bad for the rest of us, too, since deforestation is a major contributor to rising CO 2 emissions. (Economists often argue that rich countries ought to pay poor countries to protect natural resources that have global value.)
    Obviously if the developed world were more generous, then Brazilian villagers might not have to decide between destroying the rain forest and buying mosquito nets. For now, the point is more basic: It is simply bad economics to impose our preferences on individuals whose lives are much, much different. This will be an important point later in the book when we turn to globalization and world trade.
    Let me make one other important point regarding our individual preferences: Maximizing utility is not synonymous with acting selfishly. In 1999, the New York Times published the obituary of Oseola McCarty, a woman who died at the age of ninety-one after spending her life working as a laundress in Hattiesburg, Mississippi. She had lived alone in a small, sparsely furnished house with a black-and-white television that received only one channel. What made Ms. McCarty exceptional is that she was by no means poor. In fact, four years before her death she gave away $150,000 to the University of Southern Mississippi—a school that she had never attended—to endow a scholarship for poor students.
    Does Oseola McCarty’s behavior turn the field of economics on its head? Are Nobel Prizes being recalled to Stockholm? No. She simply derived more utility from saving her money and eventually giving it away than she would have from spending it on a big-screen TV or a fancy apartment.
    Okay, but that was just money. How about Wesley Autrey, a fifty-year-old construction worker in New York City. He was waiting for the subway in Upper Manhattan with his two young daughters in January 2007 when a stranger nearby began having convulsions and then fell on the train tracks. If this wasn’t bad enough, the Number 1 train was already visible as it approached the station.
    Mr. Autrey jumped on the tracks and shielded the man as five train cars rolled over both of them, close enough that the train left a smudge of grease on Mr. Autrey’s hat. When the train came to a stop, he yelled from underneath, “We’re O.K. down here, but I’ve got two daughters up there. Let them know their father’s O.K.” 3 This was all to help a complete stranger.
    We all routinely make altruistic decisions, albeit usually on a smaller scale. We may pay a few cents extra for dolphin-safe tuna, or send money to a favorite charity, or volunteer to serve in the armed forces. All of these things can give us utility; none would be considered selfish. Americans give more than $200 billion to assorted charities every year. We hold doors open for strangers. We practice remarkable acts of bravery and generosity. None of this is incompatible with the basic assumption that individuals seek to make themselves as well off as possible, however they happen to define that. Nor does this assumption imply that we always make perfect—or even good—decisions. We don’t. But each of us does try to make the best possible decision given whatever information is available at the time.
    So, after only a few pages, we have an answer to a profound, age-old philosophical question: Why did the chicken cross the road? Because it maximized his utility.
    Bear in mind that maximizing utility is no simple proposition. Life is complex and uncertain. There are an infinite number of things that we could be doing at any time. Indeed, every decision that we make involves some kind of trade-off. We may trade off utility now against utility in the future. For example, you may derive some satisfaction from whacking your boss on the head with a canoe paddle at the annual company picnic. But that momentary burst of utility would presumably be more than