Message in a Bottle

Friday, May 28, 2004

So does Marginalism work?

Steven Landsburg and his colleages spent some time wondering "If people stand still on escalators, then why don't they stand still on stairs?". After all it gets you as much forward in both cases. Their solution:
Regarding escalators, the solution came in a blinding flash. Marginal analysis does work. It is right to compare the costs and benefits of each individual step. (And thank God it's right; otherwise I'd have to retract everything I've told my students since the day I started teaching.) But before you can weigh costs against benefits, you've got to measure the benefits correctly. And in this case, "getting one foot closer to where you're going" is the wrong way to measure benefit. Who cares how close you are to where you're going? What matters is how long it takes to get there. Benefits should be measured in time, not distance. And a step on the stairs saves you more time than a step on the escalator because—well, because if you stand still on the stairs, you'll never get anywhere. So walking on the stairs makes sense even when walking on the escalator doesn't.
To Landsburg this is a big victory for marginal analysis. I have my doubts. It doesn´t only matter how much faster you are, it also matters wether you get there at all. And so the benefit of a step depends on later steps. So one has to think about the whole way, not only small steps. The benefit of one additional step may well be zero while the benefit of thirty steps may be huge.