Re: Schelling Points leads to interesting family investment opportunities

At 12:41 PM 7/28/96, Ian Grigg wrote:
>Hi Tim,
>
>you said:
>> The _costs_ of extending beyond the Schelling point boundaries
>> is deemed to be too high, and the boundary persists.
>
>This reminds me of the transactional theory of business units.
>Working from memory, the optimal size of a business unit is
>positively related to the cost of the transactions conducted
>between units, other things being held constant.
>
>Thus, in a place where it is "expensive to do business" the
>dominant form of company will be large.  Conversely in a
>cheap business environment, small companies will predominate.
>This notion spurs one to examine the transactional costs and
>to decide (or not) to lower them...

Yes, I think these things are deeply intertwined. Coase's work on the
nature of corporations, for example. (Another connection is that economics
and markets are largely about "signalling mechanisms," and it can be argued
that prices are variants of Schelling points, albeit hopping around as
other market players jockey for advantage.)

>The interesting part for your family context is that falling
>transaction costs have purportedly produced a shift away from
>large companies to smaller units.  Those falling costs are in
>the sphere of digital communications, other technology, and
>regulation.  If such were to apply to the context of families,
>upbringing children and education in general, one might
>predict that the size of the family should shrink.

Which it has, as you note. The availability of microwave dinners,
transportation to new jobs, new employment patterns, and other factors too
numerable to mention are correlated fairly strongly with a reduction in the
size of the average family.


>One would then be lead to ask, if you are proposing that
>Internet technologies in general and crypto in particular
>are influences on the Schelling points related to the family
>rights set, can this result in smaller family units?

I wouldn't go quite  _this_ far! (And it's hard to go too much further than
we have already...as you noted, increasing numbers of Westerners are
single.)

Certainly your comments are generally relevant and interesting, and
sociologists should have fun examining the economic, game-theoretic,
psychological, and other factors that are interlinked.

--Tim May

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At 5:00 AM -0400 7/29/96, Timothy C. May wrote:
> Which it has, as you note. The availability of microwave dinners,
> transportation to new jobs, new employment patterns, and other factors too
> numerable to mention are correlated fairly strongly with a reduction in the
> size of the average family.

On a wild tangent to the topic at hand, this reminds me of a talk at MIT I
went to last year (?) given by an editor emeritus of SciAm, can't remember
his name at the moment, but he was introduced by Phillip Morrison, which
was memorable for its own sake.

This guy talked about something he called the "demographic transition",
where a country's per capita life expectancy went past, say, 50 or so. When
that happens, people start to breed less. (Well, maybe the keep *breeding*,
but not procreatively ;-)).

As a result, family sizes and populations decline. He said that this has
started to happen in India, and China's getting there, draconian population
controls or not. I got the impression that he thought China couldn't have
enforced their population controls without an increase in life expectancy,
reality not being optional, and that law and government is an inevatably
reactive and not proactive business.

He said there are many hypotheses about what causes this decline in
fertility, including the commonly held one that people make babies as a
form old age pension income :-), but that all he was talking about was this
very strong inverse correlation between population growth and life
expectancy. He talked about this happening in Athens, and on the Italian
peninsula during the Roman empire, and gave other historical examples,
including, of course, Europe and America, Sweeden at the turn of the
century being a good example. He said America was the exception which
proves the rule, because most of our population growth now comes from
immigration, and that one way to kill the vitality of America was to kill
immagration, which should give erst-superpatriot Buchananite/Perotistas
some pause for reflection. He even manges to describe the post-war
baby-boom in these terms, but I forget how he did it.

He also said that the obvious things like public health and education were
good ways to increase life expectancy, but that the very best way to cause
this "demographic transition" was a dramatic increase in personal income.
:-).

Given the recent Forbes "Billionaire" issue, calling the 21st century the
"Asian Century", full of stories of the unleashed economic power of the
former command economies of India, Indonesia, Malaysia, etc., not to
mention China and VietNam or even Korea and Japan (yes, Virginia, they were
and are quasi-command economies, especially in their domestic accounts)
and, to a lesser extent, Singapore, I think he may be on to something
here...

The crypto-economic relavence here is that once we have the ability to have
peer-to-peer transactions for everything transmittable (financial assets,
expertise, even teleoperated skillsets), economic "commands" won't be
audible for all the din of internet digital commerce.

Watch what happens to life expectancy then...


Cheers,
Bob Hettinga

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