Comment on Intelligence Doping-Becker

According to the economists' analysis of externalities, a substance should be taxed, and in extreme cases banned, only if it raises the earnings and other benefits to users at the expense of harm imposed on others. For this reason, excessive drinking is fined and punished also in other ways, since heavy drinkers are more likely to get into accidents that harm others. Similarly, a substance should be subsidized if it benefits others while benefiting users. Posner's example of substances that encourage greater innovation fits this category. Substances that raise benefits to users by the same amount as it raises their overall productivity should be neither banned nor encouraged. In economies with competitive labor and products markets, individuals tend to receive earnings and other benefits that equal their "marginal product"; i.e., equal their contribution to total output. Substances or anything else that raise the productivity of individuals who receive their marginal product should be neither taxed nor subsidized. For example, sleeping pills enable users to get a better night's sleep, which allows them to get to work on time and have a clearer mind while at work, and thus become more productive while at work. There is no reason to tax or subsidize this use of sleeping pills because individuals taking the pills would generally be paid the full increase in their productivity, and they would bear the full costs. The vast majority of substances that people take to affect their cognition fit into this category of meriting neither ban nor encouragement since they primarily affect the productivity of users without having significant external effects on others, either positive or negative. Exceptions are substances that raise the benefits of users in situations that have a "zero sum" aspect, so that the user's gain corresponds to about an equal lose to others. Sports competitions have important zero sum aspects since fans care a lot about who wins and loses in addition to the quality of the play, so that increases in the performance of every player without changing outcomes brings relatively little benefit to fans. This importance of relative performance to fans provides the justification put forward in our discussion on sports doping on August 27, 2006 for major league baseball and other organized sports leagues to place limits and bans on the use of certain drugs among their players. For these drugs may have long run negative consequences for the health of users without raising fan welfare by much. However, I do not see any reason why governments should be involved in enforcement of any bans imposed by sports leagues, and it was absurd for Congress to hold hearings on whether either Roger Clemons or his former trainer were lying. Governments may be helpful to sports leagues in enforcing their ban by punishing violators, but governments might also be helpful to companies in getting their workers to reduce absenteeism. Still, that is no reason for governments to be punishing workers who do not show up for work because there are no externalities outside the workplace of the individual company or league that warrant government intervention. Other examples where relative performance helps to determine benefits include entrance to college based on test scores, such as the SAT test, or patent races to see who comes up first with the technique or process that several competitors are seeking to discover. South Korea and other countries have tried to use laws to cut down on private tutoring and other investments that increase the likelihood that a student may succeed in gaining entrance to top universities, where the number of acceptances remains constant. Presumably, these countries would want to ban students from taking various stimulants that improve their performance, perhaps at a risk to their health, but such bans are difficult to enforce. Some economists have claimed that superstar situations involving singers and other entertainers, novelists, money managers, and lawyers have this zero sum character since a person can make a huge income by being only slightly better at what he does than others. Since fans and customers prefer to listen to the best singers or have their money managed by funds that seem to be the best, someone who is only a little better than the competition can attract a very large fan base, or a lot of money to be managed. They may earn only a little from each fan or on each dollar invested, but make it up through the millions of fans they have and the billions of dollars they manage. The superstar phenomena discovered by my late colleague Sherwin Rosen is real and important in modern societies with huge economies of scale in communication, but it is not a zero sum situation. A superstar still only collects the value of his net contribution to output. The value is large not because of externalities, but because a superstar may only add a little utility to each fan, but he adds thislittle to each member of a huge fan base. All in all, even aside from enforcement issues, I see little reason for governments to ban the use of Provigil and other stimulants that improve cognitive performance. There are some situations where this improvement mainly benefits users at the expense of harm imposed on their competitors. For the most part, however, potential users are the best judge of whether they should use stimulants since they bear the lion's share of the costs as well as receive the benefits.

Comments

[Tucker]

I disagree with your conclusion primarily for one reason- many if not most of the users of intelligence doping are/would be students. We have as a society decided that 17 year olds trying to get ace their SATs, maximize their GPA, and get into elite institutions like the University of Chicago are not capable enough members of society to vote, drink, or similarly smoke cigarettes it is absurd that we would allow them to then make a well informed decision on whether to use drugs to enhance cognitive performance. And where would we draw the line at 18 in which case high school Seniors who are a few months earlier can gain an unfair advantage in grades for the critical first semester of their senior year? At 21 like alcohol? How available would it be? Would the cost give rich students an unfair leg up?

In addition Major League Baseball holds an anti-trust exemption at the pleasure of Congress, which gives Congress every right to investigate how MLB is using that exemption. If MLB as a legally enshrined monopoly is using that monopoly to promote by omission the use of performance enhancing drugs that cause harm to society as a whole then it warrants investigation. In addition the Sports Broadcasting Act gives monopoly rights to sports leagues in order to maximize their exposure. Congress can similarly investigate what the leagues do with that exposure. That said the Clemens hearings were a debacle that Waxman claimed was a result of Clemens personal insistence that he be allowed to speak to the committee on CSPAN. Perhaps baseball would be better without a legal monopoly, but neither Bud Selig nor Congress is willing to give it up.

[Jim]

The television commercial will be showing someone who doesn't seem quite right doing calculus on a whiteboard and "somewhere over the rainbow" playing gently in the backgroud with the voiceover, "Are you a college professor who needs a temporary lift or just someone with a marginal IQ who is tired of being dimwitted. Ask your doctor about Cogadd, the popular drug that lets you be someone you are not. Be careful not to use Viagra at the same time as Cogadd since the comcomitant increase in cerebral and penile blood flow demands may result in coronary ischemia and death which may limit cognitive activity.

[Brn2Run]

I think the issue that is not addressed here related to externalities is the health benefits/risks associated with using these enhancing agents. If everyone is smarter now, but has kiney failure and requires dialysis in 10 years, and the cost of my healthcare quadruples, then it is not really harmless. Of course, one of those newly smart people could cure cancer and then be stricken with the renal failure, so measuring the true cost/benefit is difficult. I bet Kevin Muphy could.

[matthew]

Kevin must not have heard the distress call. Does he respond to the Bat-Signal?

[Handmaiden to the Translational Biomedical Sciences]

I thought that the reason that Congress investigated whether Clemens was lying was because they had already investigated whether steroids were corrupting baseball, and he had lied about it then, and that the reason that they were investigating whether steroids were corrupting baseball was that they had already granted baseball an antitrust exemption as the National Pastime. The reason that Congress takes an interest in the conduct of baseball unlike the interest that it takes in other businesses is because of the unique place it perceives it to have in the national culture. ¶

Whether the government should take a special interest in culturally special institutions in the first place, and whether baseball qualifies as such an institution in the second place, are questions that elude my meager economics expertise, but perhaps Becker can find an analytic angle here, too. ¶

This post is contra to Becker's statement:

I do not see any reason why governments should be involved in enforcement of any bans imposed by sports leagues, and it was absurd for Congress to hold hearings on whether either Roger Clemons or his former trainer were lying. Governments may be helpful to sports leagues in enforcing their ban by punishing violators, but governments might also be helpful to companies in getting their workers to reduce absenteeism. Still, that is no reason for governments to be punishing workers who do not show up for work because there are no externalities outside the workplace of the individual company or league that warrant government intervention.

[dopa]

Everyone who is interested in this post should read the milestone paper on addiction and rationality.

http://ideas.repec.org/a/ucp/jpolec/v96y1988i4p675-700.html

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