Among people who haven't learned probabilistic reasoning, there's a tendency to push the (implicit) probabilities in their reasoning to the extremes; when the only categories available are "will happen", "won't happen", and "might happen", too many things end up in the will/won't buckets.

A similar, subtler thing happens to people who haven't learned the economics concept of elasticity. Some example (fallacious) claims of this type:

  • Building more highway lanes will cause more people to drive (induced demand), so building more lanes won't fix traffic.
  • Building more housing will cause more people to move into the area from far away, so additional housing won't decrease rents.
  • A company made X widgets, so there are X more widgets in the world than there would be otherwise.

This feels like it's in the same reference class as he traditional logical fallacies, and that giving it a name - "zero elasticity fallacy" - might be enough to significantly reduce the rate at which people make it. But it does require a bit more concept-knowledge than most of the traditional fallacies, so, maybe not? What happens when you point this out to someone with no prior microeconomics exposure, and does logical-fallacy branding help with the explanation?

12Kaj_Sotala1yIs this really fallacious? I'm asking because while I don't know the topic personally, I have some friends who are really into city planning. They've said that this is something which is pretty much unambiguously accepted in the literature, now that we've had the time to observe lots and lots of failed attempts to fix traffic by building more road capacity. A quick Googling seemed to support this, bringing up e.g. this article [https://www.citylab.com/transportation/2018/09/citylab-university-induced-demand/569455/] which mentions that:

Yeah, I do agree that for the case of traffic, elasticity is pretty close to 1, which importantly doesn't mean building more traffic is a bad idea, it's actually indicative of demand for traffic capacity being really high, meaning marginal value of doing so is likely also really high.

Jimrandomh's Shortform

by jimrandomh 1 min read4th Jul 201964 comments

This post is a container for my short-form writing. See this post for meta-level discussion about shortform as an upcoming site feature.