September 3, 2002
Economics Department
Theory of Escalation or Escalation of Theory.
Economist Steven E. Landsburg wonders in Slate why people walk up stairs but don't walk up escalators. It's a clever example of how economists think about problems and the kinds of mistakes they make.
Some of his Slate readers don't get it:
You fool economists have way too much time on your hands. You ignore the most obvious answer to go through this pathetic exercise that in the end has just made us all upset that you're being paid to write this garbage, wasting all of our time with something that's not that important. grr. and i thought economists were into efficiency.
No doubt, this reader would prefer that the column discussed privatization of social security or the effects of globalization on developing countries, instead of escalators. However, as economist Paul Krugman has argued, if you aren't willing to play around with your theories, you aren't serious about them. You have to test your ideas.
This reader was confused and angry because he doesn't understand the purpose of Landsburg's columns. That's understandable, because the columns are too short to explain what's going on every time. The idea behind Everyday Economics is to study the familiar events and circumstances of life using the tools and theories of modern microeconomics, and to do so rigorously. While it's unlikely that we will learn anything we didn't know about familiar events, we stand a good chance of learning something about economics. That's one of the reasons this was an interesting problem for Landsburg and the rest of the Economics they teach economics. Little problems are good teaching tools.
Most of the practical applications of Physics, such as explaining the properties of suspension bridges or airplanes, involve systems that are far too complicated for teaching purposes. Instead, physics students study really simple systems. For example, by Newton's second law of motion, an object accelerates in proportion to the force that is applied to it. Now imagine a 1-pound iron block sitting on the floor. The Earth's gravity is pulling it down with a force of exactly one pound. Why doesn't it accelerate downward? If you say it doesn't move downward because it's on the floor, you're right, but that's not a very useful bit of physics. One of the key insights of physics is that the block doesn't move because the floor pushes up on the block with exactly 1 pound of force, canceling out the force of gravity and producing a net force of zero. This kind of thinking seems like overkill for such a simple case (especially to freshmen physics students who have to draw force diagrams), but the explanation for why the Golden Gate Bridge stays up is only an extremely more elaborate version of the exact same kind of thinking.
There's a more profound reason for examining the escalator problem: Scientific theories are supposed to be general purpose tools. Einstein's Theory of Relatively is used to figure out exact planetary motions, plan space flights, design particle accelerators, and determine the properties of black holes. You don't need Relativity to figure out that a ball dropped off the roof of your house will fall to the ground. Nevertheless, if you plug the mass and locations of the ball and the Earth into the relativistic equations, they will describe exactly what happens. To put it another way, how could you trust the Theory of Relativity to predict complex situations if you hadn't already seen it work in simple situations where you already know the answers?
A person on a staircase or an escalator can choose at any instant to take a step or not. After taking a step, the exact same choice is available again. That's the kind of situation where marginal analysis is supposed to help explain behavior. Granted, it seems silly to apply marginal analysis to such a simple situation, but it ought to work. Thus, it's kind of shocking when the first attempts at analysis fail because the results predict behavior very different from what you know really happens. It's kind of like discovering a classical concert pianist who can't play "Twinkle, Twinkle Little Star." It's not that you really need him to play that song, but it seems suspicious that he can't.
Imagine encountering a helium-filled balloon for the first time. When dropped from the roof of the your house it floats upwards instead of falling to the ground, seemingly in defiance of the laws of physics. Eventually, you'll figure out that for an object to fall downward, an equal volume of air must be lifted upward to make room for it and fill in behind it. This moving air has weight too, and when the air weights more than the object, as in the case of a helium-filled balloon, it is the air that falls and the object that rises. The laws of physics hold after all, you just hadn't been applying them right.
Landsburg's article is about having that experience in the field of economics.
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