Here is a question from the final exam for my public finance course:
A typical person’s demand for potato chips is given by p=5-q where q=the number of packages of chips purchased, and p is the price of chips in dollars per package. The marginal cost of producing potato chips is $1 per package. The potato chip market is competitive, so p=MC. Dr. Economides estimates that each package of potato chips consumed creates marginal damage of $0.50.
- Illustrate these facts with a diagram.
- Define the phrase “Pigouvian tax”
- Show how a Pigouvian tax could be used in this example to improve efficiency.
- Calculate the revenue raised by the Pigouvian tax. Show on your diagram, and calculate, the efficiency gain created by the tax.
- Opponents of the tax on potato chips take a careful look at Dr. Economides’ study. It turns out that the only people harmed by potato chip consumption are potato chip eaters themselves, as potato chip consumption is associated with bad skin, weight gain and depression. Does this strengthen or weaken the argument for taxing potato chips?
Solutions to parts 1 to 4 are here. The interesting part is question 5: if potato chips only harm potato chips eaters, does that strengthen or weaken the case for taxation? Vote here to express your opinion (only the first 200 answers will be counted).
"Pigouvian taxes" are imposed to make people take into account the full impacts of their actions. The classic example is a carbon tax. Whenever people produce or consume carbon-based fuels they harm other people, from those who breathe in exhaust fumes to future generations affected by climate change. A carbon tax makes people recognize the full cost of their consumption and production choices, thus creates incentives for people to change their behaviour.
The potato chip example, however, is different: the chip eater in the exam question isn't harming other people. The bad skin, weight gain, and depression is experienced by the chip eater himself. It is not obvious that a Pigouvian tax is needed to make chip eaters take into account the harms that they causing – why not just tell people that potato chips cause bad skin, and if people think the chips are worth the zits, let them munch away? They're only harming themselves.
Interestingly, a few of my students thought that this additional information about who is harmed by potato chip eating strengthened the case for imposing Pigouvian taxes.
Why is that?
One possibility is that the students were inadequately taught, or simply didn't study the material.
Some students disputed the basic premise of the question, the idea that potato chip eaters are only harming themselves. Bad skin, weight gain and depression, they argued, are harms to others, because we have a public health system. Yet the starting point for the analysis is that potato chips create damage of $0.50 per package. If chip eaters take any of any of that damage into account when making chip purchasing decisions, the case for taxing chips weakens. Also Canada's public health system often does not cover skin creams, anti-depressants and counselling, so the link between bad skin and depression on the one hand, and health care spending on the other is not obvious.
What interested me about this response was how "health" becomes a lens through which public policy issues are viewed, and a justification of policy choices. Perhaps, though, the students were just mislead by the wording of the question. Guessing that the specific details about bad skin, weight gain and depression must matter in some way, they figured that the question must be asking about health care.
Finally, it seems that some students really don't believe that people are rational decision-makers, fully taking into account the long-term effects of their consumption choices. Even when people are only harming themselves, they support Pigouvian taxes on paternalistic grounds, to stop people from harming themselves.
Today's Chronicle of Higher Education has an article arguing that mainstream economics is dominated by a "free-market fundamentalism," one tenet of which is that people are rational decision-makers. While this may be true, it's far from obvious that mainstream economists are successful proselytizers, bringing others around to their way of viewing the world.
Update: 62 responses to the survey so far, 87% have responded "weaken".
Worthwhile Canadian Initiative 
Kevin: I have to agree with Bob Smith. Can you trust what your students say to you in class? Sure, your students probably believe they won’t change their behaviour but as all economists know, talk is cheap. You can only trust revealed preference.
Regardless, it sounds like your class hasn’t taken intermediate micro. Charging a toll changes relative prices. Getting a rebate increases shifts the budget line out. Effect is ambiguous without more information.
Eric Crampton has some interesting reactions on his Offsetting Behaviour blog: http://offsettingbehaviour.blogspot.com/2011/12/pigovean-paternalism.html
You said “Canada’s public health system often does not cover skin creams, anti-depressants and counselling, so the link between bad skin and depression on the one hand, and health care spending on the other is not obvious.” Actually, counselling for depression is covered by the Canadian health care system. You may want to correct this in your above article, because as it is this is a pretty classic example of the stigma surrounding mental illness. Mental illness is as real as any other illness, and psychiatrists have very really medical degrees too.
Obviously your students should have answered “weaken.” A weaker argument doesn’t mean there’s no argument however.
Ryan – “Actually, counselling for depression is covered by the Canadian health care system”
There is some coverage – your family doctor will give you as much counselling as he/she has time to squeeze in and a prescription for pills – but it’s a drop in the ocean.
Frances Woolley: “The way I asked the question says the total damage is $0.50, and that harm mostly falls on chip eaters. But then again, I’m biased, so probably not the best judge.”
Oh, I changed the meaning more than that. 😉
But if Dr. Economides estimated different costs for different groups, why not say what the different estimates were?
Michael : “I cannot imagine a society in which the community is not modifying and disregarding preferences.”
And it’s always been our most important social institutions that have modified preferences (and vice versa). Historically that was family, church, state. Now it’s Walt Disney and McDonalds. But when students have got their basic values from watching Family Guy, it’s really hard to even have a discussion about morality and ethics. People tend to like the idea of rights, but then the question becomes “what do we do when rights conflict?” When my right to eat potato chips conflicts with your right not to pay for health costs associated with self-inflicted harms. It’s one thing to talk about introducing values etc into economics, it’s less easy to do it when faced with a class of 60 (or 200) students, all of whom have different value systems.
Wow, that’s pessimistic. It’s also not my experience. Most people I know can tell satire when they see it. The state still does a lot of ethics-building primarily through the education system.
Second, “church” historically was and still is a source of ethics but ethics as a form of practical theology is as varied in its results as any other theology is. Different churches have different theologies and different histories. Canada as a society of immigrants long had a pattern of religious plurality and the only consistent thing that can be said about churches is that for every position taken by one church another church can be found that disagrees entirely and takes the opposite position.
As an extreme example, for the Roman Catholic Church’s very conservative stance on human sexuality there is the United Church which has GLBT ministers and recently considered adopting the “Our Whole Lives” sex ed curriculum from the United Church of Christ in the US. Our Whole Lives puts anything done in school sex ed classes to utter shame.
Lastly, a debate on pharmacare seems like another thread and the tangent on depression is not helpful. I have a lot of experience in this area and I would appreciate it if this tangent went away before it gets insulting.
When we talk about how polluters could pay a tax corresponding to the damage done or buy some offsetting behavior from somebody else ( tree planting in exchange for gas emitted on a plane ride), have you notice the reaction? Many of my students ( plus essentially all of the ordinary public) react with disbelief or horror: “You are letting the polluters get away with it!”
“Many of my students ( plus essentially all of the ordinary public) react with disbelief or horror: “You are letting the polluters get away with it!”
Indeed. Lock’em up. Just like we lock up the bankers. 😉
Frances: “Excessive realism makes exam questions far too difficult. Students – being rational and self-interested – just want questions that are reasonably simple and straightforward, and ones that examine the material taught in the class (as opposed to stuff that wasn’t covered.)”
Reality is not a linear function. The problem that Greg raised cannot be solved by simplification of the question, it invalidates the question completely.
“Both revenue and paternalism are perfectly valid reasons for a tax.”
Of course! There’s nothing at all sadistic about using government force to stop other adults from doing things that you don’t approve of.
Speaking of sadistic, whatever shall I do with the revenues from my Common Bawdy House?
I’m confused.
“Finally, it seems that some students really don’t believe that people are rational decision-makers, fully taking into account the long-term effects of their consumption choices.”
This is sarcasm, right?
Phill from the past, this is Phill from the future:
Yes, indeed I think he was making a funny, rendering these comments null and void.
Greego: ‘There’s nothing at all sadistic about using government force to stop other adults from doing things that you don’t approve of.’ – It may or may not be sadistic but it certainly is human nature. The day you can guarantee all human beings will stop interfering with activities of other human beings the day I will jump on the libertarian bandwagon.
Finally, it seems that some students really don’t believe that people are rational decision-makers, fully taking into account the long-term effects of their consumption choices
Because some of their friends smoke. Taxes on cigarettes are an example of a policy that does, in fact, respond to smokers’ irrational preference for lung cancer by asking them to respond rationally to prices, and that does, in fact, reduce demand for cigarettes. The UK has repeatedly put up taxes on tobacco since the 1950s, until something like 70% of the price of a packet is tax, and the demand for it has fallen dramatically.
Obviously it’s part of a policy-mix, but you’d have to be a professor to miss that one, and you’d have to be an economist to complain that your students are stupid because they didn’t.
Further, since when does illness not have non-medical costs to society? Sick people take time off work, and if they get sick enough they stop working entirely, and in the case of depression, they very often do so by committing suicide and thus denying the economy the entire net-present value of their future potential income stream and all the investment that has been made in their human capital.
Suggestion: make your premises empirically true. Unless of course your aim is to train your students to believe any amount of epicycles if authority asks them to…
Frances Woolley: “But then again, I’m biased, so probably not the best judge.”
I hope that you don’t think that I implied any bias on your part. 🙂
Alex: ” you’d have to be an economist to complain that your students are stupid because they didn’t.”
I did not complain, or even suggest, that my students were stupid. I said “Finally, it seems that some students really don’t believe that people are rational decision-makers.”
If you think that means my students are stupid, then you’re a stronger believer in rational decision-making than I am.
To be clear: if a student said “it makes no difference” and supported their answer with the argument about people are irrational and can’t resist potato chips, they would receive full, or close to full, marks. The reasoning matters, not the answer – that’s why I mark at least some of the answers myself, instead of having someone else mark the papers according to a rigid, pre-determined answer key.
Furthermore, let’s not lose track of the basic point: Even if illness has some external costs that are borne by society at large, the case for corrective taxation is weaker than it would be if all of the costs were external costs.
I am not arguing that there is no case for taxing potato chips. I’m arguing that the case is weaker than it would be otherwise, that is, if all harms were external harms.
B.t.w., be careful with throwing around phrases like “very often” with relation to suicide. Millions of Canadians live with depression, and deal with it in countless different ways. It’s not even obvious that depression makes you less effective on the job. Sure, depressed people are lousy at sales, but in jobs where the ability to think of everything that could possibly go wrong is a valuable skill, mild depression can be a positive asset (I read a study once that suggested tax lawyers fall into this category). But let’s stop this discussion about depression – it’s beside the point, and Determinant asked us to earlier.
Min: “I hope that you don’t think that I implied any bias on your part. :)” – no, not at all.
Frances – yah, I’m not objecting to the point that as you said “the case for corrective taxation is weaker than it would be *if all of the costs were external costs.” My objection is that you identify mental illness as one of those conditions without external costs. There’s a reason you chose depression and not diabetes for your example. Prejudice against mental illness is one of the worst bigotries in society today, and I think it behooves all of us to not unintentionally perpetuate it.
It’s true that some people (such as Abraham Lincoln, Winston Churchill, Ernest Hemingway) have managed turn their disability into a source of strength. Most don’t. There are 500,000 Canadians unemployed due to mental illness right now in Canada, and it is the second leading cause of disability and premature death (http://www.camh.net/news_events/key_camh_facts_for_media/addictionmentalhealthstatistics.html).
Again, I’m not objecting to your central point. I’m objecting to you using depression to make it. If were one of your students and I suffered from depression, I would have been deeply offended by it.
Cheers.
Ryan, would you rather be having an open discussion about mental illness right now, or would you rather be talking about the answer to some trite and inoffensive question about Christmas lights or pretty gardens or clearing snow off sidewalks?
Sigh. As a diabetic I am well aware of the false perceptions of diabetes that circulate. It happens with a lot of diseases, diabetes’ problem is that there are two types that really should have different names, they are quite different diseases under the hood.
When I said this tangent on Depression on mental illness is unhelpful, I meant it. There are lots of things to be said about it and they are not going to get a fair hearing in as a tangent on a thread about an economics exam.
Back to Pigouvian taxes and government nudges, I have had two interviews for two different positions at Health Canada. A standard question is “What is the mission, values and/or goals of Health Canada?”, the answer to which can be found on their website. One explicit goal is to lower Canada’s rate of smoking from its current 18% down to 9%. Finance and the CRA takes the lead on taxes while Health Canada is in charge of advertising and other ‘soft’ initiatives. It is very much part of a ‘Pigou Plus’ policy suite that Alex mentions.
Determinant: “There are lots of things to be said about it [depression] and they are not going to get a fair hearing in as a tangent on a thread about an economics exam.”
Agreed.
Something I don’t understand, and maybe it’s better asked of Eric Crampton since he brought it up: if polluting water and killing fish is a technological externality, then why isn’t polluting the people (e.g with cigs? I think I’m asking if labour in an advanced economy (which typically skilled) is in some sense a common pool resource … but I’m not sure. I suppose we don’t pay the fish their MP, but then if is there is a such a thing as a Keynesian multiplier, degrading the labour pool with smoking such that it makes us all poorer relative to the no-smoking alternative reality might qualify … I dunno. Too many moving parts. I’ve probably descended into the nonsense abyss.
“Sure it is, but I believe that a number of valiant attempts have been made. In any event, even if you don’t think chip eaters impose a net cost on the fisc, that cost is likely to be significantly less than just the gross cost of treating chip related illnesses.”
Not necessarily – look at my example – there is lost income involved not just direct costs.
“Of course! There’s nothing at all sadistic about using government force to stop other adults from doing things that you don’t approve of.”
a. In this case we aren’t stopping them
b. I thought we were talking about children
c. Sadistic? Its sadistic to stop people littering? Or spitting on the pavement? Yeah, I get pleasure looking at their tortured faces.
For Greego
P.S. Intolerant, or illiberal, was the word you were looking for.
P.P.S. This is exercise in teaching people how to think, not in teaching them about the real world.
Patrick: “then why isn’t polluting the people e.g with cigs?”
Polluting people with cigarettes is an externality if the smoker is polluting others, it’s not an externality if the only person harmed is the smoker him or herself (ignoring, for the moment, the harm to people who care about the smoker and are sickened by the thought of something happening to him).
Eric’s point (I think) is that public finance for the cost of medical treatment for the smoker just takes money from one person and gives it to another. Sure some people are better off and some people are worse off as a result, but nothing is gained or lost in aggregate. It’s the difference between re-arranging the deck-chairs and throwing some of the deck-chairs overboard.
On the loss of productive labour argument – I’m thinking this is some kind of a variant on the lump of labour fallacy, but need to have more coffee in order to think this through.
“On the loss of productive labour argument – I’m thinking this is some kind of a variant on the lump of labour fallacy, but need to have more coffee in order to think this through.”
Agreed, generally I would have thought of foregone income as a private loss of the chip eater (and unfortunate side effect of being sick or dead) and fully internalized. On Reason’s account, a larger population leads to higher GDP per-capita. Empirically that isn’t true (at least not at the levels of population we typically observe – at the limits with very small populations, you could see that argument). Reducing the size of the population shouldn’t, inherently, make a country poorer on a per-capita basis.
I suppose there is a social loss in the sense that we’re all joint venturers with the fisc. which takes a portion of our income through taxes, but my recollection is that the studies I’m thinking of took into account lost tax revenue. In any event, once we’re talking about people dying at 65 versus 85, that’s not neccesarily a huge issue one way or another, since, past 65, people are often either living on government support or by drawing down their savings rather than engaging in productive activities (indeed, early deaths may be preferable for the fisc. to the extent that it triggers taxes on deemed dispositions of savings, RRSPs, etc. all at once on death(at the top marginal tax rate) rather than spread out over 20 years.
Bob Smith
????
More income => more taxes
My example
Stroke at 53 before dying at 64 => (probably) 11 years not paying in or paying less in. Given that most health costs are incurred in the first few and the last few years of life SURELY that makes a difference to the net calculation.
Look I’m not saying anything one way or the other empirically, I’m just saying that a priori nothing is clear.
And your GNP/population argument ignores human capital investment.
“More income => more taxes”
Not neccesary, in a progressive tax system, the fisc will collect a lot more tax if I realize all my accrued gains or collapse all of my RRSP in one year(say, because I die), than it will if realize those gains, and collapse that RRSP over, say, 10 or 20 years (notwithstanding that I may earn additional income or gains on those savings over the course of that period. And, of course, they realize those taxes sooner.
“And your GNP/population argument ignores human capital investment.”
Not really, human capital is an inherently private asset, and one that’s non-transferable. I.e., the fact that you or I may have a great deal of human capital doesn’t inherently make others in society better off.
It’s only when we use our human capital to provide valuable goods and services, that society benefits, but that just brings us back to the income point – the benefit of our human capital is largely internalized by its owners. Moreover, unless we’re talking about a very small population (or a health cost that reduces the population by a signicant degree – say the Black Death), others will still be able to access those goods and services from other suppliers (i.e.,if we killed off 10% of Canada’s population, and 10% of its tax lawyers, people would still have access to the same services previously provided by the 10% of the tax lawyers we killed off).
I think to be able to tell as human capital story, where the population is so small (or the health impact is so enormous) that the loss of one or two skilled individuals would deny the population access to a particular good or service. You could probably tell this story at a micro level in parts of rural Canada (say, aboriginal reserves in Northern Ontario), but I wouldn’t think it would be generally true.
Moreover, keep in mind, when we’re talking about health related issues, much (though not all) of the lost life occurs at the end, when arguably human capital has less value (because their owners are retired and not using it, or it is outdated, or both).
Let’s not muddy the waters with health care issues or sentimentality. Imagine we don’t care about the suffering of others and imagine some vice that doesn’t incur any additional health care costs to the public system. Say it just makes you less productive than you would be otherwise and you die younger than you would otherwise.
The early death thing seems to boil down to lower population than otherwise. Not sure what the effect of that is. I suppose it depends. Foregone old sick people may not matter much. Foregone babies probably matters a lot if the baby boom is any indication.
But lower productivity in aggregate would seem to be unambiguously a bad thing thought, even if the cost is born entirely by the individual. Their foregone income is foregone consumption is my foregone production is my foregone income. So, I’m poorer because they are less productive, no?
So, I’m poorer because they are less productive, no?
But why would productivity be lower if the population is smaller? Sure, some high productivity people may die earlier, but so would low productivity people (unless we believe that there is an income based difference in chip consumption), so it’s not clear why a smaller population leads to lower productivity. National income may be smaller, but why would individual income change? Certainly, it’s hard to see a theoretical argument for it, and empirically it clearly isn’t true (i.e., there are lots of small high productivity countries and large low productivity countries).
Now, if you could tell a story about how eating chips is concentrated amongst the high productivity people, maybe there’s story there, but that’s a hard story to tell vis-a-vis potato chips or cigarettes (quite the contrary, consumption of those goods is probably inversely related to income – it certainly is for cigarettes, and in the modern era obesity is disproportionately a disease of the poor). Even, then, it isn’t clear that the loss of the high productivity people results in lower incomes for the others. Average incomes may fall, but the low-productivity people never had the “average” income (in the “high: and “low” universe, no one ever had the “average” income), they had low incomes, so it isn’t clear that they’re worse off.
Given how many people I’ve known who’ve done horrible things to their future selves due to hyperbolic discounting, but would never be willing to knowingly do the same harm to others, it seems that we’d need more information about the preferences of the typical potato-chip eater in order to answer one way or the other.
But I guess the students were meant to automatically assume that people care more for their future selves than they do for others? In fact, based on some of the comments above, such as Frances at 10:55, it seems there is a universal, unnecessary to be stated assumption that the typical person has 0 care for the impact of their actions on others. No surprise that the study of economics continues to correlate with unproductive, self-interested behaviour I guess.
Bob, I think I said I wasn’t sure about smaller pop.
I am probably not being clear, but I am trying in my muddled way to figure out the aggregate effects relative to the alternative world with no hypothetical human capital squandering vice. A voice in my head keeps telling me that we’re all worse relative to the alternative. It’s sorta like the agument against unions.
Declan: “But I guess the students were meant to automatically assume that people care more for their future selves than they do for others? In fact, based on some of the comments above, such as Frances at 10:55, it seems there is a universal, unnecessary to be stated assumption that the typical person has 0 care for the impact of their actions on others.”
I don’t think that the answer to Frances questions depends on that assumption at all. She is telling students that the only harm from pototo chips is borne by potato chip eaters. It doesn’t matter whether you think people care deeply about the welfare of others or not all, it they aren’t affected one way or the other, that shouldn’t change the result. Now, you could question the plausibility of Frances statement that the cost of potato chips is borne solely by chip eaters (i.e., by talking about health care costs or the emotional costs on your family from your dying young), but given that statement you don’t need to make any assumptions about the preferences of chip eaters vis-a-vis the well being other others, the only well-being that matters.
Moreover, if people do care about the well-being of others, than arguably the case for the tax on chips disappears entirely, because chip-eaters will be internalizing the costs imposed on others (and will only eat chips until the marginal social benefit from doing so equals the marginal social cost). I.e., if my utility is harmed by the increased cost I impose on you from eating chips, than that’s in effect an internal tax on my chip eating. Frances statement that the cost of chip eating is borne solely by chip eaters might be based on the assumption that the chip eaters fully internalize the harm they impose on others. That seems unlikely (for reasons discussed below), but I suppose it could be the case.
Declan: Given how many people I’ve known who’ve done horrible things to their future selves due to hyperbolic discounting, but would never be willing to knowingly do the same harm to others.
Sure, but harming yourself by smoking, drinking, etc. is a somewhat different beast from harming others by making them smoke, drink, etc (not the least of which is that you would probably go to jail for forcing a beer down someone’s throat). In any event, it surely isn’t that strong an assumption to say that people care MORE about their well-being (and their future well being) than they do about the well being of others, particularly in this context where the others concerned are (at least if we’re talking about health care costs or reduced tax revenue) people they don’t know, and the harm is not readily apparent and is hidden in government finances 20 years down the road. Moreover, to the extent where talking about future harm to others, even if we care about their well-being (say, the others are family members), the same hyperbolic discounting which causes us to give less weight to our future well being would presumably also cause us to give less weight to their future well-being as well.
Three points occur to me reading the post and the comments following it.
1)Assuming that the costs of eating the chips is entirely internal, then rationale for a pigouvian tax does weaken, however depression and obesity are both linked to less economic productivity by workers, so even in the absence of a public health care system, there is reasoning to impose a tax.
2)OHIP, at least, does cover treatment for clinical depression,and weight related illnesses, which means that the public health-care system would suffer from the effects of excessive chip consumption. these diseases, even in a private care system, would also raise demand for health-services, increasing price, which could be another reason to favour the tax.
3) The problem is that the question is counter-intuitive to many people. If the 50 cent damage was entirely internalized, there’s no reason to assume that this would translate to obesity or depression, as those would be signs of excessive consumption. If we assume that the damages are not significantly harmful in the long-term, or that the consumer has a rational reason for discounting future well-being (terminal illness?), then there are no broader social implications to the problem. This picture, of course, is very different from reality,, where humans do show a strong discounting bias to present enjoyment vs. future costs.
Students just have to remember that economic problems like this ones are though experiments, they don’t apply to reality. In reality, there would be no way to determine the marginal damages of a given act, since this would necessarily vary by context. This is not to mention the problem of trying to place valuation on human quality-of-life. People who say that the case for a Pigovian tax strengthens are in effect arguing that the marginal costs are not internal, which contradicts the premise of the question.
“It doesn’t matter whether you think people care deeply about the welfare of others or not all, it they aren’t affected one way or the other, that shouldn’t change the result.”
…
“Moreover, if people do care about the well-being of others, than arguably the case for the tax on chips disappears entirely”
Are you arguing against me, or yourself? At any rate, you (in your second comment quoted) are reiterating my point, that if people care about others sufficiently, then the case for the tax (in the event that the harm falls on others) disappears, hence the case for the tax strengthens in the situation where the harm comes to the eater directly but the eater no longer recognizes this harm due to hyperbolic discounting.
“Sure, but harming yourself by smoking, drinking, etc. is a somewhat different beast from harming others by making them smoke, drink, etc”
Precisely. All I’m saying is that many people feel as you do (I’m assuming here that you believe harming others is ‘worse’ than harming yourself, if not then I guess we’ll just have to agree to disagree). But the question assumes implicitly that people don’t feel this way and in fact are the reverse, entirely discounting the costs of making others smoke and drink, but fully internalizing the costs of doing it to themselves. That is quite inconsistent with my observations of people I’ve known.
“Frances statement that the cost of chip eating is borne solely by chip eaters might be based on the assumption that the chip eaters fully internalize the harm they impose on others.”
That wasn’t how I read the question. My understanding was that “the only people harmed by potato chip consumption are potato chip eaters themselves, as potato chip consumption is associated with bad skin, weight gain and depression.” In other words, direct harm to the eater, not indirect harm via the harm caused to others, transmitted to the eater via empathy. Indeed, if it was possible to interpret Frances’ statement in the manner you suggest, then the whole question appears nonsensical – if we’re treating harm to others and to ourselves as equivalent, then how could moving the harm around change anything? If your point were valid, then surely Frances’ ‘correct’ answer is in fact incorrect, and her students deserve a re-marking.
“it surely isn’t that strong an assumption to say that people care MORE about their well-being (and their future well being) than they do about the well being of others”
Speak for yourself. And thanks for helping to prove my point. Less argumentatively, I’d say that the validity of this assumption depends strongly on a) the context, and b) the particular person we’re talking about. Basing exam questions on an assumption that all people are purely self-interested in all situations (without stating this assumption explicitly) seems absurd to me.
As well as the assumption of rationality, there are two other unstated ideological positions framing the question – individualism and liberalism. Maybe the students who gave the “wrong” answer did not subscribe to both these ideologies? Fair enough if they did not – even in Canada surely not everyone believes that people should be free to do what they like so long as it does not harm others, and individualism is very contestable on reliable neuroscience alone, never mind ideology.
What did you say you were giving an exam in?