Tuesday, December 05, 2006

It's the utility, stupid

Michael Blowhard asks why do we blog? In particular, he asks how economists would explain the phenomenon, given what a waste of time it is.

Michael seems to think that since there is no money in blogging, but people seem to spend a great deal of time doing it, it runs afoul of traditional economic maxims.
Such as, I'd suggest, the pleasures of self-expression, connecting with other people, and perpetrating some completely-useless mischief. I won't speak for other blog-denizens, but when I write postings or cruise other blogs, I'm pitching in because it's fun and rewarding to meet interesting people and to take part in freewheeling conversations. Part of the fun, I'd argue, comes from the fact that it's all so defiantly un-sensible in economic terms.
But blogging is not unsensible in economic terms -- economics is not about money, it's about how people make choices and tradeoffs. The rational, forward looking utility maximizer, who sits at the heart of all neo-classical economic models, is maximizing utility not money, and fun is certainly a utility.

I'm not sure why economics cannot shake this reputation for only being interested in money, since all intro to economics classes talk about people valuing other things more than money on day 1 (think of it this way -- every time you buy something you're valuing that thing more than money, otherwise you would not buy it).

It's also unfortunate that behavioral economics is considered as an antidote to neoclassical economics in a "see, there is more to human behavior than making the most money" way, because neoclassical economics knows that, and behavioral economics doesn't support that argument the way it's populist boosters thinks it does. Behavioral economics undermines the rational, forward looking utility maximizer by highlighting the importance of framing effects, time sensitivity, etc., in individual decisions. Behavioral economics has to show that people are making inefficient decisions, not just maximizing something different from what we think people maximize most. And it's done this in lots of areas.

The economic explanation of blogging, if there is anything interesting to say here other than "blogging is fun" is that 1) when blogging gets easier, more people blog; and 2) probably, most people will never blog. Blogging was around long before Blogger launched, but Blogger made the process so much easier that it's not surprising it heralded the great blogging boom. Also, given that blogging is time intensive, and most people are short of time, you'd expect blogging to be rare in general, and perhaps common amongst those who have time to spare (students, academics, eventually retired people).

Behavioral economics would say that bloggers will overestimate the importance and ubiquity of blogging, by confusing their own experience with the medium, to the average experience with the medium.

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