Economists take the view that individuals make rational investment
decisions: they only gamble on the future when the revenue from an
investment will exceed its costs. Furthermore, "investors are
generally averse to holding risky assets. They would rather hold an
asset that assured to yield them 10% than an asset that is equally
likely to yield 0 or 20%." (Page 277)
The problem with eating healthy foods and exercising regularly is that
a huge amount of uncertainty exists as to precisely what the return on
investment will be from eating healthy foods and exercising regularly.
It is certain that death will still occur, and there is still a
significant, albeit uncertain chance that death will occur from a
cause completely unrelated to eating healthy foods and exercising
regularly, such as an accident. Furthermore, one may still wind up in
a situation late in life where the increase in life expectancy is not
worth much because of depression, loss of loved ones, or poor health.
What is certain are the costs: healthy foods are generally more
expensive, harder to find, more difficult to prepare, and are viewed
by many to be less tasty than their non-healthy equivalents.
Similarly, exercise requires physical exertion that many find
unpleasant, expenses for equipment and/or health club memberships, and
perhaps greater food expenditures to replace the calories being
burned.
In the face of an impossible to quantify return, and definite costs,
economists can take the position that rational people would not eat
healthy foods and exerciser regularly.
The argument relating to airline travel is that it is far more safe
than consumers require, and that therefore, the expenditures required
to make it so safe are unnecessary and make airline travel more
expensive than it need be. The basis for this argument is the
comparison of airline travel injuries and deaths per mile traveled
versus those of automobile passengers. Given that automobile travel
is a widely accepted means of transportation despite the fact that it
is statistically much more hazardous than airline travel, the argument
is made that the expenses undertaken in the form of maintenance,
inspections, and security that make airline travel so much safer than
automobile travel are wasted. Economists maintain that airline travel
could be less expensive, and therefore more available to everyone and
less of a drain on the economy, if the excess costs were eliminated so
that airline travel were not significantly safer than other widely
accepted forms of transportation.
Please request clarification if needed.
Sincerely,
Wonko
Sources: "Economics," 14th edition, by Samuelson & Nordhaus,
McGraw-Hill Inc., 1992 and a discussion in my Economics course at MIT
in 1994 regarding the airline question. |
