From: Michael Korcok <mk48@cornell.edu>
To: Issues concerning CEDA Debate <CEDA-L@cornell.edu>
Subject: Roads Still Not Taken
Economist Walter Nicholson writes in his text "Microeconomic Theory"
that:
"The notion of opportunity cost is, in a broad sense, certainly the
correct conceptual approach for considering difficult problems of
choice, and the problem of valuation is unavoidable.... it would be
hard to overemphasize its importance to economic analysis. The notion
that the cost of any action can only be measured by the value of the
opportunities foregone by taking the action is at the same time trivial
and profound." (1)
It has been more than two decades since Lichtman and Rohrer's
definitive essay "A General Theory of the Counterplan" but the only
promising foundation upon which counterplans can rest remains the
concept of opportunity cost. The central argument of Robert Branham's
1989 essay "Roads Not Taken: Counterplans and Opportunity Costs" was
that:
"Opportunity cost theory best explains the weight and operation of the
counterplan in academic debate. It offers a theoretical context in
which disputes over counterplan theory and practice may be grounded and
a basis from which the evolution of counterplan arguments may proceed."
(2)
Unfortunately, nearly a decade after "Roads Not Taken", there has been
little examination of Branham's attempt to ground counterplans in
opportunity cost concepts, no other published attempts to lay an
opportunity cost foundation for counterplans, and no promising
alternatives to an opportunity cost grounding of counterplans. The
bases of counterplan theory are as shaky today as they were when Branham
pointed out that:
"There remain, however, two surprising gaps in the literature of the
counterplan. First, there has been virtually no attempt to explain or
examine the logical operation and decision weight of the counterplan.
Second, there has been little effort to relate counterplan theory to the
treatment of policy alternatives in cognate fields, notably policy
analysis and economics. Both disciplines are, like academic debate,
devoted to the study of choices among alternative courses of action.
Mending the latter gap in the theoretical literature is essential to the
task of addressing the first, and is the principal concern of this
essay." (3)
This essay will lay again the opportunity cost foundations of
counterplans. Unlike "Roads Not Taken", however, this essay argues that
only a subset of counterplans, those which are within the authority of
the decisionmaker choosing whether to undertake plan action, can be
grounded in opportunity cost theory. The mere fact that an action
cannot or ought not coexist with a posited action is insufficient to
establish the competing action as a potential opportunity cost: the two
alternatives must exist as choices confronting a particular
decisionmaker. Initially, policy analysis in the absence of
counterplans is examined, then the concept of opportunity cost is
presented, and finally, the implications and entailments of opportunity
cost theory for counterplans are developed.
Well-Trodden Paths
A "commonsense" framework for policy analysis developed in debate in
the transition from "problem-solution" to "comparative advantage"
formalisms. Branham summarized this approach:
"In policy debate, the affirmative advocates posit one significant
deviation from the known world - adoption of the affirmative plan - and
then attempt to evaluate what the world would be like as a result. This
possible world is contrasted with a vision of the world as it would
otherwise be." (4)
This mode of policy analysis has three primary and powerful sources of
support: they are found in our pre-theoretical intuitions about the
evaluation of action, the "ceteris paribus" assumption from economics,
and "counterfactual analysis" from philosophy. Because this commonsense
view of policy analysis competes with modes of policy analysis which
could ground counterplans, we initially examine its foundations.
Our pre-theoretical intuitions about how to evaluate potential actions
seem to indicate a simple comparison between the world as it is and the
world as it would be if the potential action were to be undertaken.
Thus, for example, if one were to consider whether to drink a cup of
coffee, the evaluation involved might well proceed in this manner: "I'm
getting a bit drowsier and my thinking isn't as sharp as it needs to be
while the coffee is getting colder. I'm about to drink this glass of
water, but if I drink the coffee, I'll be more alert and think more
crisply, although the caffeine down will be worse in a couple of hours.
It's worth it: I should drink the coffee." This pattern of thought
appears as the natural and normal means of thinking when evaluating
potential actions both in everyday life and in public policy
decisionmaking.
The comparison between the world as it is and the world as it would be
if an action were undertaken seems to incorporate the "ceteris paribus"
assumption, that "all other things are held equal." This assumption is
made because it attempts to control for extraneous causal influences
thought to be irrelevant to the evaluation of an action. If one is
interested in evaluating the consequences of taking an action, then it
seems on-face plausible to take the world as a given, alter only the
condition that the posited action is undertaken, and evaluate the
resulting world in comparison to the world as it is. The expectation is
that any differences between the two worlds thus arise from and are the
result of the action under consideration. For the coffee example above,
since greater alertness is a difference in the world in which the coffee
is imbibed and since drinking the coffee is the only action introduced
into the world as it is, we would conclude that greater alertness occurs
because of drinking the coffee. The ceteris paribus assumption,
incorporated from economics as a means to control for extraneous causal
factors, seems to be a central influence underpinning this framework for
policy evaluation.
The comparison between the world as it is and the world as it would be
if an action were undertaken receives further justification from
contemporary modal logic. Since at least Lewis, the view that a
counterfactual evaluation of potential action is correct has had a
powerful philosophical grounding. In short, the argument is that in
evaluating subjunctive conditional claims generally, one examines the
nearest possible world to the actual world in which the antecedent of
the subjunctive conditional obtains. If the consequent of the
subjunctive conditional is the case in that world, then we ought to
conclude that the subjunctive conditional is true in the actual world.
The classic example from Lewis asks us to evaluate the subjunctive
conditional claim "If kangaroos had no tails, they would topple over."
The framework argued for by Lewis and subsequently by others seems
straightforward: begin with the actual world, make the minimal changes
to it necessary to accomodate the antecedent (kangaroos have no tails)
and examine whether or not the consequent (they topple over) is the case
in the resulting world - if the consequent is the case, then the
subjunctive conditional is true and if it is not the case, then the
claim is false. David Lewis explained in his 1973 work,
Counterfactuals:
"'If kangaroos had no tails, they would topple over' is
true (or false, as the case may be) at our world, quite without
regard to those possible worlds where kangaroos walk around on
crutches, and stay upright that way. Those worlds are too far away
from ours. What is meant by the counterfactual is that, things
being pretty much as they are - the scarcity of crutches for
kangaroos being pretty much as it actually is, the kangaroos'
inability to use crutches being pretty much as it actually is, and
so on - if kangaroos had no tails they would topple over." (5)
The extension of counterfactual theory to the evaluation of posited
actions appears to be simple and straightforward:
begin with the world as it is, make the minimal changes to it necessary
to accomodate the action being evaluated and compare the resulting
possible world to the actual world - if the nearest possible world is
preferable to the actual world, then the action ought to be taken and if
it is not preferable to the actual world, then it ought not to be taken.
Taken together, these three different perspectives provide a powerful
grounding for the policy debate framework whose shorthand is "plan
focus, no fiat, no counterplans." Within debate, that framework would
operate to evaluate the affirmative plan in a comparison between the
status quo, the world as it is, and the commonsense, pre-theoretical
world created by the least change necessary to accomodate the plan, the
ceteris paribus world, the nearest possible world in which the plan
obtains.
Roads Not Taken
"The concept of 'opportunity cost' is the appropriate construct for
valuing both benefits and costs."
-- White House Office of Management and Budget clarification of Clinton
Executive Order 12866 (6)
Unfortunately, the policy debate framework results in incorrect policy
prescriptions. An extended example of policy analysis is initially
presented, the theory of opportunity cost is explained, and finally, the
foundations of the "commonsense" view are re-examined in light of
opportunity cost considerations.
"You should put your $10,000 a year 'savable' income into a savings
account every year for the next 15 years". If we take the "policy
debate" view, we might reason as follows: "We are currently going to
put the money under a mattress and let it accumulate that way - that is
the status quo. Following commonsense, we will compare putting the cash
into a savings account with putting it under the mattress. Now, if we
put it under a mattress, after 15 years we will have collected $150,000
- not bad, but with inflation at 3% a year, it will only be worth about
$122,250. If we put it into a savings account that earns 6% a year, the
magic of compound interest will mean we will have collected $232,750
which will be worth only $186,000 because of the horrors of inflation.
Because the savings account is MUCH better (by about $64,000), we
conclude that we SHOULD put the money into a savings account."
And we will have reasoned very and literally poorly. That is because
the real cost of putting our money into a savings account is NOT the
value of not being able to keep it under the mattress: the real cost of
putting our money into the savings account is the value of the best
action that could have been taken if the money wasn't put into the
savings account but that must be foregone if the money is put into the
savings account. Let us suppose that the "best" opportunity action is
investing the money in an excellent technology mutual fund which is
expected to return 25% a year for the next 15 years. Now, if we put the
money into a 6% per year savings account, at the end of 15 years we will
still have collected $232,750 which is worth only $186,000 because of
inflation. If, however, we put the money into the technology mutual
fund, we will have collected $1,096,750 at the end of fifteen years, but
we won't "really" be millionaires because inflation will have made it
worth only $852,000 . The technology mutual fund is a LOT better (about
2/3 of a million dollars better): and we now conclude that "we SHOULD
NOT put the money into a savings account."
The above example illustrates the power of economists' notion of
"opportunity cost." The Dictionary of Modern Economics defines
"opportunity cost" thus:
"Perhaps the most fundamental concept in economics, the opportunity
cost of an action is the value of the foregone alternative action." (7)
This definition is properly understood to mean that the opportunity cost
of an action is the value of the "best" foregone alternative action:
the "best" action is the one which would presumably be chosen by a
rational choice-maker confronted with alternative actions. As Branham
points out:
"The concept of opportunity cost is one of fundamental importance to
the fields of economics and policy analysis, both cognate disciplines
for academic debate. Benefits sacrificed from the best available
alternative constitute the true cost of any action, and therefore should
be at the center of all policy disputes. 'Opportunity costs,' as Miller
and Starr (1967) explain, 'are penalties suffered for not having done
the best possible thing (p35).' and therefore should always be a focus
for optimal decision procedures." (8)
The commonsense view that the value of an action is the difference
between the worth of taking that action and the worth of continuing to
not take that action, all other things being equal, is incorrect. The
value of an action is the difference between the worth of taking that
action and the worth of the best action which could be taken otherwise,
but would have to be foregone if the posited action were taken. The
difference between the commonsense framework for evaluating actions and
an opportunity cost framework for evaluating actions is the value of
those actions which are foregone because the status quo is "privileged"
in the comparison to plan action: it is necessarily greater than or
equal to zero, which guarantees that the commonsense framework is
incorrect.
Now, let us return to our first example, "drinking coffee" in light of
opportunity cost considerations. The commonsense framework has
bracketed-out the option of making and drinking a cup of tea because
that action was not part of the world as it is. It might well be the
case, however, that drinking the coffee will mean that making and
drinking a cup of tea will have to be foregone (too much hassle and way
too much caffeine intake) and it might furthermore be the case that
fixing and drinking a cup of tea would be preferable to drinking the
coffee. In this case, the commonsense framework results in a clearly
incorrect decision and it does so by forcing us to ignore alternative
courses of action. The framework requires that we turn a blind eye
towards opportunity actions.
The ceteris paribus assumption can now be examined in light of
opportunity cost's alternative, the competition assumption. The
conclusion is a simple one: keeping all else equal is invalid
decisionmaking which leads to incorrect policy prescriptions. As with
the general case of the commonsense framework in comparison to an
opportunity cost framework, the cost of the ceteris paribus assumption
in comparison to the competition assumption is the value of those
actions not undertaken because of the worth of noncompetitive features
of the world as it is: again, it is necessarily greater than or equal
to zero and thus ought to be rejected. Another way to understand this
answer is that the ceteris paribus assumption treats all actions of the
status quo as givens rather than treating them as actions subject to
choice in the evaluation of the plan while the competition assumption
treats at least some actions of the status quo as subject to choice.
Finally here, what can be said in response to the counterfactual
analysis of subjunctive conditional claims? The response here is fairly
simple and parallels the understanding above. Counterfactuals were
developed as a means to understand causal entailments and implications,
not as a means to evaluate actions. The analysis of "If you drink the
coffee, your alertness will increase." requires a different framework
than "You should drink the coffee." requires. In the first instance, a
counterfactual analysis is on face sensible while in the second,
comparing the world as it is to the nearest possible world in which the
coffee is imbibed is not sensible. And the reason is that an action
ought to be taken if and only if the possible world created by taking
that action is preferable to the possible world created by the best
action which could be taken absent the action evaluated but would have
to be foregone if we undertake the posited action. Again, a
counterfactual analysis of an action treats all other actions as not
subject to choice, as merely entailed or implicated causally while an
opportunity cost analysis treats at least some other actions as subject
to choice.
Taken together, it is now a settled matter in economics and policy
analysis that opportunity cost considerations are central to
policy-making. The difficulties are in the details, however. Exactly
how opportunity costs ought to be incorporated into policymaking is an
open question. The 1986 Nobel Prize-winning economist James M. Buchanan
observed in his 1969 work, "Cost and Choice":
"There are few modern economists who would dispute the elementary
definition of opportunity cost. Statements that are presumably well
understood abound in the standard textbooks. I suggest that there is
likely to be a significant difference between such second-chapter
definitions and those which are implied in the analysis that follows.
Opportunity cost tends to be defined acceptably, but the logic of the
concept is not normally allowed to enter into and inform the subsequent
analytical applications." (9)
New Paths
Robert Branham's grounding of counterplans in opportunity cost theory
is simple and straightforward. In "Roads Not Taken" Branham argues
that:
"Standard practice in counterplan advocacy largely conforms to the
requirements of opportunity cost calculation. The opposition generally
isolates the single best alternative to the affirmative proposal (the
counterplan itself), substantiates the unique benefits available from
the alternative (counterplan advantages), and demonstrates the extent to
which these benefits are sacrificed by adoption of the affirmative plan
(competition between plan and counterplan)." (10)
This grounding of counterplans in opportunity cost theory is certainly
appealing in broad outline, but it is carelessly overbroad. Opportunity
cost is always situated within a context of choice between alternative
actions, choice is meaningful only in the context of a choice-maker or
decision-maker, and thus opportunity costs are always and only faced by
particular and specified decisionmakers. The matter was put well by
James Buchanan in his explanation of the relationship between
opportunity cost and choice:
"The essential element in this concept is the direct relationship
between cost and the act of choice, a relationship that does not exist
in the neoclassical predictive theory. In the London-Austrian
conception, by contrast, cost becomes the negative side of any decision,
the obstacle that must be got over before one alternative is selected.
Cost is that which the decision-taker sacrifices or gives up when he (or
she) makes a choice." (11)
This "direct relationship" between opportunity costs and the act of
choice is important to understand precisely because it addresses key
questions concerning which counterplans are grounded by opportunity cost
theory. Opportunity cost theory grounds all and only those counterplans
which represent actions which must be foregone if a posited action is
taken but which otherwise could be undertaken by a decisionmaker
confronting the relevant alternatives. The opportunity cost of an
action is the value of the best action which could otherwise be done but
must be foregone if posited action is taken. But opportunity costs only
exist within contexts of choice, that is, whenever decisionmakers must
choose between alternative courses of action. It is not any alternative
action which must be foregone if a posited action is undertaken which
could be an opportunity cost: only those actions foregone which are
open to choice in a given decisionmaking context are potential
opportunity costs. Thus, actions which you cannot do, for example, can
never present opportunity costs for you: they are not alternatives open
to choice. Similarly, the independent actions of others cannot present
opportunity costs for you: you are not choosing, they are. Buchanan
states this critical qualification of the concept of opportunity cost:
"First, there is the genuine obstacle to choice, the opportunity cost
that was central to the thoughts of those economists whose contribution
were summarized in Chapter 2. Second, there are the utility losses that
are always consequent to choice having been made, whether these be
suffered by the chooser or by third parties.... Strictly speaking, only
choice-influencing cost represents an evaluation of sacrificed
'opportunities'." (12)
Branham's exposition and development of opportunity cost is infused
with this understanding of the "direct relationship" between
"opportunity cost" and "acts of choice". Each one of his many mentions
of "opportunity cost" links it to "choice" or "decision". Similarly,
each example Branham develops of opportunity cost proper (before
attempting to ground counterplans) identifies a particular choice-maker
or decisionmaker faced with making a decision between competing
alternatives. Thus, Branham argues that: "In deciding to read this
essay, for example, you face an array of foregone alternatives..." (13)
and remarkably, "When Frost's narrator faces the fork in his road, he
must make a decision between routes because he 'could not travel
both/And be one traveler'." (14) The examples in the present essay
likewise embed the concept of "opportunity cost" within a context of
"choice" -- that is, opportunity costs are faced by particular
decisionmakers concerned with making particular choices.
Unfortunately, Branham loses sight of the "choice-making" or
"decisionmaking" inherent in opportunity cost when he finally begins to
ground counterplans in opportunity cost theory. In discussing the
opportunity-cost grounding of counterplans, Branham discards any attempt
to identify relevant or even potential choice-makers and
decisionmakers. Branham gives several examples of counterplans
grounded by opportunity costs:
"Popular generic counterplans can easily be rephrased to illustrate
their status as opportunity costs. A state-action counterplan argues
that adoption of the affirmative policy at the federal level will
sacrifice benefits uniquely available from implementation by state
governments. Counterplans defending socialism and anarchy describe
their 'roads not taken' as foreclosed or forestalled by the
implementation of the affirmative programs or regulations." (15)
In each of the above examples, there is a glaring absence of
"choice-makers" or "decisionmakers" which would or could be faced with
choosing between these competing alternatives. Who or what faces the
opportunity cost presented by rejecting state-action in favor of federal
action? Similarly, who or what undertakes the act of choosing between
the affirmative plan and anarchy? If an appropriate decisionmaker
cannot be identified, then it is literally nonsensical to speak of these
counterplans as potentially representing opportunity costs of the
affirmative plan.
All and only those competitive counterplans which are available as
alternatives to an appropriate decisionmaker are grounded by opportunity
cost theory.
(1) Walter Nicholson, Microeconomic Theory: Basic Principles and
Extensions, 1972, The Dryden Press, Hinsdale, IL, p.512, 502.
(2) Robert Branham, Roads Not Taken: Counterplans and Opportunity
Costs, Journal of the American Forensics Association, Spring 1989 v.25
p254
(3) Branham p246
(4) Branham pp 247-248
(5) David, prof. philos. Harvard, Counterfactuals, 1973, p.9
(6) http://www2.whitehouse.gov/WH/EOP/OMB/html/miscdoc/riaguide.html
posted on January 11, 1996; accessed on June 25, 1997
(7) David W. Pearce, General Editor, The Dictionary of Modern Economics,
Revised Edition, 1983, The MIT Press, p322.
(8) Branham p254
(9) James M. Buchanan, Cost and Choice, 1969, Markham publishing, pp.
viii-ix
(10) Branham p250
(11) Buchanan p.42
(12) Buchanan p45
(13) Branham p249
(14) Branham p252
(15) Branham p250
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