{"id":32224,"date":"2015-08-04T04:00:51","date_gmt":"2015-08-04T08:00:51","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=32224"},"modified":"2015-08-03T17:10:35","modified_gmt":"2015-08-03T21:10:35","slug":"alex-tabarrok-explains-the-happy-meal-fallacy","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2015\/08\/04\/alex-tabarrok-explains-the-happy-meal-fallacy\/","title":{"rendered":"Alex Tabarrok explains the “Happy Meal fallacy”"},"content":{"rendered":"

Another post from last month that I’m just getting around to linking<\/a>:<\/p>\n

Some restaurants offer burgers without fries and a drink. These restaurants cater to low-income people who enjoy fries and drinks but can\u2019t always afford them. To rectify this sad situation a presidential candidate proposes The Happy Meal Act<\/em>. Under the Act, burgers must be sold with fries and a drink. \u201cBurgers by themselves are not a complete, nutritious meal,\u201d the politician argues, concluding with the uplifting campaign slogan, \u201cEveryone deserves a Happy Meal!\u201d<\/p>\n

But will the Happy Meal Act<\/em> make people happy? If burgers must come with fries and a drink, restaurants will increase the price of a \u201cburger.\u201d Even though everyone likes fries and a drink they may not like the added benefits by as much as the increase in the price of the meal. Indeed, this must the case since consumers could have bought the meal before the Act but chose not to. Requiring firms to sell benefits that customers value less than their cost makes both firms and customers worse off.<\/p>\n

The Happy Meal Fallacy is fairly obvious when it comes to happy meals but now let\u2019s consider the debate over the gig economy and the hiring of employees versus contractors. Employees are entitled to benefits that contractors are not. Thus the standard conclusion is that classifying workers as contractors \u201cis great for employers but potentially terrible for workers.\u201d Wrong. Employees get their wages with fries and a drink while contractors get wages only. Would a law requiring firms to provide all workers with fries and a drink help workers?<\/p>\n

If firms are required to provide benefits to contractors they will lower the contractor wage. But how do we know the extra benefits aren\u2019t worth the reduction in wages? If the extra benefits were worth more to workers than they cost firms, firms would have eagerly provided these benefits as a way of increasing profits. Firms can profit whenever buyers are willing to pay more for a product than its cost. Benefits are a product that workers buy from firms.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Another post from last month that I’m just getting around to linking: Some restaurants offer burgers without fries and a drink. These restaurants cater to low-income people who enjoy fries and drinks but can\u2019t always afford them. To rectify this sad situation a presidential candidate proposes The Happy Meal Act. Under the Act, burgers must […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[831,25,74,9],"tags":[322,661],"class_list":["post-32224","post","type-post","status-publish","format-standard","hentry","category-business","category-economics","category-food","category-law","tag-nannystate","tag-regulation"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-8nK","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/32224","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=32224"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/32224\/revisions"}],"predecessor-version":[{"id":32225,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/32224\/revisions\/32225"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=32224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=32224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=32224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}