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The Fraser Institute, Essential UCLA School of Economics: The Nirvana Fallacy

Essential UCLA School of Economics: The Nirvana Fallacy

Welcome to the essential ideas of the UCLA School of Economics.

One of the many contributions of Harold Demsetz, a key economist at UCLA,

is how economists, and people more generally, compare the status quo to alternatives.

Demsetz observed that people advocating government intervention often do so based on an imagined

solution rather than a real world alternative. As Demsetz explained, all real-world alternatives

have faults because nothing is perfect, and if improving the status quo is the goal,

the appropriate comparison is between real-world, imperfect alternatives–

not imagined, perfect ones. His theory became known as the “Nirvana fallacy.”

Let's explore this idea with rent-controlled housing. Anti-poverty groups often argue that

housing provided by private companies fails to provide enough affordable housing. And so

these well-meaning groups lobby government to regulate the price that can be charged for rent,

which they assume will fix the problem and provide more affordable housing for low-income people.

One of the assumptions they're making is that landlords, developers, and investors

won't respond to the new limit placed on rent. But the imposition of rent control in the real

world has consistently resulted in less rental housing being built and current rental housing

being converted to condominiums – all of which reduce the availability of rental housing.

Ignoring real-world alternatives and instead relying on imagined solutions

often results in outcomes that are worse than the initial perceived problem.

Demsetz's insights into how we should compare alternatives to the status quo is a powerful

reminder of the importance of examining real-world alternatives rather than imagined solutions.

For more information on UCLA Economics, visit EssentialUCLAEconomics.org.

And to learn about more Essential Scholars visit EssentialScholars.org

you


Essential UCLA School of Economics: The Nirvana Fallacy Wesentliche UCLA School of Economics: Der Nirwana-Täuschungsversuch Lo esencial de la UCLA School of Economics: La falacia del Nirvana UCLA経済学部の本質涅槃の誤謬 Essencial da Escola de Economia da UCLA: A Falácia do Nirvana Эссенциальная школа экономики Калифорнийского университета: Ошибка нирваны Essential UCLA School of Economics: Помилка нірвани 加州大学洛杉矶分校经济学院必修课:涅槃谬误

Welcome to the essential ideas  of the UCLA School of Economics. Bienvenue aux idées essentielles de l'UCLA School of Economics.

One of the many contributions of Harold  Demsetz, a key economist at UCLA, L'une des nombreuses contributions de Harold Demsetz, économiste clé à l'UCLA, Um dos muitos contributos de Harold Demsetz, um importante economista da UCLA,

is how economists, and people more generally,  compare the status quo to alternatives. est de savoir comment les économistes, et plus généralement les gens, comparent le statu quo aux alternatives. é a forma como os economistas, e as pessoas em geral, comparam o status quo com as alternativas. це те, як економісти та люди загалом порівнюють статус-кво з альтернативами.

Demsetz observed that people advocating government  intervention often do so based on an imagined Demsetz a observé que les personnes qui préconisent l'intervention du gouvernement le font souvent sur la base d'une Demsetz observou que as pessoas que defendem a intervenção do governo o fazem muitas vezes com base num imaginário Демсец зауважив, що люди, які виступають за державне втручання, часто роблять це, виходячи з уявної

solution rather than a real world alternative. As Demsetz explained, all real-world alternatives solution imaginée plutôt que d'une alternative du monde réel. Comme Demsetz l'a expliqué, toutes les alternatives du monde réel solução em vez de uma alternativa do mundo real. Como Demsetz explicou, todas as alternativas do mundo real рішення, а не реальну альтернативу. Як пояснив Демсец, усі реальні альтернативи

have faults because nothing is perfect, and  if improving the status quo is the goal, ont des défauts parce que rien n'est parfait, et si l'objectif est d'améliorer le statu quo, têm defeitos porque nada é perfeito, e se o objectivo é melhorar o status quo, мають недоліки, тому що немає нічого досконалого, і якщо метою є покращення статус-кво,

the appropriate comparison is between  real-world, imperfect alternatives– la comparaison appropriée se fait entre des alternatives imparfaites du monde réel, et a comparação adequada é entre alternativas imperfeitas do mundo real доречним є порівняння між реальними, недосконалими альтернативами

not imagined, perfect ones. His theory  became known as the “Nirvana fallacy.” non imaginaires, parfaites. Sa théorie est devenue connue sous le nom de « sophisme du Nirvana ». não imaginadas, perfeitas. A sua teoria ficou conhecida como a "falácia do Nirvana". не уявні, ідеальні. Його теорія стала відомою як "помилка нірвани".

Let's explore this idea with rent-controlled  housing. Anti-poverty groups often argue that Explorons cette idée avec le logement à loyer contrôlé. Les groupes anti-pauvreté soutiennent souvent que les Vamos explorar esta ideia com a habitação de renda controlada. Os grupos anti-pobreza argumentam frequentemente que

housing provided by private companies fails  to provide enough affordable housing. And so logements fournis par des entreprises privées ne fournissent pas suffisamment de logements abordables. Et donc, as habitações fornecidas por empresas privadas não são suficientes para proporcionar habitação a preços acessíveis. E assim житло, що надається приватними компаніями, не забезпечує достатньої кількості доступного житла. І тому

these well-meaning groups lobby government to  regulate the price that can be charged for rent, ces groupes bien intentionnés font pression sur le gouvernement pour réglementer le prix qui peut être facturé pour le loyer, estes grupos bem intencionados fazem lobby junto do governo para regular o preço que pode ser cobrado pelo aluguer, Ці групи, що діють з добрими намірами, лобіюють перед урядом необхідність регулювання ціни, яку можна стягувати за оренду,

which they assume will fix the problem and provide  more affordable housing for low-income people. ce qui , selon eux, résoudra le problème et fournira des logements plus abordables aux personnes à faible revenu. que, segundo eles, resolverá o problema e proporcionará mais habitação a preços acessíveis para as pessoas com baixos rendimentos.

One of the assumptions they're making is  that landlords, developers, and investors L'une des hypothèses qu'ils émettent est que les propriétaires, les développeurs et les investisseurs Um dos pressupostos que estão a fazer é que os proprietários, promotores e investidores Одне з припущень, яке вони роблять, полягає в тому, що орендодавці, девелопери та інвестори

won't respond to the new limit placed on rent. But the imposition of rent control in the real ne réagiront pas à la nouvelle limite imposée au loyer. Mais l'imposition d'un contrôle des loyers dans le não responderá ao novo limite imposto às rendas. Mas a imposição do controlo das rendas no sector imobiliário

world has consistently resulted in less rental  housing being built and current rental housing monde réel a systématiquement entraîné une diminution de la construction de logements locatifs O resultado tem sido sempre a diminuição da construção de habitações para arrendamento e o aumento do número de habitações para arrendamento

being converted to condominiums – all of which  reduce the availability of rental housing. et la conversion des logements locatifs actuels en copropriétés, ce qui réduit la disponibilité de logements locatifs. a ser convertidos em condomínios - o que reduz a disponibilidade de habitações para arrendamento.

Ignoring real-world alternatives and  instead relying on imagined solutions Ignorer les alternatives du monde réel et s'appuyer plutôt sur des solutions imaginées Ignorar as alternativas do mundo real e, em vez disso, confiar em soluções imaginárias

often results in outcomes that are worse  than the initial perceived problem. entraîne souvent des résultats pires que le problème perçu initialement. muitas vezes resulta em resultados que são piores do que o problema inicialmente percepcionado. часто призводить до гірших результатів, ніж первісна проблема.

Demsetz's insights into how we should compare  alternatives to the status quo is a powerful Les idées de Demsetz sur la façon dont nous devrions comparer les alternatives au statu quo sont un rappel As ideias de Demsetz sobre a forma como devemos comparar as alternativas ao status quo são um poderoso Демсець про те, як ми повинні порівнювати альтернативи зі статус-кво, - це потужний аргумент на користь того, щоб

reminder of the importance of examining real-world  alternatives rather than imagined solutions. puissant de l'importance d'examiner des alternatives du monde réel plutôt que des solutions imaginées. нагадування про важливість вивчення реальних альтернатив, а не уявних рішень.

For more information on UCLA Economics,  visit EssentialUCLAEconomics.org. Pour plus d'informations sur UCLA Economics, visitez EssentialUCLAEconomics.org.

And to learn about more Essential  Scholars visit EssentialScholars.org Et pour en savoir plus sur Essential Scholars, visitez EssentialScholars.org

you vous