Tuesday, October 14, 2008

Comparative Advantage

My colleague (and friend) Pam Perlich is making fun of my blog because I haven't yet written a lot that's specific to Utah.  This despite my claim that that Utah-related stuff is my comparative advantage.

While I think that making fun of my blog is a perfectly worthy activity, I think maybe Pam needs a lesson in what comparative advantage means.

You can have a comparative advantage at Task A and still be horrible at it....  as long as you're less horrible (relatively) at Task A than than you are at Task B.  

So there's nothing inconsistent here.

(Comparative advantage is one of the really big (and really old) ideas in the economics of international trade.  Paul Krugman's recent Nobel Prize was given in part because Krugman observed that comparative advantage didn't seem to explain all of the world's trade flows --- he then developed theories that helped economists understand was was missing.)

2 comments:

Garth said...

The other piece of why you may not have followed your theme, is because it is often very hard to blog with a narrow focus. You could, however try to dedicate a small section of your post to something termed The Wasatch Slant. How the post topic might impact Utahns.

Scott Schaefer said...

Good idea. But I would hate to exclude other Utah-based mountain ranges.