Thomas Schelling and the Titanic

Disagreeing with your guru always creates an interesting situation, especially when you back into it unawares.

Blogging has been light of late partly because I’ve been teaching a big undergraduate lecture class: the introductory course in policy analysis. Having 120 students means I can’t even pretend to run a discussion, and therefore I’ve been doing elaborate lecture notes and a powerpoint slide show for each class, all of which — along with a presentation to a National Research Council panel on immunotherapies for substance abuse (of which more later) — has cut into blogging time.

One valuable side-effect of teaching an intro course is the need to get clear with yourself exactly what it is you believe to be basic, and what you believe to be true, about your field. How much of the pure benefit-cost analysis that seemed such an eye-opener when I was a graduate student do I still think is valid? Insofar as it is valid, how can I say it in a relatively jargon-free way to a group of people whom I can’t assume to know either microeconomics or calculus? (I had the thrill today of a student’s coming to me and saying, as a side-note to another discussion, that my explanation of marginal benefit had finally convinced her that there might be some valuable substance hidden under the mathematical formalism of the first derivative.)

My current topic is the ethics of benefit-cost analysis in a world of inequality. If rich people are willing, as they on average are, to spend more of their own money to reduce small risks to their own lives than poor people are willing to spend of their money to reduce small risks to theirs, how should we think about those differences when it comes time to spend public money, or regulating private action? Should our safety regulations applying to inter-city buses take into account that the people travelling — and who will have to pay more if the safety regs get tighter — are on average much poorer than, for example, airline travellers? I’m pushing the “yes” answer, I’m not sure how successfully.

The central example I used was the Titanic, and I offered the following thoughts, in what I called “a meditation in the spirit of Thomas Schelling.” (The reading for the day was Schelling’s “Economic Reasoning and the Ethics of Policy,” which uses the example of safety equipment at airports with different clienteles, but I thought the Titanic would be a more dramatic case.)

The Titanic had enough lifeboats for first and second class passengers, but not for steerage. So the poor passengers almost all drowned, while the rich passengers mostly survived. Pretty disgusting, right? The company ought to be ashamed of itself, even after eighty years. There ought to be (ought to have been) a law!

Well, maybe not. It turns out that about half the passengers on the Titanic were travelling steerage (what United Airlines calls “coach”). But their total fares amounted to only 8% of the revenues for the voyage. A requirement of one lifeboat space per passenger might have made carrying steerage passengers unattractive to the lines — they could have carried cargo instead, as the Lusitania famously did. At least, it would have made the cost of carrying steerage passengers greater, since even a big liner has only so much space and weight-bearing capacity. If the steerage passengers were only paying 8% of the total fares, a small increase in the total costs of running the ship would have translated into a big increase in their fares.

So the well-intentioned regulation “one lifeboat space per passenger” might have had the consequence of making it much harder for poor people to emigrate from Europe. (Since all of my great-grandparents came over in steerage, and since there was no alternative way to get from Europe to America, I take this point rather personally.)

Now it’s possible to construct combination policies to take care of this problem: combining the regulation about lifeboats with a further regulation requiring the lines to take some proportion of steerage passengers at some legislated price. That would in effect be a tax on first- and second-class steamship passage to subsidize immigration, plus a regulation requiring the subsidized emigrants to spend their subsidy on lifeboat tickets rather than something else they might have needed or wanted much more urgently. Phrased that way, neither the tax nor the regulation is obviously justified.

If you want to help emigrants, I said in Schelling’s name, you ought to help them with what they want, not with what it would make you feel good for them to have. If you hate the fact that they have to travel in danger as well as discomfort because they’re so poor and life in Europe is so miserable, it’s the poverty and the misery you should be worrying about, not just the particular consequences of that poverty and misery that interfere with your enjoyment of your breakfast newspaper.

I can’t tell how well my argument went over; all I can say is that no one actually screamed at me or walked out, and the questions were calm and analytical.

Today’s lecture was even tougher morally: I talked about computing the value of preventing statistical deaths. [I asked one of my TAs afterward how she thought the lecture had gone, and she said she’d found it “morbid,” partly, I suppose, because I kept using my own life as the example.]

The text for today was another Schelling essay, “The Life You Save May Be Your Own.” (Both essays are in his collection Choice and Consequence; if you haven’t read it, you have fifteen treats in store for you.) But what did I find when I reread that essay last night but the following paragraph:

…the success of organized society depends on traditions, attitudes, beliefs, and rules that may appear sentimental or extravagant to a confirmed materialist (if there is one). The sinking of the Titanic illustrates the point. There were enough lifeboats for first class; steerage was expected to go down with the ship. We do not tolerate that any more. Those who want to risk their lives at sea and cannot afford a safe ship should perhaps not be denied the opportunity to entrust themselves to a cheaper ship without lifeboats; but if some people cannot afford the price of passage with lifeboats, and some people can, they should not travel on the same ship.

Well, I take his point. I would have hated to be the crew member in charge of keeping the steerage passengers away from the lifeboats. But, if I understand the joint-production economics of liner traffic correctly, there could never have been steerage passage without first- and second-class passengers to provide most of the revenue. If that’s right, Schelling’s proposed rule against mixing passengers with and without lifeboat access would have kept my ancestors in Latvia and Galicia and Russia, which were lousy places for poor Jews when they left and got substantially worse later.

So I think I prefer my view — the one I confidently offered as Schelling’s — to Schelling’s own.

However, if that’s right, that would make twice in thirty years that I’ve been right and Schelling wrong when we disagreed. A careful Bayesian would at best keep an open mind on the question pending further discussion. Consider this an invitation to that discussion.

[Edited to remove what turned out to be an incorrect guess about the plot of the movie. Thanks to a reader for the correction.]

Update Ampersand challenges the factual basis of the above; how deeply, he asks, would a lifeboat requirement have actually cut in to the availablity of steerage passage? He points out that the lifeboat-space deficiency on the Titanic was the product of regulatory lag. Glen Whitman asks a different question, to which I don’t know the answer: Did the steerage passengers on the Titanic know they weren’t getting lifeboat space when they bought their tickets?

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: