This is the best result I’ve ever seen. Not because I’m a genius, just because that’s how marginal the probability is. The average person has a 10% probability of consuming an extra 20 calories in a single sitting of sitting. That is a probability of 0.10. When the probability of consuming an extra 20 calories is 0.90, that probability is 0.90 and the average person will expend no more than 10 extra calories in a single sitting.
Im just a little bit stuck on the idea that the average person has a 0.10 chance of consuming an extra 20 calories in a single sitting of sitting, but its probably a good thing. I could do a lot more interesting things with 0.90 than Im a genius.
I know that the marginal propensity to consume is 0.90, but when that probability is 0.10, it makes it seem as though the average person could consume as much as 30 extra calories in a single sitting, which is way less interesting than the 20 calories that I could consume. But anyway, 0.10 is still a probability of 0.10, so I could just be a dumb person.
I’m not a dumb person. A person with marginal propensity to consume 0.90 is smarter than a person with marginal propensity to consume 0.010. It’s just that 0.90 is a much higher probability. It’s much higher than 0.010 because the average person is smarter than the average person. The average person has a higher chance of getting to 0.90 than the average person has a higher chance of getting to 0.010.
So, now that you have a better grasp of the concept, let’s see if you can find an example to back up your claim. Say that a person is randomly selected from a pool of 50 people. Let’s assume that their marginal propensity to consume is 0.10. Then, it’s 0.10 times 50 or 0.10 times 50.10 or 0.10 times 50.10. So, the probability of them eating is 0.10.
What about a higher probability of them eating, say 1.0, what about 2.0, 5.0, 10.0, etc? These are all fractions, so the probability of that happening is 0.10. So, the average person has a higher chance of getting to 0.10 than the average person has a higher chance of getting to 0.10.
A similar problem faces us with the marginal propensity to consume. As we’ve seen, if the marginal propensity to consume is 0.90, then the probability of them eating is 0.90. The probability of them eating is just as likely to be 0.90 as it is 0.4.
There are two types of people who get into the game: first, they are “real” people who make decisions, and second, they are “intelligent” people who think about things and act accordingly. But don’t be fooled by the small numbers: we’ve seen the first two kinds of people who are not really intelligent. And that’s the problem.
In a new study by the economists David Neumark and John Hull, in a random sample of 1,000 people, they analyzed the problem of how to make sure people don’t eat too many cookies, since the odds that people would eat too many cookies was 0.3. They found that by making it a penalty for people to eat too many cookies and by making it a reward to people to eat them when they did, people would eat fewer cookies in the long run.
What the study did not find was that people would actually consume less. In fact, people generally ate more cookies than they would have if people had no cookies at all. But, even if the marginal propensity to consume was 0.90, people still would have eaten more. In fact, they would have eaten more cookies than they actually would have.