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Ep. 166 Explaining Kenneth Arrow’s Impossibility Theorem for Social Choice

First Bob explains his contest involving Adventures in Pacifism–winner gets 100 smackers. Then he explains the incredibly powerful, and surprisingly Austrian, result by which Kenneth Arrow showed it was impossible to coherently aggregate individual preferences into a social ranking.

Mentioned in the Episode and Other Links of Interest:

The audio production for this episode was provided by Podsworth Media.

About the author, Robert

Christian and economist, Research Assistant Professor with the Free Market Institute at Texas Tech, Senior Fellow with the Mises Institute, and co-host with Tom Woods of the podcast "Contra Krugman."

12 Comments

  1. Not bob on 11/28/2020 at 4:27 AM

    Boring Friday night… Murphy delivers!

  2. Edmund on 11/28/2020 at 5:27 AM

    Hi Bob, I’m not sure I agree with your conclusion that arrows theorem shows that social choice is a dead end. All it really says is there is no ideal mechanism for any arrangement of individual preferences. However it does not then follow that given an arrangement of individual preferences there is no mechanism that follows the 3 axioms. For example democracy or another social welfare function may follow the 3 axioms in some countries but not others.

    • Josh Hodges on 12/04/2020 at 9:52 PM

      Perhaps I didn’t hear the explicit claim by Bob, but does Bob suggest the the Impossibility Theorem suggests that social choice is a dead end?

      So far as I understand it, it proves that, ultimately, all democratic processes devolve into de facto totalitarianism.

      • Josh Hodges on 12/04/2020 at 9:53 PM

        Addendum to the above comment:

        There very well might be people who believe a leader (or a board) are God-kings deserving to rule us. That would certainly fulfill the 3 axioms, but it’s still totalitarianism.

        • Edmund on 12/31/2020 at 12:01 AM

          We could for example imagine a society that has a highly homogeneous population. For example 10 people with identical preferences. In that case democracy would satisfy the 3 axioms. So it would really depend on case by case and lots of surveying of the population to know which mechanism if any could satisfy the 3 axioms.

          • Josh Hodges on 01/07/2021 at 11:07 PM

            “For example 10 people with identical preferences. In that case democracy would satisfy the 3 axioms.”
            You’re merely choosing an arbitrarily low n. Again, however, the proof is meant to demonstrate that over time democracy devolves into dictatorship.

            Regarding your 10 people argument, I believe that a practical example can disprove even your arbitrary total.

            For most people, the typical “inner circle” of close friends a person can maintain numbers about 5. My guess is most of these folks do not share the same circle, and thus my guess is that even this group could not adequately rank any set of three priorities.



        • Edmund on 12/31/2020 at 12:13 AM

          Arrow has said “Most systems are not going to work badly all of the time. All I proved is that all can work badly at times.”

  3. Not bob on 11/28/2020 at 5:52 AM

    While this proves that no voting system can fulfill the criteria, doesn’t it also prove that no market mechanism can possibly fulfill them?

    • aaron on 12/07/2020 at 6:33 PM

      The market doesn’t need to fulfill them. In the market, it doesn’t matter if society prefers McDonalds or Burger king, each individual can pick whichever they want, of those options or a myriad of other choices

  4. riotoverlord on 11/28/2020 at 2:58 PM

    Very Interesting. when I listened I could not help but explore possibilities. In a planet called Ditania, most(90%+) nations of the planet are social democracies and most(90%+) are part of a “democraticesque” global body of cooperation and trade which helps defining the future of planet by advising certain policies and declaring the ones that don’t follow rogue (prohibiting trade). Given these conditions and using Arrow impossibility theorem could we arrive in a situation when a single individual decides the future (is the dictator)of Ditania, since the whole world is consistently and exclusively approving the policies that he supports? Or did I got lost in the episode and misunderstood the proof?

  5. Mike Mylin on 12/07/2020 at 4:13 PM

    Anybody willing to help a high school math teacher make this proof accessible in a high school Geometry class. I started with Hansen’s Graphical Proof and am now trying to connect Sen’s approach to the proof. Got stuck a little and would like a collaborator to work through a couple questions.

    • Robert Murphy on 12/07/2020 at 5:18 PM

      Mike, I saw your email. I’ll email you the classnotes I used in Hillsdale to explain Sen’s proof.

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