Three Faces of Greg Mankiw

Yet another excellent post from Greg Mankiw. This time it's a three-sided cage match between Greg Mankiw, Greg Mankiw, and Greg Mankiw: Greg the Libertarian, Greg the Utilitarian, and Greg the Moralist:

Greg Mankiw's Blog: Why I hate gambling: My personal philosophy is about 50 percent libertarian, 40 percent utilitarian, and 10 percent moralist. The libertarian and utilitarian usually keep the moralist pretty well contained: they have a 9 to 1 advantage, after all. But reading a recent article in Slate from the wife of a professional gambler let the moralist in me escape...

Greg the Moralist:

My view is that there are three kinds of gamblers, all of which sadden me. First, there is the compulsive gambler. When I was growing up, the husband of one of my mother's coworkers lost all their money in a fit of compulsive gambling. This occurred just as their teenage daughter was getting ready to apply to college. The college savings, as well as all their other savings, were gone. Watching this experience has most likely colored my view of the activity more broadly.

Second, there is the recreational gambler. He spends, say, $20 a week on slot machines or lottery tickets.... [G]iven the availability of books, movies, plays, museums, checkers, chess, etc., it is an unfortunate reflection on a person's imagination when a scratch lottery ticket is the best diversion he can find....

Third, there is the professional gambler.... In some ways, this case is the saddest of all.... It is a shame that someone with so much inherent ability wastes it doing something of such little social value...

Greg the Libertarian:

None of this has much implication for public policy. The libertarian in me says people can waste their lives if they want...

Greg the Utilitarian:

The utilitarian points out that governmental attempts to suppress gambling are likely to be fruitless and would foster a large underground economy...

I'm tempted to jump in and head-butt the libertarian: If you were to ask a compulsive gambler if he really wanted to waste his life, he would probably say no: that the life he wound up with is not the life he really wanted. It is really hard for almost all of us to make good decisions, and 90% of doing well is finding institutions and situations in which the pressures are such as to make good decisions more likely.

On the other hand, Greg the Moralist slightly scares me: I buy the argument for the compulsive gambler and the professional gambler. Somebody good enough at calculating odds and reading situations to make money as a professional gambler should pick a segment that is positive-sum rather than zero-sum for the economy as a whole: he should go to Wall Street and become part of the global capital allocation mechanism.

I would certainly agree that lottery tickets are a very low-quality diversion, and that the computer game Civilization packs at least fifty times the diversion-per-buck of a scratch lottery ticket. (Indeed, I find it so powerful and diverting that I have no copies: There was a time when I had to decide whether to be a Civilization addict or an economics professor.) But I don't want to get onto the moralist's slippery slope any more than Greg Mankiw wants to get onto the regulator's slippery slope.