The Economics of the 2011 England Riots
During early August 2011, riots spread throughout various British cities after their genesis in the capital. Many of the countries citizens are perplexed as to why so many have been rioting as many of the vandals care not for drug dealer Mark Duggan whose death was believed to be the cause of the event. Simply put, the rioters are destroying their own localities in order for their own financial gain, however, it is evident that they will eventually suffer along with everyone else when most of the local businesses are bankrupt due to their deeds and they are struggling to find sources of consumption. Furthermore, the riots are painful for everyone else who were not involved as they watched their beloved home towns torn to shreds by their own residents. Therefore, as far as the society is concerned, everyone loses out and the pleasure which the looters will gain from stealing will be short lived and compensated for: so just why are they doing what they are?
This all comes down to an economic concept known as psychological-time preference (or “discounting”), which, simply put, is the principle of “we want pleasure now rather than later”. In the case of the England Riots, the happiness gained from recreational violence and stolen goods, (such as the occasional pack of basmati rice!) occurred instantly whereas the pain of lacking business in the communities was to happen in days to come. As these two instances of utility and dis-utility were very similar in magnitude, the rioters chose to do what they did.
Psychological time preferences are incredibly common in everyday life and in films. Take the Saw movies for example - there is in fact much economics behind the meaningless blood and gore showcased in the film. The antagonist puts certain people in his “games” in which the “contestant” has to inflict great pain upon him/herself in order to escape a gruesome death which occurs in a specified amount of time. Now it is certain that the dis-utility of self-inflicted pain is unequivocally outweighed by the dis-utility of a gruesome death, however in most cases in all of the films, the player “chooses” the death over the self harm. The psychological time preference provides a reason for this; the fact that the death occurs later on in time eases the pain of death regarding the point in time at which the player makes his/her decision. In essence, whereas what is written above is by all means true, the same cannot be said of a contest between “self-inflicted pain now vs. ghastly death later”. If the players had to walk into one of two doors, one giving them pain now and the other giving them death now, a survival of the contestant would occur much more often.
Because of the significance and influence of the concept regarding people and their decisions, it is my personal belief that more research and experimentation should be done to expand our knowledge of it. Each second of time brings, with itself, some pain or pleasure depending on the nature of the delayed event. Economists should figure out whether the utility/dis-utility of time is an absolute value for each and every person, or differing between people depending on other factors such as income. After this is known, business and governments will be able to estimate by how far they should compromise the well being of today for the benefit of the future, which would be knowledge of great aid to those stated above.