Read This Before You Sign the Ban Guns Petition
- Posted by Jeff Carter
- on December 18th, 2012
Economists think differently. They look at problems through the lens of supply and demand. Some people call them heartless, but they are correct when it comes to solving microeconomic problems a lot. Macro is a different story.
Craig Pirrong has been thinking differently for a long time. He teaches at the University of Houston. I read this post on guns and found myself nodding a lot with it. The first response to the Newtown tragedy is ban everything. That’s an incorrect response if you want to live in a free society. Of course, my cynical view is many people in America don’t want to live in a free society, as long as they are in the rule making class and can stay above the laws.
Perhaps some necessary conditions, or things approaching necessary conditions can be identified. Loners. Obsession with violent video games. These individuals share some characteristics, but only a few people with those characteristics are risks.
Meaning that any attempt to identify those who pose the greatest risk is likely to be subject to very high rates of both false positives and false negatives, even if there was a concerted effort to evaluate the mental health of every gun purchaser. Some of the high risks will go unidentified, and some of the low risks will be falsely considered high risk.
Both types of error are costly, and it is necessary to recognize that there is a trade-off. If you try to reduce the risk of a false negative (a real threat that goes undetected) you increase the likelihood of false positives (those who pose no threat are prevented from obtaining a firearm, or even worse, are institutionalized or medicated against their will).
Making the best trade off depends on the costs of the two types of errors. Those advocating far more restrictive gun laws believe that the cost of a false negative is so high that we should accept a very high rate of false positives. That is, that there is little cost of denying anyone who poses even the slightest risk from obtaining a weapon: what does anyone need a gun for, anyways? And especially: what does anyone need a semi-automatic weapon for?
If you really believe that there is no benefits to owning a gun, but only costs, you would conclude that gun bans are justified: the cost of a false positive is zero, and there is no need even to attempt trying to identify who is a risk or not. Psychological screening would be a waste. If you believe the cost of a false positive is zero, any effort to try to identify is a risk is unjustified.
Read it. Read it all. Think. Don’t listen to politicians from either side. They just want money, votes and power.
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Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)