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An economic policy on vampires

In academia, mundane, popular economics on June 5, 2009 at 12:54 pm

What should be our economic policy on blood-sucking ghosts of dead homo sapiens, or vampires? In Macroeconomic Policy and the Optimal Destruction of Vampires (1982), Dennis J. Snower claims that vampires’ “most conspicuous macroeconomic impact arises from their detrimental effect on the labor force”.

One section of the paper presents a Model of Human-Vampire Dynamics, stating, “myopic humans, who maximize their welfare at every instant of time, may be expected to destroy a socially suboptimal number of vampires” (pg. 649).

Snower shows a number of analytic equations which include the variable p to represent a vampire’s blood coefficient requirement, S for the quantity of stakes produced, n for the constant human procreation rate, and the constant sigma for the rate of vampire attritition through sunlight.

He presents the theorem, “If the number of stakes per vampire remains below the critical level s^c=(p – sigma) – n, it is impossible for the human race to survive” (pg. 650).

Another section deals with optimal vampire destruction. He claims that, even though the annihilation of all vampires seems favorable, it is not socially optimal to do so. The author presents a set of graphs and equations I fail to understand, but I think the intuition behind the technicality is that the supply of stakes would become infinitely large if all vampires are destroyed (pg. 653).

He says that an optimal condition would be to have a production rate of stakes that reduces the vampire population, but is sufficiently low to allow their regeneration (pg. 653).

In his suggestion for future research, he claims that his work sets the stage for “an investigation whether humans and vampires grope their way toward a Cournot-Nash equilibrium”.

I think his assumption that only stakes are able to slay vampires is too simple to be of practical value. We should also consider the production rates of rosary necklaces, crucifixes, garlics, and scapulars.