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Aesop Econ: The Two Dogs

By Tom W. Bell and Glen Whitman

A MAN had two dogs: a Hound, trained to assist him in his sports, and a Housedog, taught to watch the house. When he returned home after a good day?s sport, he always gave the Housedog a large share of his spoil. The Hound, feeling much aggrieved at this, reproached his companion, saying, ?It is very hard to have all this labor, while you, who do not assist in the chase, luxuriate on the fruits of my exertions.? The Housedog replied, ?Do not blame me, my friend, but find fault with the master, who has not taught me to labor, but to depend for subsistence on the labor of others.?

Children are not to be blamed for the faults of their parents.

Aesop takes this for a story about parental duty, but I see a story about specialization according to comparative advantage.

Both hunting and house-watching are valuable activities. Now, it may well be that the Hound could guard the house as well as the Housedog. But that doesn?t mean the Housedog is useless. On the contrary, his presence allows the Hound more time to go hunting, thereby increasing the household?s overall productivity.

Imagine what would happen if the Hound and Housedog split their time between the two activities, perhaps by swapping places at lunch. Suppose the Hound can catch ten game birds per day versus the Housedog?s four, and they are equally good at guarding the house. By splitting their time, they would catch a total of seven birds per day, i.e., five from the Hound?s half-day plus two from the Housedog?s half-day. But by specializing according to their respective comparative advantages (the Hound in hunting, the Housedog in guarding), they get ten birds, for a gain of three. The Housedog enables that gain by guarding the house; does he not also deserve a share of the spoils?

Full post as published by Agoraphilia on September 09, 2011 (boomark / email).