The economics of a gun buyback counter-protest

Gun buyback (and competing gun auction)

http://www.seattlepi.com/news/texas/article/Church-and-gun-enthusiasts-compete-for-weapons-4209609.php

Apparently, a church in Seattle organized a gun buy-back where they offered $50+ for people to turn in their guns.

A pro-gun advocate staged a counter-initiative across the street. Apparently, he organized an auction: people in line for the church buy-back could instead have their gun auctioned off to the highest bidder across the street.

Let’s think about that for a moment….

Upon first reading about this, I had several reactions:

1. Opposing a church gun buy-back??? Really?!?

2. The pro-gun people’s counter-initiative to auction-off guns is actually a pretty creative idea in this context. (I don’t approve of their motivation, but I have to give them props for having an interesting idea.)

3. It is actually not immediately obvious to me if the auction actually has the intended effect of reducing guns on the streets.

Let’s explore that third point a little more deeply….

For simplicity, I’ll refer to people giving up their guns as the “sellers,” people purchasing the guns at auction as the “buyers,” the people organizing the auction as “pro-gun” advocates, and the people at the church who organized the auction as the “anti-gun” advocates. Getting guns “off the streets” will refer to a reduction in the total number of guns held by private citizens in the community.

Sellers

By selling at auction as opposed to doing the buy-back, the sellers certainly come out ahead financially–the prices at the auction were apparently quite a bit higher than the reward being given by the church. However, the sellers lose the satisfaction of getting guns off the streets.

The sellers could, though, use their extra profit from selling at auction to fund additional violence-reduction or anti-gun initiatives in the future. They could also hand the money right over to the church to increase the reward they are able to give for turned-in guns.

This couldn’t increase the reward to match the auction cost, but it COULD increase the reward enough such that the (monetary) reward from the church PLUS the satisfaction of getting the guns off of the streets would indeed exceed the subjective benefit of the higher available profit from the auction (in the minds of at least some people standing later in line).

Buyers

People wanting to buy guns can possibly do so more cheaply than buying a new gun in the traditional way. It is not clear how the auction prices relate to prices for comparable guns for sale at stores. It is very possible that, in this situation, the buyers are actually willing to bid up the price above the retail price of a similar gun–they apparently get some value from convincing people to sell to them instead of sell to the church.

Any money the buyers spend on guns in the auction is money that CANNOT be spent to buy guns directly from a store.

What is not clear, however, is whether buying a gun in the auction prevented any of the buyers from making another gun purchase from a store. Was there another (store) gun they were planning to purchase either right now or in the future that they are no longer planning to purchase because they bought a gun at the auction?

This is the key point that determines the net effect of the auction on the number of guns on the streets.

Who wins: pro-gun or anti-gun?

If the buyer had been planning to buy a new gun from the store, but instead buys a gun from the auction, then the auction actually has NO net effect on the number of guns on the streets.

The total number of guns on the streets is the same in both of these scenarios:

  1. The seller gives 1 gun to church (in exchange for a small payment) and the buyer goes to the store and buys 1 gun.
  2. The seller auctions 1 gun to the seller (for some higher payment).

Either way, the seller ends up with one fewer gun and the buyer ends up with one additional gun.

Note that, in the long run, this still applies if the buyer, for example, had been planning to buy a gun a month in the future, but decides to buy one at the auction instead–the net effect is the same.

On the other hand, if a particular buyer’s likelihood of buying another gun at a store does NOT change as a result of buying a gun at the auction, then the number of guns on the streets is not reduced. (I suppose it is also possible that there could be a few people who are MORE likely to buy another gun at the store after buying one at the auction–this would increase the number of guns on the streets even more!)

The more of these people the auction can convince to come and buy guns, the more effective they will be at preventing the church from reducing the number of guns…. recruiting potential buyers from a crowd waiting in line at a gun store is probably has no net benefit to their cause.

Advertisements
This entry was posted in Political thought and tagged , , , , , , , , , . Bookmark the permalink.

2 Responses to The economics of a gun buyback counter-protest

  1. Auth says:

    I’ve long ago noticed this, which is why I’ve motsly ignored E-Bay all along. I would try to get a deal yet I’d constantly see the price of something I wanted go above the lowest online retail price I had found. I see it as a result of two factors:1) Idiot “autoupdate” bidding systems — usually encouraged by the operating web site (in this case, E-Bay, but other auction sites, too). People often don’t configure these with the idea that the price should not go above a reasonable percentage of the price+S&H. They just tell it to keep bidding it up.2) People don’t always learn what the actual lowest online price they can get is. This leads them to bid the price higher than it ought to be because they perceive it as a deal even when it clearly isn’t.I’m sure the whole “I Want to WIN!” crap applies, too — certainly that’s been suggested by the E-Bay commercials, but my own experience with auctions (my grandfather was a founding member of the Fla. Auctioneers Assoc., and performed auctions from the 30s to the late 80s) is that people have more sense than that, generally.I think it’s just sloppiness in learning the value of what it is that they are buying which is the main factor.

    Like

  2. Kaisar says:

    In a mass market you get anealmios of this type with probability almost 1. They arise because of participants who turn it into a negative-sum game. Examples are recreational participants and for those the outcome (profit or loss) is not of importance but they gain value purely from participation, an external benefit which they value more than the difference between the certificate worth and what they pay for.Another example is retail forex traders. Anyone who participates in a zero-sum forex game dominated by professional players and uses huge margin should know that he will lose, sooner than later. Yet, million around the world participate and lose instead of putting their money in a savings account. Some do it because they gain benefits other than monetary profits, adrenaline rise, etc.The explanation may be simple then. Again, in a large participant market, you can always find anealmios of this type due to some participants enjoying external benefits other than making money, in this particular case the thrill of participating in an auction values at about $14.Very good detection of an anomaly though.E. Harokopos

    Like

What do you think? Anything to add? Anything you disagree with? Please add your comments below....

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s