TANSTAAFL
Encyclopedia : T : TA : TAN : TANSTAAFL
Details
TANSTAAFL means that a person or a society cannot get something for nothing. Even if something appears to be free, there is always a catch. You may get free food at a bar during "happy hour", but the bar-owner may get you to pay indirectly through higher priced drinks, or he gets some other benefit (such as attracting new customers, who will return on other occasions and pay for their food).
TANSTAAFL may not always hold at the individual level, depending on the interpretation of the phrase. For example, some may argue that mothers often provide their children with lunch at no cost. Others respond that even mothers are looking for something in return for their generosity.
Nevertheless, it seems that if one individual is getting something at no cost, somebody else ends up paying for it. If there appears to be no direct cost to any single individual, there is a social cost. Similarly, someone can benefit for "free" from an externality or from a public good, but someone has to pay the cost of producing these benefits.
The idea that there is no free lunch at the societal level applies only when all resources are being used completely and appropriately, i.e., when economic efficiency prevails. But when inefficiency exists, one can get a "free lunch". For example, microeconomics argues that the production of pollution may be inefficient because the polluters are not forced to pay for the damage they cause. A tax or other program that forces the polluter to internalize this externality would improve efficiency, increasing social welfare. In practice, however, others who are benefiting from the inefficiency will use their political or social power to prevent this tax. That is, the polluter may use lobbying and campaign contributions to preserve his or her ability to freely pollute.
To a scientist, TANSTAAFL means that the system is ultimately closed — there's no magic source of matter, energy, light, or indeed lunch, that cannot be eventually exhausted. Therefore the TANSTAAFL argument may also be applied to natural physical processes. (See Thermodynamics.)
In mathematical finance, the term is also used as an informal synonym for the principle of no-arbitrage. This principle states that a combination of securities that has the same cash flows as another security must have the same net price.
TANSTAAFL is sometimes used as a response to claims of the virtues of free software. Free-software supporters often counter that the use of the term "free" in this context is primarily a reference to a lack of constraint rather than a lack of cost.
TANSTAAFL is the name of the student-run snack bar in the Pierce residential student dorm of the University of Chicago. The name references the fact that the use of the term in economics was popularized by Milton Friedman, the Nobel-Prize-winning former University of Chicago professor.
Citations
- "Oh, 'tanstaafl'. Means 'There ain't no such thing as a free lunch.' And isn't," I added, pointing to a FREE LUNCH sign across room, "or these drinks would cost half as much. Was reminding her that anything free costs twice as much in the long run or turns out worthless."
- * Manuel in The Moon Is a Harsh Mistress (1966), chapter 11, p. 162, by Robert A. Heinlein Heinlein, Robert A. The Moon Is a Harsh Mistress (1966). 1st Orb edition, 1997, 382 pp. New York: Tom Doherty Associates. ISBN 0-312-86355-1.
- "There's no such thing as a free lunch."
- * popularized by economist Milton Friedman;
- * Contrary to rumor, New York Mayor Fiorello LaGuardia did not say it in Latin in 1934; what he really said, in Italian, was "No more free lunch" (current references: [linguistlist] and a [speech] by George H. W. Bush; more references needed).
- The book TANSTAAFL, the economic strategy for environmental crisis, by Edwin G. Dolan (Holt, Rinehart and Winston, 1971, ISBN 0030863155) may be the first published use of the term in the economics literature.
See also
References
From Wikipedia, the Free Encyclopedia. Original article here. Support Wikipedia by contributing or donating.
All text is available under the terms of the GNU Free Documentation License See Wikipedia Copyrights for details.