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Suppose you are a policymaker with clearly specified goals. You determine, with the input of your constituents, that we desire to improve the discipline of Americans, and to have them do a better job of showing up on time. How do you proceed with doing something about this problem?

Aside from the obvious start of asking whether that’s a worthy goal and what benefits it would bring, one might envision compiling a list of things you can do to improve timeliness (again, assuming that individuals on their own are not going to make changes). That list might include tax incentives for workers who regularly show up on time, advertising campaigns to improve timeliness, the attempt to inculcate social norms that make tardiness unacceptable, better education at all levels, parents taking a harder look at how they behave and raise their kids, harsh penalties for regular tardiness, and many more.

If information about the costs of each of these alternatives were available, and information regarding their likely effectiveness, you would probably pick the policy with the biggest bang for the buck. And if you had any scruples, you’d probably pick the one that most respects individual sovereignty, and takes advantage of the other social institutions we have at our disposal to suppress our sometimes lazy instincts.

You might even add to the list of options: force all young men and women between the ages of 16-20 to serve at least two years in the military. What? Does that sound a bit heavy-handed? It ought to. Maybe military service has as a benefit that those who do it end up being better disciplined. But if the goal of policymakers and their constituents is to get people to show up for work on time where does, “Mandatory Military Service” rank on the list of options. It would be very difficult to imagine it being anywhere near the top in terms of cost effectiveness. Once you throw in a moral foundation — that people find it objectionable to be enslaved, and enslaved to an institution that has violence as its reason for existence — it would be highly implausible that drafting all young Americans is a good solution for a tardiness problem. Perhaps it is.

Whether my supposition above is wrong is not the point here. The point is that an extremely useful way of making decisions is not to reason backward from already chosen policies and use potential benefits as a justification for having made decisions. Rather, the way to make decisions is to ask, “what is the most effective way to achieve this objective?” If your objective is to make people live longer, it might be that improving education or providing more exercise opportunities is the best way to do it. It might even be that giving people more access to doctors makes them live less (remember, that for a time in the 19th century, visiting the doctor increased your chances of dying, especially if you were an expecting mother). Just because visiting a doctor can make you healthier does not mean that this is the best way to improve health. Similarly, just because one desirable outcome of military service is improved discipline, does not mean that putting everyone in the army is even remotely a good way to promote discipline for the entire country.

The reason to focus on the question in this way is because whenever one points out that windows are being smashed, supporters of the program invoke whatever benefits came from the program as justification for doing it. Going to the moon wasted hundreds of millions of dollars of resources that could not be dedicated to better health, better environmental conditions or better education. But … but … but … opponents shout … we got Tang! Same thing for military service. We spend hundreds upon hundreds of billions of dollars on defense (maybe rightly, maybe not). And one side benefit is perhaps that soldiers come out more disciplined (although I just read a paper showing that veterans commit more crime than non-veterans, ceteris paribus), but it is totally incorrect to say that the discipline is a reason to support a draft.

One may fruitfully apply this method of analysis to any economic problem. In perhaps no other area is it more needed than in environmental policy. We will turn our attention to that question in the near future. Have a great weekend! Just because by driving drunk you got home faster than if you took a cab, it does not mean that it was a wise decision.

One Response to “How to Be a Good Economist”

  1. Speedmaster says:

    >> “The reason to focus on the question in this way is because whenever one points out that windows are being smashed, supporters of the program invoke whatever benefits came from the program as justification for doing it. Going to the moon wasted hundreds of millions of dollars of resources that could not be dedicated to better health, better environmental conditions or better
    >> education. But … but … but … opponents shout … we got Tang!”

    Nailed it! Sooooo often I hear people make their case for or against something, but that’s always easy to do if you’re willing to only look at one side of the ledger.

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