The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. – F.A. Hayek
Posted in Institutions, incentives on Jan 14th, 2012
I just learned that the large blue books that I use to give essay examinations in cost $1.00 each! They’re 12 pages (6 sheets) of lined 8.5″ by 11″ paper. If you asked me what I thought they cost I probably would have said 10 cents each. I use somewhere between 300 and 500 of [...]
Posted in Paternalism, Regulation, incentives on Dec 6th, 2011
One of my favorite places in western NY happens to be right by my home – Mendon Ponds Park. I especially love to cross-country ski, snowshoe, and ice-skate there in the winter. In any case, it is becoming increasingly difficult to find places to sled in Monroe County anymore. This is rather startling since the [...]
Posted in incentives on Aug 13th, 2011
Today is the 3rd Anniversary of my start date here at the U of R (i.e. I am entering my 4th year here). The men’s room here on our floor has 4 sinks and two soap dispenser. The sinks are arrayed in a horizontally line from 1 to 4. The first dispenser sits above and [...]
Posted in incentives on Aug 7th, 2011
The Endangered Species Act is infamous for the perverse incentives built into it (these come from the fact that it imposes costs on a very small minority of people for something that is presumably a national or global public good, but this is not surprising in our modern thugocracy). But here is another perverse incentive [...]
Posted in Politics, incentives on Apr 11th, 2011
In 1910, it is estimated that there were 13 million Americans in Mutual Aid Societies (things like Life Insurance societies, fraternal organizations, etc.). That year, the US census estimated that there were 92 million Americans. Therefore about 14% of Americans were members of these voluntary aid societies. This was at a time when America was [...]
Posted in Education, You Can't Have it Both Ways, incentives on Mar 30th, 2011
They both act irresponsibly with other people’s money. I am sure this is playing out in many states right now as it is here in my home state of New York. Our state is “suffering” through a projected $10 billion deficit. Last year, the state estimates that it raised $134.6 billion in revenue. The state [...]
Posted in incentives on Mar 25th, 2011
I am increasingly convinced that this odd idea has merit. It might be the case that the best hope for developing “clean” and affordable energy technologies would be lower fossil fuels prices. You heard me right. Lower.
Posted in You Can't Have it Both Ways, incentives on Mar 12th, 2011
Some narratives of the recent financial crisis include criticizing the Ratings Agencies for being very generous in their awarding of AA and AAA ratings to (what turned out to be) risky mortgage securities. One reason for this, it is asserted, is that the agencies were paid by the bond issuers rather than the bond investors. [...]
Posted in incentives on Feb 23rd, 2011
A few weeks ago in class I was discussing what I refer to the, “you might as well do something worse” (i.e. the marginal cost equals zero) problem in deterrence. I am sure there is a fancy real name for it, but the simple idea is this: whenever you have a maximum penalty for some [...]
Posted in Environment, incentives on Dec 10th, 2010
But rather a perfectly sighted man putting on blinders. The following e-mail exchange could just as well have happened in your hometown. I encourage you to do the same. Here is a simple conversation I had with the City of Rochester regarding its curbside recycling programs. It’s not like the city does not provide lots [...]
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