Billy Foster, PhD

Billy Foster

Clinical Assistant Professor of Economics at

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Ask a physicist how long it would take a bowling ball to land if you dropped it from the roof of your house. He will happily assume that your house is located in a vacuum, and then proceed to calculate the right answer. Ask an engineer to predict the path of a billiard ball after it is struck at a certain angle. He will assume that there is no such thing as friction, and the accuracy of his prediction will give him no cause for regret. Ask an economist to predict the effects of a rise in the gasoline tax. He will assume that all people are rational and give you a pretty accurate response. — Steven E. Landsburg, The Armchair Economist (1993)

Posts Tagged ‘negative externalities’

“My boss can’t find anything without me.”

“He’s a slob–his mother constantly cleaned up after him.”

“I can’t spell–I’ve got spell-check.”

Simply put, economics is nothing more than the study of decision making. Whether we’re car shopping, eating out, or contemplating stealing, part of us asks “What will this really cost me?”  This implies that weaker punishments lead to more crime, but what about incentives involved in everyday bad behavior?

Night DriveHousekeepers reduce the cost of untidiness; so those who use these services are messier than they would be without them. Similarly, spell-check reduces the cost of misspellings; while administrative assistants maintain the incentive for the big boss to remain unorganized. The stakes can get larger, however.

In The Armchair Economist, Steven Landsburg suggests that safety regulations (seatbelt laws, mandatory air bags, etc.) increase the number of accidents. He argues that the cost of driving carelessly is lowered in terms of expected injury or death. Likewise, competent nurses diminish the costs of doctors making mistakes, leading to more errors. Birth control reduces the cost of unprotected sex, thereby increasing its frequency.

What about those who never had the incentive to learn how to be good drivers, competent doctors, or responsible sexual partners? Much like spell-check users on a handwritten exam, when these individuals leave their coddled environment, they cannot simply switch to demonstrating good behavior because they never learned good habits in the first place. Once they lose their safety nets, the potential damage they can inflict greatly increases.