Auto companies have made great strides in improving engine efficiency in recent decades. But those improvements haven’t done much to improve the fuel economy of America’s passenger car fleet. Instead, consumers have “spent” most of those efficiency improvements on bigger, faster cars. MIT economist Christopher Knittel has carefully quantified these tradeoffs in a recent paper in the American Economic [...]
Posts Tagged ‘Incentives’
How Do Consumers Spend Engine Efficiency Advances? On Bigger, Faster Cars
Posted in Energy, Microeconomics, tagged Auto, Energy, Gasoline, Incentives, Offsetting Behavior on January 5, 2012 | 4 Comments »
You Can’t Manage What You Don’t Measure Correctly, NYC Crime Edition
Posted in Data, Microeconomics, tagged Crime, Incentives, Measurement, New York City on January 2, 2012 | 2 Comments »
You can’t manage what you don’t measure. That’s good advice, as far as it goes. But it has a dark underside: managing the measurement rather than actual outcomes. Over at the New York Times, Al Baker and Joseph Goldstein recount a troubling example. To keep reported crime rates low, New York’s Finest may be under [...]
The Invisible Hand is Made of Delicious Invisible Meat
Posted in Life, Microeconomics, tagged Humor, Incentives, Tragedy of the Commons, TripAdvisor on September 30, 2011 | Leave a Comment »
The incomparable xkcd on incentives, morals, and TripAdvisor: Here’s another favorite.
Moral Hazard, Pakistan Edition
Posted in Budget, International, tagged Incentives, International, Moral Hazard, Pakistan on May 17, 2011 | 2 Comments »
The United States can’t pursue al Qaeda alone. We need help from other nations. To encourage nations to provide that help, the U.S. created the Coalition Support Fund to reimburse coalition partners for the costs they incur fighting terrorism. As Adam Entous reports in the WSJ, the prospect for such “reimbursement” creates an obvious incentive: our partners may exaggerate how [...]
Incentives and Property Rights, Dead Raccoon Edition
Posted in Life, Nature, tagged Incentives, Life, Nature, Property Rights on May 9, 2011 | 9 Comments »
It seems like only yesterday that I met Rocky. Probably because it was yesterday. Our smallest cat Caramel was staring intently upward. Following his gaze, I spied Rocky tucked between two branches high in the silver maple near our deck. Rocky didn’t look well. Raccoons aren’t usually out and about at 3:00 on a sunny [...]
How Do Entrepreneurs Operate in Afghanistan?
Posted in International, tagged Afghanistan, Entrepreneurship, Incentives, International, Transaction Cost Economics on November 26, 2010 | 4 Comments »
“Uncertainty, not insecurity, is the fundamental problem for business” in Afghanistan according to a new study by Jake Cusack and Erik Malmstrom at the Center for a New American Security (ht: Zach W.). In “Afghanistan’s Willing Entrepreneurs: Supporting Private-Sector Growth in the Afghan Economy,” they report: In national surveys, insecurity ranks at the top of [...]
Advice to Nasdaq and the NYSE: Cancel Only 90% of the “Erroneous” Trades
Posted in Finance, Microeconomics, Uncategorized, tagged Finance, Incentives on May 9, 2010 | 4 Comments »
Nasdaq and the New York Stock Exchange have both announced that they will cancel many trades made during the temporary market meltdown between 2:40 and 3:00 last Thursday afternoon (see, for example, this story from Reuters). These “erroneous” trades include any that were executed at a price more than 60% away from their last trade [...]
The Warped Economics of Carry-On Luggage
Posted in Uncategorized, tagged Airlines, Incentives, Tragedy of the Commons on October 23, 2009 | 14 Comments »
I just got home from a quick trip to Denver, where I spoke at a Concord Coalition event on our nation’s dire fiscal outlook. That’s a big, complex problem, but today I’d like to share some thoughts on an even more vexing problem: the warped economics of carry-on luggage. As you probably know, most major [...]
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