Taxes Cause Crime?

Apparently, an exorbitant excise taxes on cigarettes in New York has resulted in a spike in cigarette related crime. Though the intention had been to discourage smoking by making them $10 a pack and raise revenue for the cash strapped state, an added element has been the wave of cigarette thefts in convenience stores around the state. Click on the title to get the details.

The Ultimatum Game

Click on the link and you'll access a full lesson using the Ultimatum Game. This is a great activity when you begin teaching Economics on why people make the choices they do and how each person has a unique perspective on the line between greed and self-interest.

RSA Animate – Superfreakonomics

RSA Animate – Superfreakonomics
Clicking on this link will take you to a short video animation on the classic Ultimatum Game. This is an entertaining look at the motives that drive people to make the choices they do. The video and actually playing the game with your students will clarify in their minds the difference between greed and self-interest, and whether there actually is altruism in the world.

Leno And Incentives

1. Comedian Jay Leno takes his show to Michigan to help "not just the autoworkers -- anybody out of work in Detroit."

2. He gives away tickets for free.

3. Someone tries to sell his ticket on ebay.

4. Mr Leno objects.

So I wonder: If a person down on his luck prefers the cash to the opportunity to watch Leno live, why would Leno object? Is it altruism that is really motivating Leno here? Is he really sure that the unemployed person in Detroit would be better off with an evening of laughs than $800 in his pocket? Or does Leno want to play to a live audience of unemployed workers so he will seem altruistic to his television audience?

Absent externalities, markets improve the allocation of resources. Both the buyer and the seller of the ticket must be better off: otherwise they would not engage in the transaction. The only significant negative externality that I can see here falls on Mr Leno himself. In other words, Leno's objection to the ebay sale is an understandable and fundamentally self-interested act in that the sale impedes his abilty to appear selfless.

Did he play Detroit to lift the spirits of the unemployed or to elevate his own image?

Parking In L.A.

This is an article about the traffic problems in Los Angeles that the author believes are the result of a pricing issue. It's a good study in incentives and how a realignment could fix an inefficient market. There are follow-up questions at the end of the article for your students to answer.

Can A Soda Tax Begin To Fight The Epidemic Of Obesity?

This article addresses the balance between personal freedom and taxes as a disincentive. Do we want government legislating our diets? It has worked for cigarettes.

Sometimes It's Rational To Be Irrational

Does it make sense to spend hundreds of dollars on a lawsuit to recover a $25 mistaken charge? It all depends on how you define utility. Sometimes satisfaction comes in ways beyond mere dollars and cents. This article expresses one man's frustration with the airlines and his crusade for justice.

People Respond To Perverse Incentives

The Coyotes Are Raising Their Fees

Since the 1980s, so-called “coyotes” have charged higher and higher fees to smuggle Mexicans across the American’s southwestern border, even in the midst of a recent decline in demand for their services..

Mexican Migration To The U.S. In Decline

The level of border apprehensions of undocumented immigrants seems to be a pretty good indicator of what will happen to the overall American job market six months later.

Here is an assignment that would work with this and the post above on Mexican "Coyotes".

PRICING ISSUES AROUND MEXICAN IMMIGRATION

In the space provided below, use your understanding of marginal analysis and how prices are determined to discuss the flow of Mexican immigrants (legal and illegal) to the U.S. over the last twenty years. In so doing answer the following questions:

1. What has been the incentive over the years for Mexican citizens to find the means to emigrate to the U.S.?
2. What has been the incentive of American employers to hire these workers (legal and illegal)?
3. Why have the emigration trends that were so strong in the 1990s faded recently?
4. What types of businesses and entrepreneurs have benefited from the flow of humans across the border?
5. How have the conditions of the “coyote” business changed recently and what impact have they had on the pricing structure?
6. What should the U.S. do about the millions of illegal immigrants that reside in our country? Use cost/benefit analysis to explain.

Calls To Tax Junk Food

As the battle over health care rages on, more people are focusing on consumer behavior and personal choice as a culprit behind escalating costs. There are many people who believe that if junk food consumption was reduced so would the pressures on our health system. Sin taxes on cigarettes have been a successful tool in discouraging smoking, could taxes on sugary sodas and snacks be a disincentive to consume. Opponents to this idea cite that excise taxes are regressive and would place additional pressures on the finances of low-income citizens. In addition, the difficult economy has led people to seek cheaper food sources which are often times the type of product targeted by this tax. Click on the link above and weigh in on this issue which seems to be gaining momentum.

Assignment that can accompany this reading:

HOW TO RESOLVE THE HEALTH CARE CRISIS?

Washington D.C. is currently wrestling with the age-old problem of how to provide affordable health care to every American without bankrupting our future and burying the issue under a pile of governmental bureaucracy. No one denies the facts that we inadequately deliver the service as we are woefully inefficient with our spending and far too many citizens find the necessity well beyond their reach. There are numerous suggestions on how to deliver health insurance differently but there is remarkably little discussion on how to impact demand. An obesity epidemic plagues our country and everyone understands that excessive weight creates a series of health problems that put debilitating pressures on our health care system. The article suggests a new tax that is gaining in popularity and is modeled after the highly successful “sin” tax on cigarettes.

In an essay, respond to the following points:

• What is the issue presented in this article?
• What are the arguments supporting the implementation of this tax?
• What are the arguments against the implementation of this tax?
• Using evidence from the article, express your view on whether this is a good or bad idea.
• How much of a role should personal responsibility play in the health care debate and what are some other ways in which personal behavior can be altered to reduce excessive demand and expensive procedures?