Author: Lori Alden
Audience: High school
and college economics students
Time required: About
10 minutes of classroom discussion per example
Standards: Incentives, supply and demand
sometimes have consequences that lawmakers or the public either ignored or didn't anticipate. This exercise asks
students to use economic principles to identify the unintended
consequences of several policies.
Three strikes laws
states have enacted laws requiring judges to impose tough
sentences for a third felony conviction. The result?
An increase in the murder rate. Explain.
article, two University of Alabama criminologists found that
the murder rate went up in areas that had enacted "three
strikes" laws. A robber with two strikes who's
committing a robbery, for example, will get roughly the same
punishment whether or not the victim is killed. The
criminologists believe that felons facing a third conviction
have a stronger incentive under three strikes laws to kill
anyone who can serve as a potential witness against
Seat belt laws
no question that wearing seat belts helps protect drivers and
passengers. But seat belts have led to an increase in
pedestrian and cyclist deaths. Why?
Several economists have argued that wearing seat belt makes
drivers feel more secure, so they drive more
article reviews some research about the unintended
consequences of seat belt laws.
Banning DDT in Less Developed Countries
In the early 1970s, the Audubon Society and the Natural
Resources Defense Council, spurred on by Rachel Carson's book
Silent Spring, successfully pressed the US government to stop
foreign aid to any country using the insecticide DDT, arguing that
the insecticide caused cancer and harmed wildlife. The
government relented, and many third world countries stopped using
DDT. But banning this insecticide almost certainly led to
more, not fewer, deaths. Why?
Solution: According to this
article, the incidence of malaria increased dramatically in
countries that had stopped using DDT, since the insecticide had been
previously very effective in killing the mosquitoes that carry
the disease. This
article claims that tens of millions have died over the past
few decades because of the DDT ban, which remains in
place. What's worse, this
paper argues that the ban was based on dubious evidence.
4. Don't talk to strangers
Parents and teachers often instruct children not to talk to
strangers. Some have suggested, though, that the
"stranger danger" campaign may be making children less
Solution: Talking to strangers can be a good
survival strategy for children who are lost or in danger.
cub scout, for example, remained lost in the woods for four
days because he hid from search and rescue volunteers out of
fear they would steal him. This
article argues that warning children about strangers doesn't
protect them much anyway, since it's more likely that they'll be
abducted by someone they already know. This
article claims that discouraging interaction with strangers inhibits social
development, making it more difficult for children to spot
dangerous people or situations.
5. FDA drug approvals
The Food and Drug Administration (FDA) is charged with
approving drugs and medical devices before they can be marketed to
the public. In 2004, the FDA was criticized for having been
too quick to approve the arthritis drug Vioxx, which was later
discovered to cause heart attacks. Some say the FDA should
spend more time testing drugs before it gives them its stamp of
approval. But doing so might cause more, not fewer,
Solution: One of the opportunity costs of the FDA drug approval
process is that people may die while waiting for the drug.
article, for example, claims that 3,000 people with advanced
kidney disease could have been saved by the drug Interleukin-2
during the three years it took the FDA to approve
6. Reduced logging in the National Forests
To protect the threatened northern spotted owl, Judge William
Dwyer issued an injunction in 1991 that greatly reduced logging on
the national forests in the Pacific Northwest. Yet this
policy may have resulted in more, not fewer, acres of forest being
harvested worldwide. Why?
article (written by me) argues that timberlands in the
Pacific Northwest are among the most productive in the
world. When Judge Dwyer ordered a decrease in logging
there, the supply of timber worldwide decreased. That
raised the price, inducing producers elsewhere to increase
logging. Some of the forests that have taken up the slack
are less productive, requiring that more acres be cut in order
to produce the same amount of lumber. See also this
article by Gregg Easterbrook.
1992 and 2000, the average state cigarette tax rose by 64% but
gross state tax revenue from cigarette taxes only rose 35%.
Part of the decline in revenue was due to a decrease in cigarette
smoking, which was one of the intended consequences of the
tax increase. But state legislatures had expected to make
much more revenue from the cigarette taxes. What went wrong?
to this article by
Bruce Bartlett, smugglers have a stronger incentive now to buy
cigarettes in low-tax states and sell them in high-tax
states. Organized crime and terrorists are increasingly
involved in this business.
2002, President Bush imposed a tariff on steel imports in order to
protect the steel industry from foreign competition. He
ended the tariff in 2003, partly because of evidence that the tariff
was costing more American jobs than it was saving. Explain
how that could happen.
The tariff raised the price of steel in America, making it more
difficult for our domestic steel-consuming industries (like the
auto industry) to compete with foreign producers. This
report predicted that if the tariff had remained in place, 8
steel-using jobs would have been lost for every steel-producing
Vegetarians and animal rights
professor and animal rights activist Tom Regan argues that there's
an ethical reason for becoming a vegetarian or vegan: it
does the least harm to animals. But there's evidence that
vegetarianism has led to an increase in animal deaths. Why?
According to Steven
Davis of Oregon State, many small animals are killed when
tractors and other farm equipment go through fields. Davis believes that
fewer animals would be killed if vegetarians included beef and
dairy products in their diets.
Saving horses from slaughter
Thanks to the efforts of animal rights
activists, horse slaughter is now banned in
Texas and Illinois, home to the last three
horse slaughterhouses in the United States.
Some argue that this was bad news for
this New York Times article, many of the horses that would
have been slaughtered in those states are now being transported
to Canada and Mexico. The animals now must make a grueling
journey before they're slaughtered, and the methods of slaughter
are often less humane than those formerly practiced in the
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