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Category: Policy

Spring Break Classic Posts: Why “Gas Strikes” Make Absolutely No Sense

(It’s Spring Break here this week, so I am taking the week off from blogging to work to revise a few articles and begin working on new research projects. As a result, I am re-posting old posts that some new readers might have missed but which were very popular the first time I posted them. The following was initially posted on March 9, 2011.)

I just saw this on Facebook:

“OKAY! WE HAVE HAD ENOUGH!!! Gas Strike March 10th! This worked once before…let’s try it again. On March 10 if everyone does not buy gas for one day, it will hurt the oil companies. It’s time we stood up to them. We CAN have a voice…REMEMBER “MARCH” 10th DO NOT BUY GAS! Please repost this to as many people as you can…it is urgent that this spreads like wildfire!

PS: Try not to fill up the day before or after so that this day will have an impact on the companies

Thanks”

Annoying statements in ALL CAPS and questionable punctuation (or lack thereof) aside, I just wanted to state for the record that this is a really, really stupid idea.

Free Download of Calestous Juma’s “The New Harvest: Agricultural Innovation in Africa”

Calestous Juma’s most recent book The New Harvest: Agricultural Innovation in Africa is now available for free from the Kennedy School of Government website. Here is an overview of the book:

African agriculture is currently at a crossroads, at which persistent food shortages are compounded by threats from climate change. But, as this book argues, Africa faces three major opportunities that can transform its agriculture into a force for economic growth: advances in science and technology; the creation of regional markets; and the emergence of a new crop of entrepreneurial leaders dedicated to the continent’s economic improvement.

Filled with case studies from within Africa and success stories from developing nations around the world, The New Harvest outlines the policies and institutional changes necessary to promote agricultural innovation across the African continent. Incorporating research from academia, government, civil society, and private industry, the book suggests multiple ways that individual African countries can work together at the regional level to develop local knowledge and resources, harness technological innovation, encourage entrepreneurship, increase agricultural output, create markets, and improve infrastructure.

If you are like me and prefer to have the entire book in a single .pdf file, scroll down on the page for a link to the complete text of the book.

Calestous is also a prolific tweeter. You can follow him on Twitter by clicking here.

Speeding Fines That Vary With Income: Absolute vs. Relative Risk Aversion and Public Policy

Where there are posted restrictions, most European countries take speeding very seriously and levy hefty fines. The latest case in point is a 37 year-old Swedish man who was clocked at 180 miles per hour on a motorway between Bern and Lausanne in Switzerland.

Unfortunately for this driver of a new Mercedes-Benz SLS AMG, Switzerland doesn’t have fixed fines for speeding. Instead they use a formula similar to that in Finland where the fine is calculated based on the vehicle’s speed and the driver’s income. Back in 2002, Nokia executive Anssi Vanjoki had to pay a fine of $103,600 for going 47 mph in a 31 mph zone.

A student in my Law, Economics, and Organization seminar mentioned the article quoted above last week when I was explaining the difference between the twin concepts of absolute and relative risk aversion.

In economics, risk is not so much about what most people call risk as it is about gambles over income. In other words, risk preferences are defined over income or wealth. See here for an excellent discussion starting on page 64 in chapter 6 of David Friedman’s Law’s Order. So why would Switzerland and Finland have speeding fines that vary with income?