Covid Caution and Curry

On March 17, my favorite NBA player, Steph Curry shot a 3-pointer and then, as is his wont, backpedalled. The problem: he was backpedalling off the sideline instead of down the court and there was no barrier to stop him. In a normal game, there would have been some normal barrier to stop his going backward, whether the barrier be other chairs that players were sitting on or something else.

But because of Covid cautions, there are large spaces between chairs and so as Steph went backward, he didn’t stop until his tail bone came in hard contact with some metal stairs. Go to this link and page down to the 38-second video if you want to see what happened. But be prepared to watch something painful.

Why do I highlight this in an economics blog? Because it illustrates in microcosm the failure to make reasonable tradeoffs to deal with Covid-19. We know that Covid-19 is not particularly risky for young people and especially for young people without co-morbidities. NBA players are not a random sample; their physical fitness certainly puts them in the top 1 percent and maybe even in the top 0.1 percent of people their age, let alone of all ages. (And maybe in the top 0.01 percent.) The probability that Steph Curry would get badly sick from Covid, even if he didn’t get the shot, is really low. But the NBA did not make the tradeoffs the way I would have. I’m not challenging their right to do so: it’s their arena, pun not intended. I’m challenging the bad thinking behind their decision.

We often hear from the behavioral economists like Richard Thaler and  behavioral legal scholars like Cass Sunstein about “availability bias.” The idea is that people pay attention to what’s most prominent, not to what’s most likely. Where oh where are Thaler and Sunstein? Shouldn’t this be their moment to shine by pointing out how absurd some of these policies are?

 

(0 COMMENTS)

Read More

The cultural impact of rent control

The Economist has an article discussing the predictable failure of Berlin’s new rent control law:

And indeed a recent study by the German Institute for Economic Research found that rents in the newly regulated market of flats built before 2014 have declined by 11% compared with the still-unregulated market for newer buildings.

But the problem, entirely foreseeable and foreseen, is that the caps have made the city’s housing shortage much worse: the number of classified ads for rentals has fallen by more than half. Tenants, naturally enough, stick to their rent-capped apartments like glue. Landlords use flats for themselves, sell them or simply keep them empty in the hope that the court will nix the new regulation. Meanwhile, rents and sale prices in the still-unregulated part of the market, and in cities close to Berlin, such as Potsdam, have risen far faster than in other big German cities.

In addition, rent control also discourages landlords from properly maintaining their buildings.  In the long run, the quality of rent-controlled buildings will tend to approximate their price.  And this can cause discord between tenants and landlords:

The rent cap has managed to make Berlin’s housing shortage even worse—and poisoned relations between tenants and their landlords.

Socialism is sometimes defined as statism plus egalitarianism.  But these are actually quite different policies, and in my view statism is far worse.  Regulations such as rent controls, minimum wage laws and immigration restrictions tend to pit one person against another, reducing cooperation and making society more cruel in the process.  Egalitarian policies such as progressive taxes can also have negative effects in areas such as work incentives, but they don’t tend to undermine civic virtue in quite as pronounced fashion as statist policies.  I’d rather live in a free market country with progressive taxes than a statist economy with flat taxes.

 

(0 COMMENTS)

Read More

1 2 3 6