Incentives matter

Learning Objectives: Understand and apply the “Economic Way of Thinking”.
Lecture handout: Incentives matter*

Conventional wisdom believes that seatbelts save lives. But economic wisdom asks how they affect the benefits and costs of being in an accident. The lecture content on seatbelts comes from a great book called “Risk“, by UCL’s John Adams. And here is the New York Times article claiming that “Bicycle Helmets Put You At Risk”.

We learnt that incentives matter. This podcast provides a thought provoking example:

The lecture looks at how coordination might take place without centralised control. This clip of San Francisco in 1906 demonstrates a spontaneous order:

 

And here’s a video on the concept of “shared space” and what happens when traffic lights are removed:

 

(Based on this tweet).


These resources form part of my Managerial Economics course map. You can watch the full YouTube playlist here. This page ties into Chapter 1 of ‘Economics: A Complete Guide for Business‘.
Share and be social