And, apparently hasn’t heard of people who believe in incentives. I’ve read this a couple of times and maybe I am still missing something. Is he saying what it sounds like he is saying?
In discussing a Financial Times column proposing an increase in the gas tax, he writes.
Let me draw an amusing analogy. Imagine you wanted to tax cigarettes higher, but were worried how smokers would react. You assume all of them smoke a pack a day, which amounts to 365 packs per year. So if you raise the tax on that by $2 a pack, and give them a rebate for $730, would that make them smoke less?
This idea seems a little bit out there, for smokers or drivers. I guess the idea that the government would be paying its citizens to not do something just seems a little too hard to swallow.
. . . Any cost savings incurred from not driving after the tax would also have been a cost savings that they would have incurred before. Now that savings is greater, but they didn’t care about it then, why would they care about it now? I just think people care more about convenience. [emphasis mine]
Now, just to be clear. What I find shocking here is not that Indiviglio doesn’t believe that people will reduce their consumption of gasoline in response to a modest increase in the relative price of gasoline. Hey, estimates of the elasticity of gasoline vary.
Nor, is it that he seems to believe proponents of gas taxes are fools. Hey, everyone is entitled to an opinion.
However, I’ve read his post a couple of times and it really sounds like he’s shocked that anyone would believe in the basic idea that relative prices change behavior.
Has read anything that his editor has ever written?

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Tuesday ~ July 7th, 2009 at 11:20 pm
teageegeepea
It was indeed astoundingly bad. He can’t comprehend a revenue-neutral Pigouvian tax because he doesn’t understand how changes on the margin affect behavior. There’s no consideration as to what other possible uses people might have for their rebate when competing wants become relatively cheaper to satisfy. Has he heard of opportunity costs? Or the Laffer Curve and the old debates about marginal tax rates?
I guess the idea that the government would be paying its citizens to not do something just seems a little too hard to swallow.
Hadn’t he heard North Carolina is paying teen girls not to get pregnant?
Now that savings is greater, but they didn’t care about it then, why would they care about it now?
A genius idea occurs to me. McDonalds should double the price of its burgers and thereby more than double its profit margin. Sure, that would be a greater cost, but people were willing to put up with costs before. The idiots at Burger King, who were unable to come up with this idea, will be driven out of business in no time.
I think that people can be quite myopic (which is why the H.O.P.E program Mark Kleiman writes about deviates from what theoretical law & economics would say is the efficient punishment), but they’re not dumb enough that they don’t respond to incentives. Casey Mulligan has repeatedly featured stories of how people have rationally taken advantage of actions the government has taken in response to the recession.
He makes one good point about political pressure behind efforts to reduce energy consumption, but in his comments about recent government intervention in the auto industry he hilariously (at least if you’re sense of humor is like mine) fails to take into account regulatory capture. Woodrow Wilson knew about it, Gabriel Kolko knew about it, it’s nothing novel.
I was unaware that McMegan was editor of the Business channel. Thought she was just a writer. I’m a bit confused by how many “contributing editors” and “associate editors” many online publications have.
If it makes Indiviglio feel any better, I recently had to explain crowding out to an economist. It was admittedly a heterodox economist (at least I think so), but I’ve never even taken a college course in the subject.
Wednesday ~ July 22nd, 2009 at 8:16 pm
stinknugget
The guy is an idiot. I am not sure why he’s allowed to write a business column or opinion piece or whatever you want to call what he’s doing.
http://business.theatlantic.com/2009/07/the_unemployed_still_have_health_insurance.php
Saturday ~ August 6th, 2011 at 8:11 am
Jenna Jolano
Just watching you on CSpan — you are impossible to understand because you swallow your words…. very annoying… suggest speech lessons..