More moral hazards in action

A moral hazard is when isolating people from a risk encourages more risky behavior. The San Francisco Chronicle is reporting an uptick in speeds and minor accidents on the Golden Gate Bridge following the installation of a safety barrier in the median.

The California Highway Patrol announced Thursday that it is stepping up enforcement of speed limits on the Waldo Grade in Marin as well as at the bridge and toll plaza. The reason is that in the days since the more secure movable median barrier was installed, the average speed of drivers on the approach from the north has jumped even though the speed limit was lowered from 55 to 45 miles per hour.

To clarify, that doesn't mean that risks always magically balance out, but changes in human behavior need to be considered when considering new safety precautions.

Hat tip to Alex Tabarrok.
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I get it, those loans are actually subsidies for big corporations

The Kronies are back at it again.



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Bankor makes money out of moral hazard

I know people like to throw around hyperbole such as "This is the greatest thing ever" or "Holy cow, this set the bar on parody." I won't say that, but I am saying this is the greatest thing I've seen this year.

Behold, The Kronies action figures webpage.

Here's a taste:





Kind of makes me want to play some Awesomenauts, only with a copy I bought using someone else's money.
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Weekend reading list

I'm out of town for the weekend so here's a few of the things I've been reading these last few days.

Surly Amy, one of the Skepchick bloggers who I normally respect and had a very enjoyable conversation with at TAM 2011, suggested her critics should not be allowed to wear clothing with messages that offends her at future conferences. I'm sad to hear her make such a contemptible statement and hope she recants.

Another secular blog wrote about why being godless does not automatically mean someone supports abortion and third-wave feminism. I can now take that off my list of long future posts to make.

I took joy in learning that one of my pet theories has not only been studied, but supported by those studies. I've long suggested that legal access to abortion must to some extent encourage additional pregnancies by providing a safety net for unprotected sex. It's a traditional moral hazard Economists Phillip B. Levine and Douglas Staiger have studied this effect both domestically and abroad and describe abortion as a potential "pregnancy insurance." Bonus points for their reminder that this effect does not indicate what the optimal number of abortions should be.

An unrelated study showed that 37.5 percent of social psychologists admitted they would discriminate against hiring a qualified candidate if they knew he or she was a conservative. No one should be shocked.

Finally, Mark J. Perry shared a quotation from Peter Glover about the similarities between Jehovah's Witnesses and Peak Oil true believers when their doomsday prediction turns out to be wrong:

"Why are peak oil-ers like Jehovah’s Witnesses? Answer: When the definitive JW prediction of the ‘Day of Wrath’ failed in 1914, they did what false prophets have done in every generation: shifted the goalposts (to 1975 in the case of JW’s—and wrong again). It’s what false prophets do to save face, enabling them to keep fleecing the inherently gullible. Peak-oilers do likewise. 

Having written their headline-grabbing, money-making blockbusters predicting the imminent collapse of an oil-driven industrial world, peak-oilers like to maintain a ‘fluid’ approach to their predictions. In the case of oil, however, that’s becoming a tougher proposition, as their ignorance of energy, economics and the sheer ingenuity of man is increasingly revealed in the looming global oil boom."

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Moral hazard in Gears of War 3

Horde mode in Gears of War 3 is slated to feature a new hazard - the moral hazard.

In Gears 2, horde mode is an endurance match where waves of enemies swarm a small squad of up to five players. It uses the games multiplayer deathmatch maps as arenas and players “win” after completing 50 waves of increasingly difficult monsters.

If you die in horde mode, you don’t come back until the next wave. A wave fails the moment the last player dies, so staying alive is very important.

But that’s going to change in Gears 3 horde mode. Players will win currency to purchase fortification (to be fair, horde mode was unbeatable without using shields as improvised barriers), traps, weapons and - get ready for it - resurrections for dead teammates.

Now this isn’t going to be the cliche “how dare they make changes in the new version” post that nerdblogs are so prone to include. It’s entirely possible this will be more fun, and I look forward to having randomly-selected bosses every 10 waves instead of a pack of bloodmounts each time.

Instead, I want to make a prediction - more players will die stupid, risky deaths because the permanent buzzkill of an in-game death will be gone.

I tend to only play horde mode with friends, and I imagine that will be become an official policy when horde 2.0 matches feature reckless players looking to rack up more kills kamikazing into packs of enemies, then demanding in squeaky voices that I spend hard-earned currency to bring them back so they can do it all over again.

I theorize that a no-rez policy may make some groups more successful on average, as players will see their risk and reward curves bend, take less chances, and have more money leftover to buy explosive-tipped arrows.
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An economics lesson for skeptics

A year and a half ago I fell off my weekly podcast schedule and got behind on Skeptics Guide to the Universe. Partially because I got behind on jogging and stopped playing World of Warcraft - two activities I would do while I listened - and partially because I started listening to Econtalk and wanted to get caught up on that podcast. I am now within striking distance of being caught up with both of them and mixing them in together has got me thinking a lot about economics within skepticism, and how often they overlap.

Economics is a strange beast to most skeptics - they think it's about money when its really about making the most with limited resources. Most people see a demand curve stretched over a Cartesian coordinate plane and shut down. However, someone like me who's got econ fever doesn't see numbers and percentages - we see people and their wants and needs and how they shape their actions. The degrees of comfort and hardship are what it's all about - not abstract figures.

But most science nerds miss this field. Take for example a Skeptics Guide episode I listened to the other week. There was a long discussion about how ineffective sunscreen can be because people slathered with it spend more time outside because they think it will protect them. The discussion was very interesting to hear, but the panel was unaware that they were discussing a well-known economic concept - the moral hazard, where people insulated from risk will behave in a riskier manner, and in some cases they will be harmed more than if no safety measure was put in place.

Brandying about the term would make it easier to find other examples, such as seat belts, airbags and other automobile safety devices which encourage fast driving. The concept is common enough to inspire the name of econ-country crooner "Merle Hazard."

Here's another important one - opportunity cost. As skeptics we understand that homeopathy is a placebo medicine - it doesn't directly harm the health of the treated, it's merely water, but it keeps people from seeking real medical advice. To put it another way, the opportunity cost of getting homeopathy is all the real treatment one could be getting at the same time.

Economic concepts really belong in a skeptics toolbox, as risk and reward are important issues in skepticism.
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