Friday, September 30, 2011

in which n. gregory mankiw demonstrates the irrelevance of his ten principles

This post written earlier today is said by Mankiw to have demonstrated the relevance of his Principle 4, "People Respond to Incentives," but it's very possible students will not see his main point. From the (Wall Street Journal) article:
Top officials, in a bid to meet goals to win promotions or thousands of dollars in bonuses, directed many employees to refrain from issuing decisions on cases until next week, according to judges and union officials. This likely would delay benefits paid to thousands of Americans with pending applications, many of whom are financially needy and have waited for a government decision for more than a year.
So Mankiw decided to pick on government officials who responded to a blip in the government calendar by suggesting to their employees that they work less. While this does indeed demonstrate how officials responded to (perverse) incentives (hm... how does "People Respond to Perverse Incentives" sound as a principle?), some students may react by saying, "that's not the duty of government employees! They should be fulfilling their public duty!"

Yes indeed, and guess what: "citizens usually act so as to fulfill their public duty" is not one of Mankiw's ten principles. So I guess Mankiw's 10 principles don't apply to government workers....

...or to families (who purposely do not respond to incentives when deciding whether to provide you with a home or food on the table) either...

I guess the 10 principles aren't really principles, are they? Either that, or whatever world Mankiw is envisioning in his textbook is a cold and barren wasteland.

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