Stimulus from an economic perspective

Stimulus from an economic perspective

The greatest part of economics boils down to a simple sentence: (people respond to stimulus), and what is less is a comment on this sentence.

((People respond to stimulus), it sounds an acceptable phrase and almost everyone will recognize its validity as a general principle. What sets the world of economics apart is its insistence on taking this principle seriously all the time.

Economists' belief in the strong impact of stimulus offers them a lot, and they rely on it as a guide in unknown areas. In 1965, Ralph Nader published a book that draws the reader's attention to several things in cars design that increase the risk of driving beyond the acceptable limit, and the federal government responded quickly by passing several legislation to achieve Safe driving, including requiring car manufacturers to install seat belts, use of moving steering wheels, dual brake system and reinforced windshield.

Before these laws came into effect, any economist could predict one of the consequences, namely, an increase in the number of car accidents, because the fear of dying in a car accident represents a strong incentive for safe driving, while a seat belt leader is not as afraid of this danger. Because people respond to motivation, their leadership becomes less cautious and the number of accidents increases.

The principle applied here is the same principle that predicted the disappearance of gasoline queues, when the price of gasoline falls, people are increasingly attracted to it, as well as when the price of a car accident falls (i.e. the possibilities Death or the expected value of medical bills), the incidence of car accidents increases.

After this digression on the challenges of experimental research, I return to the underlying theme: the power of stimulus. The nature of the world of economics explains this power, do energy-saving car reduce our consumption of gasoline? Not necessarily, these car reduce the price of driving, so people choose to drive too much.

In 1983, Professor Edward Leimer of the University of California, Los Angeles, published a funny article entitled "Let's keep the passions from the record economy", in which he warned that the researcher's prejudices could affect strongly in his findings. Lemerre used the death penalty as an example.

Stimulus is important, and the literature of economics contains tens of thousands of empirical studies that reinforce this view, and there is not a single study that makes us refute it in a convincing way, and economists always They experience this saying (while they may secretly wish to be the first to prove it incorrect to make themselves famous), and always expand their application.

While we were previously only thinking about the buyer's response to meat prices, we are now thinking about the driver's response to the seat belt.

Economists have studied the foundations on which people choose a life partner, or determine the size of the family. Some researchers have taken so much interest in this trend that (The Journal of Politics Economy) published a satirical article on the economics of brushing teeth, and estimated this article that people spend half hours fully waking up brushing their teeth, and the author of this article boasted that "No model society can reach such exact results), with all these changes, there is one thing that is constant: the power of stimulation.