Tuesday, July 26, 2005

The Economics of Sinful Habits

Professor Mike Rappaport at The Right Coast suggests:
There is in fact a surefire way to get teenagers to consume less beer, tobacco and drugs, according to one study after another: raise the cost, in terms of either dollars or potential punishment.
Punishment - maybe. But, merely increasing the cost of products in dollar terms simply shifts production and exchange onto the black market - or, as we free-marketeers refer to it, "The Real Market." Artificial price increases, in the long run, only tend to distort the market while having no lasting effect on demand; and in the short-term, increases the chance that some dude named Soprano will get in the mix.

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