ECN 340 Lecture Notes - Lecture 4: Minnie Mouse, Sexually Transmitted Infection, Teenage Pregnancy
Lecture 4: Chapter 1: The Logic of Life: The Economic Way of Sex, Crime, and Minnie Mouse
The Economics of Sex
• Paets, ae ouseles. With these ods Opah Wife itodued Aeia to
the shokig es of the teeage oal se aze
• A study, conducted by researchers at Johns Hopkins Bayview Medical Center in
Baltimore, found that between 1994 and 2004, young people between ages twelve and
twenty-fou eae oe tha tie as likel to epot that the’d eetl had oal se
• Question: Are kids really becoming more depraved – or are they just being smart?
• Economists claim that: Rational people respond to trade-offs and to incentives (and
disincentives). When the (marginal) costs or (marginal) benefits of a course of action
change, people change their behaviour as they max satisfaction
• Rational people think – not always consciously – about the future as well as the present
as they try to anticipate likely consequences of their actions in an uncertain world
• With this definition, the kids must be responding to incentives: the potential cost of oral
se ust e loe tha egula se, thus the sustitute, as the ould sith to
Pepsi if the price of Coca Cola rises
The Importance of the Rationality Postulate
• The assumption that people are rational leads us to some clear and testable theories
about the way the world works. It can help us to strip layers of complexity and guide us
toward possible solutions
• Example: If crime rates are high in some areas, then rational choice theory says that
crime must pay in those areas: We need to look for a way of raising the cost or lowering
the benefit of committing crime
• We do make complex calculations of costs and benefits when we act rationally, but we
often do it unconsciously
The Economics of Sex
• Other studies confirm that as cost rise, young people behaviour changes
• Example: Klick and Stratmann found that wherever and whenever parental notification
laws concerning pregnancy and abortion are passed, gonorrhea (sexually transmitted
disease) rates start to fall in the teenage population relative to the adult population – to
whom, of course, the new laws do not apply
• The only explanation for this would seem to be that an abortion notification law
sigifiatl aises the ost of upoteted se, ad that the teenagers rationally
espoded to that ost. Teeage pega ates also fell
The Importance of the Rationality Postulate
• Behaioual eooists hae poided plet of poof of so alled iatioalit.
Kahneman won the Nobel Prize in economics in 2002 fo his ok o ehaioual
eoois
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
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