Thursday, July 21, 2011

Amnesty and Incentives

Amnesty for past bad acts may or may not be a good policy in different situations. But repeated amnesty and anticipated amnesty is probably not. From the archives (well from 2003) we have this gem from "Beware The Amnesty Binge" by Alan Ehrenhalt:

Thirty-seven years ago, Charles de Gaulle decided to spring a treat on the voters of France after they reelected him. He declared an amnesty on outstanding traffic offenses. It was a wildly popular scheme--and every French president since then has repeated the gesture.

These amnesties still serve to enhance the honeymoon effect for newly chosen chief executives. The only problem is that French drivers, knowing that they will be forgiven, drive like maniacs in the months leading up to the election. This isn't just a matter of anecdote: Highway deaths in France consistently increase by significant percentages just prior to an election. In May 2002, the month before France reelected President Jacques Chirac, there were 616 fatalities, compared with 553 during the same period the year before.

Anticipate Moral Hazard

Hat tip Justin Ross

No comments:

Post a Comment