Friday, December 3, 2010

A Coasian approach to drunk driving enforcement

New York City is giving away 2,000 $25 credit cards to people to use during the holidays when they shouldn't be driving. Details of the "Be the Man" campaign here. In effect, the city is paying people to drink a lot but not drive. This is a cheaper solution than having people drink a lot and then drive. This is the cheaper solution even though the penalties for getting caught drunk driving are severe. The penalties are severe enough that we would expect that drunk drivers should pay the $25 cab fare out of their own pocket because it is so much cheaper than the thousands of dollars (plus potential loss of life, injury and property damage) a DUI will cost. Yet because high levels of enforcement are difficult--the vast majority of drunk drivers will get away with it--and extremely expensive the city is better off by paying people to avoid driving in the first place. In this case the city is better off as fewer people are driving around hammered, the city saves money compared to ramping up enforcement, and the potential drivers are happy because now they can buy $25 more of beer. Everybody wins! Thanks, Coase.

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