Saturday, March 29, 2014
A key assumption for economics is that people make decisions "on the margin"- how much more it will cost or benefit someone to produce, sell, or consume one more item. A friend of mine came out with an article in probably the top journal in all of Economics looking at how that's not true in the context of water. (Article is posted under Reading on the course Blackboard website.) For something like this where prices change depending on how much we buy (i.e. when there's a bulk discount, or a fee for overuse) then it's harder to predict how people will respond to a change in prices. First of all, an interesting result, and secondly, I'm so excited for my friend to get into this top journal!