Monday, February 14, 2011


I hated all the movies and dramatizations I ever saw of the the sinking of the Titanic. This analysis by Bruno Frey and his co-authors in the latest Journal of Economic Perspectives is much better. When there is breathing room, people (for the most part) do the right thing. Social norms do their work.
The empirical analysis is consistent with the view that the effects of status
(passengers traveling in higher classes have a better chance of surviving) and social
norms (such as saving women and children first) depend on time. It seems that on
the more slowly sinking Titanic pro-social behavior played a larger role, while more
selfish conduct prevailed on the rapidly sinking Lusitania. Of course, time may not
be the only factor at work. Natural experiments based on naval disasters may well
have other factors for which control variables would be useful.

This morning's WSJ cites progress on implementation of the Paul Romer charter city idea in Honduras. Sebastian Mallaby is quoted: "We'll develop both different laws, perhaps, but importantly different norms about right and wrong." It's not just about the legislated rules.