MK

M

I can’t remember my logic now, but I always thought that it would be interesting to compare the second hand market for gym memberships (ie via trademe) to compare those gym membershups that are transferrable vs. those that are not would be an interesting way to measure this phenomenon. As I say, I forget exactly how I thought this would work but am confident that it would be an interesting quantifiable avenue for research.

End result in this case is the action the individual directly controls – going to the gym and working out (single party); pregnancy is the indirect result of actions the individuals involved directly control (multi party).

Paying someone not to get pregnant or not to impregnate is not the same as penalising somebody for not doing something – in this case, going to the gym and working out. As such, the mechanism is very different to that of a penalising one which is 1) freely chosen and 2) the result of the individual considering the choice in the context of the medium to long term. Sex, on the other hand, which is a necessary – although insufficient – condition for unplanned pregnancy, is often considered in the context of the short-term, particularly for youth and particularly given the biological processes which take place around the time of such a decision (poor calculation of probabilities in terms of long term outcomes, lowered inhibitions, etc). As such, this, as well as getting pregnant/impregnating somebody being an indirect result, means it’s signifcantly harder to control in terms of outcome even were payment a particularly viable incentive tool (As well as this, unlike the above gym and workout situation, if one sees the rate of pregnancy and impregnation in and by those under twenty as overly high and problematic, a conclusion could be that the negatives of pregnancy don’t even seem effective as penalising factors, but that possibly speaks to the mindset when the decision is made).

I have no doubt there is a very specific situation where it will be a second-best solution – and of course I will give you that point.

However, I am of the opinion that, in general, there is a superior “second-best” solution in so far as the government can make a institution, or opt-in contract, which will allow people to choose commitment individually – thereby making use of revealed preferences.

In many ways it is similar to the reason why we choose externality taxes above direct regulation – unless the cost of said tax (commitment mechanism) is very large, it remains superior to direct regulation.