Friday, October 24, 2008
Cheaper than a DUI
I love the cabs in Charlottesville, specifically the ones with the slogans on the back. While some are more or less clever, I've noticed a number of them (or the same one, repeatedly) with "Cheaper than a DUI." While this is certainly true in a nominal sense, the economist wonders whether this is necessarily true. Assuming a cab fare X and a DUI fine Y, we must discount the fine by the probability p of being caught and convicted. Thus, the cab is only cheaper than a DUI if X < pY. Of course, this is not the whole story, as there are other costs associated with a DUI than are captured in the fine (reputation, jail time). Also, penalties are usually greater for repeat offenders. Okay, cabbie, you've convinced me. Carry on. Oh, and can we stop by Christian's first?
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