Saturday, March 26, 2011


At this point I think I can just say that if everyone is stealing $100 worth of office supplies, it's really better thought of as part of their wage, or like any benefit. Possibly better than $100 more in wages (hey, nontaxable!), although possibly worse if they value the office supplies at less than it actually costs the company to buy them.

By the way, unenforced rules against theft can be an effective method of price discrimination. In high school, many of my friends used to ask for water cups from Chipotle and fill them with soda; in theory Chipotle could even be happy with such behavior if the only people willing to steal in such a manner are those with a relatively low willingness to pay (such as teenagers). (I'm not suggesting that's actually what was going on). As another example, we could set up a socially conscious bread stand that was easy to steal loaves from, with the understanding that only desperately starving people would be willing to steal to eat, and we actually want them to. Depending on the norms for stealing versus lying, this could discriminate between customers more effectively than a sign saying, "Free bread if you're starving." Indeed, even in the absence of such norms, note that there's a risk of being caught and punished for stealing (unlike lying); a bread stand that secretly chose not to pursue enforcement would still be taking advantage of the threat's ability to separate consumers, effectively giving away bread only to those people who are so desperate as to make the risk worthwhile.


  1. I think a similar sort of problem arises at soup kitchens. Soup kitchens explicitly advertise that they give away free food. Is it stealing to take charity if you don't really need it? To my knowledge, soup kitchens never turn visitors away. We know that there is clearly an incentive for people to go there for a free meal, but obviously only those who think the benefit outweighs the cost would go. I'm left to wonder how many people actually eat at soup kitchens who don't need it.

    By the way, I added to your thoughts on lying here.

  2. Greg,

    That's a good question. Soup kitchens could also effectively ration their soup by long lines and/or low quality, since only people with a low value of time and an outside option of eating dirt would be willing to partake of the soup, even if it's (monetarily) free.

    I can just imagine the foodie cult following that might form if word ever got out that some soup kitchen was serving the best soup in New York...

  3. Exogenous CombustionMarch 26, 2011 at 11:17 PM

    To do with the general idea behind the soup kitchen comment, which I like, Larry Katz had an interesting line:

    "A great revelation comes upon you when you realize that when 40% of eligible people are participating in a program, it may mean that it's well-designed."

    The idea being that 100% are eligible for soup kitchens, and time/low quality of surroundings, etc. drive most of us off, as suggested.

    It's in our interest to make people wait in line to get their welfare checks, have food stamps rather than real cash, etc.

  4. Exogenous CombustionMarch 27, 2011 at 9:04 PM

    Correction: I said Larry Katz, I meant Larry Summers. All these Harvard guys look alike to me I guess.

  5. Yes, this is a good caveat to the economist's favorite first-order point that attaching strings to how people spend their money makes them (weakly) worse off (e.g. by providing them with guaranteed healthcare rather than just giving them the money and letting them decide whether to buy health or food with it). Maybe by offering everyone free but limited healthcare, we effectively transfer some wealth to the poor without ever having to make sure that their poverty story checks out (which we might have to do if we were just giving away money). That could be worth sacrificing a little efficiency.