An economist's lens gives us reasons for great hope and great frustration

http://ourdelhistruggle.com/2009/07/23/blueline-bus-menace/ gives the economic reasons behind why Delhi's blueline bus drivers drive rashly causing several accidents on Delhi's roads.

Ironically the above bleak article gives great hope to me...great hope because the root cause of the problem has turned out to be the-economic-incentive-of-picking-as-many- passengers-as-possible instead of too-much-traffic. The latter problem is not as easily solved as the first. Making the buses city-run (and hence fixed-salaries) by CommonWealth games in 2010, is the solution that is going to come into effect.

This solution seems to suggest that most problems can be solved using the following 2 steps -
1. understand the incentives of various parties by viewing the problem through an economist's lens
2. pick a solution that does away with those incentives that are causing the unwanted behavior. (The incentives for driving fast & recklessly were understood first - more fares, more money; and then a solution was picked that does away with those incentives - fixed salary)

Changing human behavior is more difficult than changing policy/rules. And most problems, just like the above problem, fall into the category that can be dealt with by changing policy/rules. This is a cause for great hope. And the great thing about this class of problems is that, when dealt with properly, the results will be instantaneous . And unfortunately the corollary also is true. If not dealt with, these problems can remain as problems indefinitely.

This brings us to the bigger issue of inaction. The analysis of the above article was probably known to even 5th grade students long time back, but there was no action on the issue until the issue reached gigantic proportions (115 killed in 2008 - translates to almost 10 killed every month). This is a cause for great frustration when you know the solution exists but is not being used.

This post is influenced by my recent reading of The Undercover Economist and by listening to JP Narayan (loksatta) videos on YouTube. All problems should be looked at with an economist's lens first (i.e. Following the money) instead of quickly pinning the blame on the 'nature' of Indians or Americans or humans.