One of the fundamental tenets of economics is that “people respond to incentives.” In other words, human beings will consciously adjust decisions and actions in response to changes in expectations and the environment. While it might seem obvious when stated so clearly, many government officials act as if this were not true of human behavior. Such people might as well join King Canute in issuing commands to ocean tides.
Take, for example, a plan to be implemented on January 1 by the European Union which is intended to reduce carbon emissions from air travel into Europe. Jets landing in Europe will be charged for the amount of fuel that was used based on the distance traveled. This presumably will account for the amount of carbon dioxide that a specific jet has emitted into the atmosphere.
In light of this new penalty, officials at UPS are weighing a plan to reroute jets flying between their hubs in Hong Kong and Cologne, Germany. Passenger jets do not necessarily have the luxury of adding layovers to avoid penalties because passengers are more time-sensitive than cargo. The UPS response will increase the total mileage that each plane flies, but will avoid about one quarter of the penalty charged by the European Union. As a result of the European Union plan, carbon emissions likely will increase beginning January 1.
What would you do, gentle reader, if you were in the same position as UPS? What would you do if you were an airport official in Turkey or Africa and soon would have the ability to earn more landing fees by helping jets stop just long enough to avoid paying higher penalties to the European Union? As you can see, as we think through the intersection of theology and economics, it will be essential to remember that people respond to incentives.
By the way, is it really necessary to avoid emitting carbon dioxide into the atmosphere…?