Economic incentives, in the treatment given them across The Bob Zadek Show, are the rewards and costs that a rule or price attaches to a choice, and the resulting tendency of people to adjust their conduct accordingly. Guests applied the concept to law enforcement, to traffic and public facilities, and to housing regulation.
Perverse incentives and civil forfeiture
In the earliest of the episodes, Bob Zadek introduced the subject through a clip of Scott Bullock, described as the chairman or president of the Institute for Justice. Bullock’s formulation was that when people are given the wrong incentives they respond accordingly, and that it should not be surprising that they stretch the definition of law enforcement; his stated fundamental point was that people enforcing the laws should not benefit directly from them, since police and prosecutors are supposed to be about the fair and impartial administration of justice rather than the pursuit of property Cops Are No Better Than Criminals (2011).
Zadek restated the point as a perverse incentive, comparing it to meter maids on a commission basis, and said that everybody responds to economic incentives and that this is human nature. He added that he would probably have that bias himself if he were in law enforcement, and that the statute gives police the incentive to be very aggressive while property owners take it in the shorts. In the same segment he argued that private property is the foundation on which every sensible economic system is based, that most third-world countries understand that the first step toward the second or first world is a civil law system that respects private property, and that property rights are taking a backseat in this country, including through taxation Cops Are No Better Than Criminals (2011).
Policing for profit and equitable sharing
Brian D. Kelly, in a later episode, discussed the research environment around forfeiture. Asked by Zadek whether other economic studies matched the rigor of his own, Kelly said other studies exist but that his is richer and a deeper data set for the questions he asked. He described equitable sharing: many states have forfeiture reform efforts underway, and in some states pursuing civil asset forfeiture can be quite difficult or even impossible, but local police agencies can apply to the federal government to adopt a seizure, or work with the federal government otherwise, so that the asset is seized under federal law and state prohibitions are circumvented. He said unusually available data make that an important and well-studied forfeiture area, while forfeiture research generally is horrifically difficult because the data sets are complicated and extensive Brian D. Kelly on the False Promise of Policing-for-Profit (2019).
Zadek framed equitable sharing as federal law providing the motivation while local law enforcement are the boots on the ground, and said that through economic incentives it induces local law enforcement to ignore property crimes and violent crimes because police do not get forfeiture income from those, although those are what their customers, the citizens, care about. He put it as federal incentives changing how police spend their day at the expense of what citizens want, and as a distortion of the principle of federalism, since policing is exclusively the province of localities Brian D. Kelly on the False Promise of Policing-for-Profit (2019).
Kelly answered with an earlier study of his published in 2016, which asked whether the proportion of drug arrests out of all arrests increased over time and whether it was linked to what is sometimes called an agency’s dependence upon forfeiture. Other authors looking at data from the 1990s, he said, answered yes very strongly. His own look at the 2000s found the answer was also yes, with statistical significance, that forfeiture leads local police to spend more time on drug policing, but that it was not a big effect; the proportion of time spent on drug policing is far higher than before forfeiture and equitable sharing came into play, which he placed in the early 1990s, but it has plateaued, so the data for the 2010s do not show a lot more resources going to drug arrests. On the use of his work, Kelly said the study only came out in July, that he is working with the Institute for Justice and hopes they are using the results in their state reform efforts, that reform must be looked for in the states because the feds are not doing anything, that a 2015 reform under the Obama administration was quite helpful on equitable sharing but was largely reversed under Attorney General Jeff Sessions, and that although Congress is holding hearings and good bills have been introduced, he did not see them passing into law for at least the next year or two Brian D. Kelly on the False Promise of Policing-for-Profit (2019).
Opportunity cost, marginalism and incentives
A 2022 episode with Steven E. Rhoads treated economic incentives as one of three core concepts alongside cost and marginalism. Zadek asked Rhoads to explain opportunity cost, marginalism and economic incentives conceptually, saying that if the audience understands these in an economic sphere they will see how naturally the concepts apply to everyday life The Economist’s View of the World (2022).
Rhoads illustrated opportunity cost with a grocery shopper who finds steak expensive and buys hamburger instead, and with public programs, where an individual is one person out of hundreds of millions and taxes do not mean much to him. He cited polling figures in which about 95% say insurance companies should cover everyone with a disability or medical problem, but only 55% when asked whether they would accept higher taxes for it. He used rumble strips as a marginalist example: putting them where traffic was heaviest is worthwhile, but spending five times as much to put them on every country road would cost an enormous amount and there are better ways to save lives. He described the economist at the dedication of a new recreation center as the only moody attendee, noting that the same money put into education for the poor could have raised scores by half a grade The Economist’s View of the World (2022).
On incentives proper, Rhoads said the concept is simply the understanding that just because the roads are filled up does not mean more roads are needed; it may mean a better pricing system for the roads we have. A driver deciding whether to travel at rush hour thinks of his private costs but not of the fact that everyone else on the road will get there slower because of his decision, and charging more for rush-hour driving than for driving at 10:00 AM makes him realize that other people are involved. He noted that most big cities have systems that sense a license plate at rush hour and send a bill, and that his wife complains about the bill while he tells her not to go at that time. He extended the same logic to public tennis courts that are busy after work, suggesting a small charge could encourage people who are not working to play at 3:00 The Economist’s View of the World (2022).
Zadek responded that the word Rhoads did not use but that underlies it all is markets. He contrasted two ways to make roads less crowded: assigning people a driving time, which he characterized as force, coercion, compulsion and denial of liberty, and letting people drive whenever they want but pay the market price for driving at the speed limit. In his account the price that keeps roads moving smoothly becomes an auction in which those who need it most pay the most, with total freedom and no coercion. Rhoads added that he loves markets and that most of his academic peers do not, that it is not only conservative economists who like markets but all mainstream economists, and he cited Joseph Stiglitz writing in the Washington Post that he is not a socialist because every successful economy in the world uses markets and private property, calling himself a progressive capitalist, and Paul Krugman’s textbook describing markets as marvelous in the way they allocate resources. Rhoads’s central-planning illustration was sawdust: a milk farmer told economists up in Vermont that the price of milk was way up because his sawdust was so much more expensive, since his cows lie down on it and give more milk; sawdust is also used in mulch, in a composition used in car dashboards, and in charcoal, so an administrator who lowered the price of milk for schools would not know what the mulchers or builders of particleboard for low-income housing would have to give up. The beauty of a market, he said, is that whoever is willing to pay the most gets it, with all the producers speaking for their consumers The Economist’s View of the World (2022).
Incentives in housing policy
In a 2023 episode, Zadek said that reforms in California have not been at the local level but at the state, which has passed legislation that to a limited degree removes traditional local control zoning, and that the state offers both a carrot and a stick. He said states have been offering economic incentives, and that Biden’s $1.7 trillion Inflation Reduction Act included funds to localities which induce or create legislation to provide for more housing. He also noted a Wall Street Journal report on the early stages of a national rent control statute, which he called the scary other way to go. Christian Britschgi said he had written about the federal rent control proposals that day Free to Build (2023).
Across episodes: no development
The excerpts show economic incentives raised in four episodes — the 2011 discussion of civil forfeiture with Scott Bullock, the 2019 conversation with Brian D. Kelly, the 2022 conversation with Steven E. Rhoads, and the 2023 housing discussion with Christian Britschgi — but they do not show the same question argued and then revisited, so no development between an earlier and a later treatment can be traced.
What the sources do not cover
The excerpts do not state the outcome of any forfeiture case, the name of any bill, or the amendment on which any holding turned. They do not give the founding date or founding principles of the Institute for Justice, nor the title or field of any speaker beyond what the labels and Zadek’s introductions state. Where a section ends mid-sentence or a speaker’s turn breaks off, the excerpts supply no further content.