The Fallacy of Ignoring Incentives from "summary" of Economics in One Lesson by Henry Hazlitt
The Fallacy of Ignoring Incentives is a common mistake made by many in analyzing economic policies. This fallacy occurs when people fail to consider how individuals and businesses will respond to changes in incentives. Incentives play a crucial role in shaping human behavior, and ignoring them can lead to unintended consequences.
When policymakers implement new regulations or taxes, they often focus on the intended effects of these policies without considering how individuals will adjust their behavior in response. For example, if the government raises taxes on cigarettes to discourage smoking, they may assume that people will simply pay the higher prices and smoke less. Ho...
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