Answer the A-F questions in words.

What Life fs All About The economist's faith in the power of incentives nerves him well. and he trusts it as a guide in unfamiliar territory. Back when seat belts (or air bags or antilock brakes) were first introduced, any ccon-. omist could have predicted one of the comequences. The number of car accidents incrcased. That's because the threat of being killed in an acoident is a powerful incentive to drive carefully. But a driver with a seat belt or an air bag faces less of a threat. Because people respond to incentives, drivers are less careful. The fesult is more accidents. The governing principle is preciscly the same one that predicts. behavior at the gas pump. When the price of gasoline is low, people choose to buy more gasoline. When the price of accidents (eg.) the probability of being killed or the expected medical bill) is low, people choose to have more accidents. You might object that + idents, unlike gasoline, are not in any sense a "good" that peopic would ever choose to purchase. But speed and recklessness are goods in the sense that people seem to want them. Choosing to drive faster or more recklessly is tanta. mount to choosing more accidents, at least in a probabilistic sense. An interesting question remains: How big is the effect in question? How many additional accidents are caused by seat belts, air bags. and other safety equipment? Here is a striking way to frame the question: Seat beles tend to reduce the number of driver deaths by making it easict to survive an accident. At the same time, scat beles rend to incrate the number of driver deaths by encouraging reckless behavior. Which effect is the greater? Is the net effect to decrease or to increase the number of driver deaths? This question can't be answered by pure logic. One must look at actual numbers. The first person to do that was Sam Peltzman of the University of Chicago. He found that the two effects are of ap.proximately equal size and therefore cancel exch other out. When seat beles were first introduced (along with padded dashboards and The Power of incentives 5 collapsible stecring columns) there were more accidents and fewer driver deaths per accident, but the total number of driver deaths remained essentially unchanged. Pedestrian deaths, however, appear to have increased-pedestrians, after all, are not equipped with padded dashboards. Subsequent srudies have found comparable results for air bags and antilock brakes. I have discovered that when I tell noneconomists about Peltzman's results, thcy find it almost impossible to believe that people would drive leis carefully simply because their cars are safer. Economists, who have learned to respect the principle that people respond to incentives, do not have this problem. If you find it hard to believe that people drive less carefully when their cars are safer, consider the proposition that people drive more carefully when their cars are more dangerous. This is, of course, just another way of saying the same thing. but somehow people find it easier to believe. If I took the seat belts out of your car, wouldn't you be more cautious when driving? What if I took the doors of?? Carrying this logic to its extreme, we could probably cut the accident rate dramatically by requiring each new car to have a spear mounted on the steering wbeel, pointing directly at the driver's heart. I predict there would be a lot less tailgating. At the other extreme, NASCAR drivers have cars so safe that thcy can gencrally crash into concrete walls at high speeds and walk away with no injuries. How do they respond to all that safety? In the words of the economists Russell Sobel and Todd Nesbit, "They race them at 200 miles per hour around tiny oval racetracks only inches away from other automobiles - and have lots of wrecks." And when the cars get safer, they have even more wrecks. NASCAR introduces hundreds of safety-related rule changes every year, which has allowed Sobel, Nesbit, and others to test and confirm this prediction. Answer the following based on the section "Union Impact on Non-wage Outcomes" of the textbook reading. A. Fringe Benefits: List six examples of fringe benefits. Between fringe benefits and wages, what factors deter compensation the firm prefers? What factors determine what the union will bargain for? Unionized workers tend to have fringe benefits and 1 for "lower". Enter 9 if the empirical relationship is highly ambiguous. ) Comparing union and non-union wo differences than if we compared them by measuring their total compensations including fringe benefits. (En is highly ambiguous.) B. Employment: Explain how unions can have a positive or negative impact on worker employment. In the tr C. Work Conditions and Satisfaction: The faster work pace observed in union jobs is due to more", 2 for "unions are more likely to form for jobs which push workers harder". Enter 9 if the empirical re observed with union workers. it possible that unions contribute positively to job satisfaction? D. Safety: Unions are generally observed to be associated with injuries and the empirical relationship is highly ambiguous.) For fun, read the above excerpt from Stephen E. Landsberg injury paradox is most similar to the explanation of the seatbelt-accident paradox? Which of Donado's expla E. Turnover: Union workers quit their jobs than non-union workers. (Enter 1 for relationship is highly ambiguous) Give three possible explanations. F. Productivity, Profit and Investment: Consider behavioural responses to higher wages. Give one example a productivity in the union sector and in the non-union sector. Consider direct effects of unions on productivit positively. Profits are generally for unionized firms than comparable non-unioniz empirical relationship is highly ambiguous) In a situation where unions increase productivity, explain why th s of the textbook reading. When giving explanations, a short sentence or jot notes is fine. wages, what factors determine which compensation workers prefer? What factors determine which in for? total compensation than non-unionized workers. (Enter 1 for "higher" o for "the same" Ig union and non-union workers by measuring differentials in wages would show luding fringe benefits. (Enter 1 for "greater" 0 for the same" -1 for "smaller". Enter 9 if the empirical relationship ker employment. In the tradeoff between wages and employment, when will a union prioritize one or the other? s due to (Enter 1 for "employers push workers harder because they have to pay them Enter 9 if the empirical relationship is highly ambiguous) Give five possible explanations for higher dissatisfaction satisfaction? injuries and number of deaths. (Enter 1 for "more". 1 for "fewer". Enter 9 if im Stephen E. Landsberg's "The Armchair Economist" (pp.4.5). Which of Donado's explanations for the unionWhich of Donado's explanations is most likely for the coal-mining industry according to Morantz? on workers. (Enter 1 for "more", o for "with the same frequency", 1 for "fewer". Enter 9 if the empirical ages. Give one example an adaption firms may make and explain how this behaviour indirectly affects s of unions on productivity. Give one explanation for how the presence of a union may influence productivity comparable non-unionized firms. (Enter i for "higher". of for "the same frequency". 1 for "lower". Enter 9 if the oductivity, explain why the union's effect on profits may be positive or negative. The economist's faith in the power of incentives serves him well. and he trusts it as a guide in unfamiliar territory. Back when seat belts (or air bags or antilock brakes) were first introduced, any economist could have predicted one of the consequences: The number of car accidents increased. That's because the threat of being killed in an accident is a powerful incentive to drive carefully. But a driver with a seat belt or an air bag faces less of a threat. Because people respond to incentives, drivers are less careful. The result is more accidents. The governing principle is precisely the same one that predices behavior at the gas pump. When the price of gasoline is low, people choose to buy more gasoline. When the price of accidents (e.g.. the probability of being killed or the expected medical bill) is low, people choose to have more accidents. You might object that acidents, unlike gasoline, are not in any sense a "good" that people would ever choose to purchase. But speed and recklessness are goods in the sense that people seem to want them. Choosing to drive faster or more recklessly is tantamount to choosing more accidents, at least in a probabilistic sense. An interesting question remains: How big is the effect in question? How many additional accidents are caused by seat belts, air bags, and other safety equipment? Here is a striking way to frame the question: Seat beles tend to reduce the number of driver deaths by making it easicr to survive an accident. At the same time, seat belts tend to increase the number of driver deaths by encouraging reckless behavior. Which effect is the greater? Is the net effect to decrease or to incrcase the number of driver deaths? This question can't be answered by pure logic. One must look at actual numbers. The first person to do that was Sam Peltzman of the University of Chicago. He found that the two effects are of ap. proximately equal size and therefore cancel each other out. When seat belts were first introduced (along with padded dashboards and collapsible steering columns) there were more accidents and fewer driver deaths per accident, but the total number of driver deaths remained essentially unchanged. Pedestrian deaths, however, appear to have increased-pedestrians, after all, are not equipped with padded dashboards. Subsequent studies have found comparable results for air bags and antilock brakes. I have discovered that when I tell noneconomists about Peltzman's results, they find it almost impossible to believe that people would drive less carefully simply because their cars are safer. Economists, who have learned to respect the principle that people respond to incentives, do not have this problem. If you find it hard to believe that people drive less carefully when their cars are safer, consider the proposition that people drive more carefully when their cars are more dangerous. This is, of course, just another way of saying the same thing, but somehow people find it easier to believe. If I took the seat belts out of your car, wouldn't you be more cautious when driving? What if I took the doors of? Carrying this logic to its extreme, we could probably cut the accident rate dramatically by requiring each new car to have a spear mounted on the steering wheel, pointing directly at the driver's heart. I predict there would be a lot less tailgating. At the other extreme, NASCAR drivers have cars so safe that they can generally crash into concrete walls at high speeds and walk away with no injuries. How do they respond to all that safety? In the words of the cconomists Russell Sobel and Todd Nesbit, 'They race them at 200 miles per hour around tiny oval racetracks only inches away from other automobiles - and have lots of wrecks." And when the cars get safer, they have even more wrecks. NASCAR introduces hundreds of safety-related rule changes every year, which has allowed Sobel, Nesbit, and others to test and confirm this prediction. What Life fs All About The economist's faith in the power of incentives nerves him well. and he trusts it as a guide in unfamiliar territory. Back when seat belts (or air bags or antilock brakes) were first introduced, any ccon-. omist could have predicted one of the comequences. The number of car accidents incrcased. That's because the threat of being killed in an acoident is a powerful incentive to drive carefully. But a driver with a seat belt or an air bag faces less of a threat. Because people respond to incentives, drivers are less careful. The fesult is more accidents. The governing principle is preciscly the same one that predicts. behavior at the gas pump. When the price of gasoline is low, people choose to buy more gasoline. When the price of accidents (eg.) the probability of being killed or the expected medical bill) is low, people choose to have more accidents. You might object that + idents, unlike gasoline, are not in any sense a "good" that peopic would ever choose to purchase. But speed and recklessness are goods in the sense that people seem to want them. Choosing to drive faster or more recklessly is tanta. mount to choosing more accidents, at least in a probabilistic sense. An interesting question remains: How big is the effect in question? How many additional accidents are caused by seat belts, air bags. and other safety equipment? Here is a striking way to frame the question: Seat beles tend to reduce the number of driver deaths by making it easict to survive an accident. At the same time, scat beles rend to incrate the number of driver deaths by encouraging reckless behavior. Which effect is the greater? Is the net effect to decrease or to increase the number of driver deaths? This question can't be answered by pure logic. One must look at actual numbers. The first person to do that was Sam Peltzman of the University of Chicago. He found that the two effects are of ap.proximately equal size and therefore cancel exch other out. When seat beles were first introduced (along with padded dashboards and The Power of incentives 5 collapsible stecring columns) there were more accidents and fewer driver deaths per accident, but the total number of driver deaths remained essentially unchanged. Pedestrian deaths, however, appear to have increased-pedestrians, after all, are not equipped with padded dashboards. Subsequent srudies have found comparable results for air bags and antilock brakes. I have discovered that when I tell noneconomists about Peltzman's results, thcy find it almost impossible to believe that people would drive leis carefully simply because their cars are safer. Economists, who have learned to respect the principle that people respond to incentives, do not have this problem. If you find it hard to believe that people drive less carefully when their cars are safer, consider the proposition that people drive more carefully when their cars are more dangerous. This is, of course, just another way of saying the same thing. but somehow people find it easier to believe. If I took the seat belts out of your car, wouldn't you be more cautious when driving? What if I took the doors of?? Carrying this logic to its extreme, we could probably cut the accident rate dramatically by requiring each new car to have a spear mounted on the steering wbeel, pointing directly at the driver's heart. I predict there would be a lot less tailgating. At the other extreme, NASCAR drivers have cars so safe that thcy can gencrally crash into concrete walls at high speeds and walk away with no injuries. How do they respond to all that safety? In the words of the economists Russell Sobel and Todd Nesbit, "They race them at 200 miles per hour around tiny oval racetracks only inches away from other automobiles - and have lots of wrecks." And when the cars get safer, they have even more wrecks. NASCAR introduces hundreds of safety-related rule changes every year, which has allowed Sobel, Nesbit, and others to test and confirm this prediction. Answer the following based on the section "Union Impact on Non-wage Outcomes" of the textbook reading. A. Fringe Benefits: List six examples of fringe benefits. Between fringe benefits and wages, what factors deter compensation the firm prefers? What factors determine what the union will bargain for? Unionized workers tend to have fringe benefits and 1 for "lower". Enter 9 if the empirical relationship is highly ambiguous. ) Comparing union and non-union wo differences than if we compared them by measuring their total compensations including fringe benefits. (En is highly ambiguous.) B. Employment: Explain how unions can have a positive or negative impact on worker employment. In the tr C. Work Conditions and Satisfaction: The faster work pace observed in union jobs is due to more", 2 for "unions are more likely to form for jobs which push workers harder". Enter 9 if the empirical re observed with union workers. it possible that unions contribute positively to job satisfaction? D. Safety: Unions are generally observed to be associated with injuries and the empirical relationship is highly ambiguous.) For fun, read the above excerpt from Stephen E. Landsberg injury paradox is most similar to the explanation of the seatbelt-accident paradox? Which of Donado's expla E. Turnover: Union workers quit their jobs than non-union workers. (Enter 1 for relationship is highly ambiguous) Give three possible explanations. F. Productivity, Profit and Investment: Consider behavioural responses to higher wages. Give one example a productivity in the union sector and in the non-union sector. Consider direct effects of unions on productivit positively. Profits are generally for unionized firms than comparable non-unioniz empirical relationship is highly ambiguous) In a situation where unions increase productivity, explain why th s of the textbook reading. When giving explanations, a short sentence or jot notes is fine. wages, what factors determine which compensation workers prefer? What factors determine which in for? total compensation than non-unionized workers. (Enter 1 for "higher" o for "the same" Ig union and non-union workers by measuring differentials in wages would show luding fringe benefits. (Enter 1 for "greater" 0 for the same" -1 for "smaller". Enter 9 if the empirical relationship ker employment. In the tradeoff between wages and employment, when will a union prioritize one or the other? s due to (Enter 1 for "employers push workers harder because they have to pay them Enter 9 if the empirical relationship is highly ambiguous) Give five possible explanations for higher dissatisfaction satisfaction? injuries and number of deaths. (Enter 1 for "more". 1 for "fewer". Enter 9 if im Stephen E. Landsberg's "The Armchair Economist" (pp.4.5). Which of Donado's explanations for the unionWhich of Donado's explanations is most likely for the coal-mining industry according to Morantz? on workers. (Enter 1 for "more", o for "with the same frequency", 1 for "fewer". Enter 9 if the empirical ages. Give one example an adaption firms may make and explain how this behaviour indirectly affects s of unions on productivity. Give one explanation for how the presence of a union may influence productivity comparable non-unionized firms. (Enter i for "higher". of for "the same frequency". 1 for "lower". Enter 9 if the oductivity, explain why the union's effect on profits may be positive or negative. The economist's faith in the power of incentives serves him well. and he trusts it as a guide in unfamiliar territory. Back when seat belts (or air bags or antilock brakes) were first introduced, any economist could have predicted one of the consequences: The number of car accidents increased. That's because the threat of being killed in an accident is a powerful incentive to drive carefully. But a driver with a seat belt or an air bag faces less of a threat. Because people respond to incentives, drivers are less careful. The result is more accidents. The governing principle is precisely the same one that predices behavior at the gas pump. When the price of gasoline is low, people choose to buy more gasoline. When the price of accidents (e.g.. the probability of being killed or the expected medical bill) is low, people choose to have more accidents. You might object that acidents, unlike gasoline, are not in any sense a "good" that people would ever choose to purchase. But speed and recklessness are goods in the sense that people seem to want them. Choosing to drive faster or more recklessly is tantamount to choosing more accidents, at least in a probabilistic sense. An interesting question remains: How big is the effect in question? How many additional accidents are caused by seat belts, air bags, and other safety equipment? Here is a striking way to frame the question: Seat beles tend to reduce the number of driver deaths by making it easicr to survive an accident. At the same time, seat belts tend to increase the number of driver deaths by encouraging reckless behavior. Which effect is the greater? Is the net effect to decrease or to incrcase the number of driver deaths? This question can't be answered by pure logic. One must look at actual numbers. The first person to do that was Sam Peltzman of the University of Chicago. He found that the two effects are of ap. proximately equal size and therefore cancel each other out. When seat belts were first introduced (along with padded dashboards and collapsible steering columns) there were more accidents and fewer driver deaths per accident, but the total number of driver deaths remained essentially unchanged. Pedestrian deaths, however, appear to have increased-pedestrians, after all, are not equipped with padded dashboards. Subsequent studies have found comparable results for air bags and antilock brakes. I have discovered that when I tell noneconomists about Peltzman's results, they find it almost impossible to believe that people would drive less carefully simply because their cars are safer. Economists, who have learned to respect the principle that people respond to incentives, do not have this problem. If you find it hard to believe that people drive less carefully when their cars are safer, consider the proposition that people drive more carefully when their cars are more dangerous. This is, of course, just another way of saying the same thing, but somehow people find it easier to believe. If I took the seat belts out of your car, wouldn't you be more cautious when driving? What if I took the doors of? Carrying this logic to its extreme, we could probably cut the accident rate dramatically by requiring each new car to have a spear mounted on the steering wheel, pointing directly at the driver's heart. I predict there would be a lot less tailgating. At the other extreme, NASCAR drivers have cars so safe that they can generally crash into concrete walls at high speeds and walk away with no injuries. How do they respond to all that safety? In the words of the cconomists Russell Sobel and Todd Nesbit, 'They race them at 200 miles per hour around tiny oval racetracks only inches away from other automobiles - and have lots of wrecks." And when the cars get safer, they have even more wrecks. NASCAR introduces hundreds of safety-related rule changes every year, which has allowed Sobel, Nesbit, and others to test and confirm this prediction