What do economists dream about at night?
Well, there could be many different things, depending on what each of these blokes were up to at that point in their lives, but one theme is likely to be a part of any of their dreams: price.
For many economists, the performance of many things in life boils down to price. Increase a product’s price, their demand would decrease – in some cases, as in super premium products, increase. E etc etc
James Noughton too subscribed to the importance of price as one of the most important levers to regulate the world. Given that he was a prospective Nobel Prize winner, he knew a hell of a lot…
A brilliant international economist arrives at a powerful way to dramatically reduce CO2 emissions around the world.
His solution? Increase the price of high carbon footprint products by five times, for a duration of six months. Demand for these products will fall dramatically, and people around the world will get used to a new low carbon lifestyle within six months. After which, even if the prices were restored to their earlier numbers, the new habits and behaviours will ensure a low carbon world.
After some deliberation, all the countries implement this idea. At first, people revolted but soon, they started significantly reducing their demands for high carbon products.
Just as the economist had predicted, within a month, the CO2 emissions worldwide had dropped by 90%.
The experiment went on for six months, and it was a thorough success. There were whispers that the economist would be a sureshot for that year’s Economics Nobel Prize.
Prices were restored to the original numbers on the first day of the seventh month.
By the end of the first week, daily CO2 emissions were 300% of what they were before the experiment was started.