Among the chattering classes debating the usefulness of economic analysis has become the topic du jour. Economists seem to be as clueless as anyone else when it comes to understanding the global recession, let alone dealing with its consequences.
But while it is now fashionable to discard long cherished economic insights, the crisis also shows that people still behave rationally. Just ask Australia’s car thieves.
Stealing a car is perhaps not the most obvious activity that economists would pay attention to. But it turns out that car theft is the perfect example to show how people react to incentives.
The National Motor Vehicle Theft Reduction Council just released a ranking of the cars most popular among Australia’s thieves. Perhaps ordinary, law-abiding citizens would assume that if you were a thief you would go for a recent model of an attractive brand. But that only shows that they have never seen the world through the eyes of a rationally thinking thief.
The problem with newer cars is that they are fitted with modern security technology, including immobilisers. This is also the main reason why car theft has fallen from a level of about 130,000 in 2000 to under 60,000 last year.
But the increased use of immobilisers has left older cars a more attractive alternative for thieves and so the Ford Falcon EA, last produced in 1991, topped the list of Australia’s most stolen cars. Which leads to another question: Why bother stealing a rust bucket? Yet again, it’s incentives that matter: Yesteryear’s high commodity prices ensured that scrapyards paid up to $400 for such a large car.
There is hope for drivers of old Ford Falcons though, thanks to the economic crisis. Fallen commodity prices have reduced the scrap value of their vehicles to just $10, and who would risk criminal prosecution just for a tenner?
Chances are that Australia’s car thieves will soon go out of business – but economic analyses remain as useful as ever.