I have to teach two days later, and I am now preparing for it:
Taro's Econ 101
Price of Pepsi and Human Behavior
When the price of Pepsi rises, what should we do? It’s an easy question. We usually seek substitutes, say, Coke. The price rise makes us shift to Coke.
Price is one of the factors that changes people’s behavior.
Economists say that people react to incentives. Incentives mean a motive for a particular action. Do people really react to incentives?
On a teenage oral-sex craze in the United States by Tim Harford.
Oral sex is to stimulate penis or vagina by using mouth, say, fellatio and cunnilingus. Both the adults and the teenagers are related to much more oral sex than in 1990. Why not?
Schools teach the risks of sex, particularly HIV/AIDS and some other sexually transmitted infections (STI). Oral sex can be safer than penetrative sex. It dramatically reduces the risk of HIV and other STI.
(a) The economic analysis
If the price of risky sex went up and teenagers really did think about the results of their actions, they would have less risky sex, oral sex.
People switch to safer sex due to the price rise in risky sex: use of the contraceptive pill is down, but use of condoms is up. Moreover, the percentage of teenage virgins has risen by more than 15 percent since the beginning of the 1990s.
(b) Policy implication
Abortion-notification laws force teenagers to get permission to abort from their parents. Some scholars found that wherever and whenever such laws have been passed, STI rates in the teenage and adult populations start to diverge.
When it becomes more difficult to abort, teenagers seem to reduce unprotected sex.
To sum up, now we can see that people really react to incentive.