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Government Guidelines and Unintended Consequences

Apr 4, 2012 • Behavioral Economics, Economic Humor, Government, Labor, Thinking Economically, Uncategorized • 234 Views    2 Comments

Sometimes government guidelines can have unintended consequences.

Government travel guidelines:

At a networking reception, the General Services Administration spent $1900 on 400 “petit beef Wellington” snacks and $2000 on 400 “mini Monte Cristo sandwiches” and it (sort of) all made sense.

Called the government’s personal shopper by one journalist, the General Services Administration (G.S.A) is an independent federal agency that does some of the purchasing and building management for other government agencies. The uproar though, is over money that it spent on itself–close to $822,000–at a Las Vegas training conference for 300 people during 2010.

I checked the G.S.A. website for travel guidelines. There appears to be a lodging cost per diem limit of $99 for Las Vegas. According to all news articles, conference planners adhered to lodging cost constraints. From what I could discern, though, award ceremonies had no such ceilings. So the rooms were inexpensive. The unintended consequence?  The catered award ceremonies were extravagant.

Government nail guidelines:

For my class discussion of unintended consequences, a  9/10/90 New Yorker article about factory quotas in the former Soviet Union by economist Robert Heilbroner is perfect. As he described it, “If the output of nails was determined by their number, factories produced huge numbers of pinlike nails; if by weight, smaller numbers of very heavy nails. The satiric magazine Krokodil once ran a cartoon of a factory manager proudly displaying his record output, a single gigantic nail suspended from a crane.”

The bottom line: Whether looking at guidelines for health care, financial regulation, travel expenses or nail production, it is tough to shape human behavior because unpredicted incentives always seem to create unintended consequences.

My sources: From CNN and the NY Times for the Las Vegas Story; GSA travel expense guidelines document; the New Yorker archives for a 9/10/90 article from Robert Heilbroner.

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