Thursday, March 18, 2010

Tequila flavored beer, anyone?

Alcohol is illegal in the dorms at Abstinens College. Why are students more likely to sneak in a couple bottles of, say, tequila, rather than cases of beer, even though most would rather drink beer than tequila?

Congratulations to Yuan Tao for being the first to provide a plausible economic analysis of the drinking dilemma described above.


Yuan Tao said...

Personally, this question refers to the concept of “opportunity cost” in economics. As a student, if I really want to have a drink, I will choose strong drink rather than beer. Because if I am caught by RA or RD, it makes no differences whether what I am drinking is beer or tequila. Another extreme example may be more intelligible------a murderer, who has killed lots of people, is more possible to kill others he even does not know. Why? Because he knows he is to be put to death. His life is the opportunity cost when he commits a crime. Thus, he may kill more people to make his “cost” more “worthy”, although he does not want to kill strangers at all. For the same reason, our opportunity cost to drink alcohol is to be fined with $100. Why not have some spirits to make the $100 cost-effective?

Yuanqi Yan said...

Under the same probability of detection, students will get the same level of punishment whichever kind of alcohol they dink; thus, they'll of course choose the stronger one--tequila to make their choice more cost-effective. The situation in the post occurs as a result that the marginal penalty is not high enough to awe the students.
Yuanqi Yan