they were making a “before” and “after” calculation, the authors used the standard method described in the Heads Up! on computing a percentage change—i.e., they computed the percentage changes in comparison to the original values instead of the average value of the variables.) The elasticity of citations with respect to the fine was thus −0.21 (= −31.5%/150%) The economists estimated elasticities for particular groups of people For example, young people (age 17–30) had an elasticity of −0.36; people over the age of 30 had an elasticity of −0.16 In general, elasticities fell in absolute value as income rose For San Francisco and Israel combined, the elasticity was between −0.26 and −0.33 In general, the results showed that people responded rationally to the increases in fines Increasing the price of a particular behavior reduced the frequency of that behavior The study also points out the effectiveness of cameras as an enforcement technique With cameras, violators can be certain they will be cited if they ignore a red light And reducing the number of people running red lights clearly saves lives Source: Avner Bar-Ilan and Bruce Sacerdote “The Response of Criminals and Non-Criminals to Fines.” Journal of Law and Economics, 47:1 (April 2004): 1–17 ANSWERS TO TRY IT! PROBLEMS The absolute value of price elasticity of demand tends to be greater when more time is allowed for consumers to respond Over time, riders of the commuter rail system can organize car pools, move, or otherwise adjust to the fare increase Using the formula for price elasticity of demand and plugging in values for the estimate of price elasticity (−0.5) and the percentage change in Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 256