PEOPLE RESPOND TO INCENTIVES. Today's message is at Marginal Utility.

In the bigger picture, what worries me is that we'll get policies that take the organization of suburban sprawl life as immutable consequences of primal human desires, rather than as an adaptation to cheap private transportation that may be abandoned as quickly as it was thrown up when market forces turn on it. (Policies that seek to promote low gas prices versus low fuel consumption may have this effect.) Human life has been successfully lived without big-box stores, even in my lifetime, if you can imagine that. This is not to say that I disagree at all with Prof. Hoch's conclusion that the transition will be hard, especially as it implies that the values of today's half-megabuck McMansionettes are no more privileged than those of the once-grand houses owned by the elites of small (and not-so-small) towns along, say, the route of the Erie Canal.

But I think an underappreciated feature of neoclassical microeconomics is that while consumers may in principle want everything, what they actually choose to have is regulated by relative and absolute prices. So when self-mobile freedom is sufficiently expensive, sooner or later other forms of consumption will be substituted for it. The question is whether the corporate welfare state will allow this to happen.

There's a harder question: to what extent will business interests (the automobile lobby, mall and tract housing developers primarily) make common cause with more populist interests (should real gasoline prices rise further; right now there is a summer peak approximately equal to early 1981 levels just before domestic price controls and international collusion came to an end) who face large capital losses as house prices adjust and job losses? There's also the possible reaction of urban interests. Will they continue to push their thickly-settled, rail-structured view of work and shopping, rather than, for instance, allowing local bus authorities or bus entrepreneurs greater freedom of action?