Drones and Tasers: Income and Substitution Effects

In microeconomics, income and substitution effects are tricky things that can lead astray those who have sipped but little of the Pierian spring of economics. Imagine a new technology that is more effective, at lower cost, than an older technology that does some of the same things. You might expect that use of the old technology would fall dramatically, as users switch from the old technology to the new. That is the “substitution effect” of the new technology, and it’s quite intuitive even to non-experts in economics. But then there’s also an income effect. The new technology costs less “buck” for a given “bang.” If users just want a fixed amount of “bang,” therefore, they will have some income left over. How will they spend it? They might actually spend some of that on the old technology, provided the old technology has some other uses to which the new technology cannot be put. This is the “income effect.” A priori, it’s unknown whether income or substitution effects will dominate; empirical analysis is required.

Economists apply income and substitution effects analysis to the effects of income taxes, for instance. Raising income taxes might seem to cause a reduction in work effort, necessarily. Work pays less, so people switch into leisure. That’s the substitution effect, but there’s also an income effect. If people just want to make sure they have X amount of income, then a tax increase will actually make them work more, so that they can reach that income. As I understand the economic consensus, income taxes, on the margin, have a negative but small effect on work effort in the U.S. and other advanced industrialized societies.

Drones and tasers are fairly new coercive technologies for the military and the police, respectively. Advocates for each technology claim that they will actually reduce the number of unintentional killings by these actors. Drones allow for better targeting of the bad guys, reducing the risk of killing innocents. Tasers allow police to use nonlethal, incapacitating force in situations where otherwise they might have had to use deadly force in the past.

But this analysis focuses only on the substitution effects. What about the income effects? These new coercive technologies are “cheap,” both in the narrow, financial sense and in their logistical and political demands. Shooting someone might require some kind of investigation; tasering someone rarely does. We should accordingly expect much more use of coercive force by militaries that have drones and by police forces that have tasers. They will be tempted to use these technologies, not just as direct substitutes for the old technologies of killing, but as substitutes for far less aggressive techniques. The drone assassination becomes a substitute for arrest or capture; the tasering becomes a substitute for the billy club, muscle power, or even a verbal command.

Indeed, independent estimates suggest hundreds of civilians have been killed by drone strikes in Pakistan, and one senior analyst claims that, on a per engagement basis, drone strikes have been far more likely to kill civilians than fighter jet strikes, due in part to lower training standards for drone pilots.

Meanwhile, Amnesty International has found more than 350 deaths due to police use of tasers, and news stories about police use of tasers to subdue already compliant civilians are routine. There is no evidence that America’s sky-high police shooting rate has declined due to substitution to tasers.

In summary, while drone and taser technologies could in principle be better for civilians by encouraging switching from more dangerous technologies, the evidence suggests that income effects have dominated substitution effects, and they encourage more, not less exercise of coercive power on the whole.

2 thoughts on “Drones and Tasers: Income and Substitution Effects

  1. This post is absolutely brilliant. It makes me wish that I taught micro-economics so that I could reforumulate this little essay as an exam question.


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