Incentives matter, really, they do

We’re told that a disaster like Deepwater Horizon could happen all over again. Because the regulations on what people are allowed to do have been relaxed and that just does make gushers on the sea bed more likely:

But experts say an incident of similar scale could happen again and has been made more likely by the Trump administration’s decision to loosen Obama-era safety rules. Those standards had grown from an independent commission’s damning findings of corporate and regulatory failures leading up to the spill.

This is to succumb to the bureaucratic, perhaps statist, delusion. If everything is written down on little bits of paper, if government determines, in detail, what people may do, then nothing bad can happen.

This is not how we humans interact with reality. Incentives really do matter:

BP said on Tuesday it would take a new charge over the 2010 Deepwater Horizon spill after again raising estimates for outstanding claims, lifting total costs to around $65 billion.

That’s around 65 billion reasons why a repeat of Deepwater Horizon is less likely than it once was.

Do note that we’re not saying that there is no value to regulation. At the very least a listing of best practice contains value and we’re even willing to agree that insisting people don’t do stupid things is of benefit. But it is still true that hom. sap. responds to the total set of incentives faced not just the chatterings of the clipboard wielders.

The loosening - or tightening - of drilling regulation is as nothing compared to that fear of losing, again, 65 large. Something we need to recall when designing those regulatory systems of course. It’s that total set of incentives that matter.