Hobo Economicus

The central implication of maximising behaviour amid competition is that rates of return tend toward equality. We test that implication in a market whose participants have the traits that behavioural economics suggests should make it hardest to find evidence of maximisation: the market for panhandling at Metrorail stations in Washington, District of Columbia. We find that stations with more panhandling opportunities attract more panhandlers and that cross-station differences in hourly panhandling receipts are statistically indistinguishable from zero. Panhandling rates of return thus tend toward equality. Extreme ‘behavioural’ traits do not prevent maximisation in this market.

That is a new Economic Journal article by Peter T. Leeson, R. August Hardy, and Paola A. Suarez.