Is it worth bothering to pay for municipal car parking? I only get caught out every now and then, and it’s such a bother finding change for the meter compared with writing the occasional cheque.
Hilary Potts, Ealing
A similar question once occurred to Gary Becker, then a professor at Columbia University. Running late to a viva examination of a doctoral student, he drove to the university and then quickly weighed the cost of paying for parking against the chance of being fined. He then asked the unfortunate student to discuss the optimal behaviour of the authorities who set the charges and penalties. The story ends happily: the student passed, Becker avoided a ticket and won the Nobel prize.
If it is true, as you imply, that the expected cost of risking a ticket is lower than the expected cost of paying up front, then your municipal authorities are giving you a surprisingly easy decision. It is obvious that you should not pay – or more precisely, that you should pay large sums occasionally rather than small sums every time.
Many people would find this strategy made for anxious shopping trips, but you seem to have nerves of steel. This is rational: unless the fines are very large, or your income much lower than that of most people who find small sums of money irritating, the unpredictability of parking fines should not itself seriously lower your utility…
Continued at ft.com.