Mervyn’s moral hazard

"My first memories of Leeds are from a wet summer in 1958. I was ten years old, we lived on the moors above Hebden Bridge, and my father took me to my first Test Match – England against New Zealand at Headingley. It rained all day on both Thursday andFriday, and, when play started in mid-afternoon on Saturday, on a drying wicket NewZealand were bowled out by Laker and Lock for 67. So I became a slow bowler. I wastaught to bowl – slow left arm – at Old Town primary school by the headmaster, Alfred Stephenson. During the morning break he would mark the wickets in chalk in theplayground, and draw a small circle exactly on a length. If we could pitch the ball withinthat circle he would give us a farthing. As we improved, and the payout of farthingsincreased, the morning break became shorter and shorter – my first lesson in economic incentives, or what is known in the trade as ‘moral hazard’."

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