Logic matters. It leads us from simple ideas to surprising conclusions. A simple idea is that people respond to incentives. A surprising conclusion is that when drivers are protected by air bags, they drive more recklessly and have more accidents. A simple idea is that when the price of something goes down, suppliers provide less of it. A surprising conclusion is that recycling programs, which reduce the price of timber, ensure that fewer trees are planted and forests shrink. A simple idea is that monopolists charge whatever price the market will bear for their output. A surprising conclusion is that when oil supplies are interrupted, steep price hikes are evidence of competition, not monopoly. A monopoly oil company wouldn’t wait for a supply interruption to raise the price.
Evidence matters too, but logic can be powerful all on its own. Take, for example, the argument about recycling and the size of forests. If I wrote that the reason we have large cattle herds in this country is that people eat a lot of meat, few readers would demand detailed numerical evidence to support that conclusion. The idea itself is too powerful and too compelling. It’s instructive, then, to realize that the same powerful and compelling idea tells us that one reason we have large cultivated forests is that people use a lot of paper.