Thursday, May 21, 2009

Charles Lindberg Trans-Atlantic Flight Anniversary

In the Fall of 2009, I will be teaching a first year seminar course at the University of Iowa about the economics of outer space. Specifically, we will be looking at how free market economic principles can help develop this new market. Periodically we will look back at events in history to glean how economics can help provide incentives in this new and relatively wide-open industry. Here is one of those instances.

Eighty-two years ago today May 21, Charles Lindberg was the first person to successfully fly across the Atlantic from New York to Paris. It took him 33.5 hours in which he flew through snow and sleet, and was mobbed by excited French spectators; and that is about what I remember from high school US history. For those interested, here is the NY Times front-page article from that historic flight, and here it is from the Charles Lindberg website.

Why did Lindberg under-take such a dangerous and bold flight. Was he a thrill seeker; someone who wanted to get his name in the papers; did he have a friend in Paris and this was the only way to get to see them soon? Or was there another reason - a less romantic reason - a reason based on incentives? You betcha!

In 1919 Raymond Orteig set up a prize worth $25,000 to the first person to successfully fly across the Atlantic, and it was "Lucky Lindy" who was able to not only smash his way into history with this historic flight, but also was able to collect a rather large sum of money (remember it was 1927) for his historic trip.

One of the topics we will be talking about in the first-year seminar is the extent that prizes, such as the X Prize that was captured by Scaled Composites a few years ago, or the Google Moon Prize - yet to be captured, can be used to promote innovation in areas where markets are not yet developed enough for innovators to devote their time and energy profitably. We will also talk about the drawbacks of such prizes.

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