The Australian economist, Joshua Gans, recently described a problem central to the current financial turmoil. How could he persuade his young son not to wet his pants?

Believing in the power of incentives, Mr Gans offered a reward if his son could keep his pants dry for seven nights. The boy simply removed his pants. The prohibition was on wetting pants, not on wetting the bed. Young Gans was learning a skill that would equip him well to be a British MP, or a senior executive in a global bank.