There's an old economist joke: an economist is walking with a friend when they both notice a $100 note lying on the footpath. As the friend bends to pick it up, the economist shakes her head and says: ''Don't bother! If it were a real $100 note, someone would have picked it up already.''

The joke is a neat expression of the ''efficient markets hypothesis'', the idea that market pricing already reflects all publicly available information. To the economist's mind, it would be a rare thing to find stray money lying about. So fundamental is the human desire to make a profit, the chances that some profit-maximising individual hadn't already snaffled it up are so low as to be negligible.

Irvine Credit:Rocco Fazzari

But the joke is also instructive in what it reveals about the instinctive behaviour of non-economists. You see, most regular people, like you and I, would indeed stoop to pick up a $100 note if we saw one.

Which brings me to carbon pricing. Perhaps the biggest furphy being bandied about by radio talkback hosts and others about putting a price on carbon is the assertion that, because the scheme will compensate households for any increase in costs, there will be no incentive to reduce consumption of carbon-intense goods and services, such as electricity.