Friday, October 29, 2010

Great Kids Village, A Pricing Question

Sylvia (my 11 month old daughter) and I just got back from Great Kids Village in Silver Spring. The place is a store sized indoor play area for young kids (I'd say ages crawling to age 6 or so) with lots of toys and things to climb and explore. Sylvia had a great time.

Looking at their prices I was a little surprised by the pricing for memberships. If you buy a family membership the price is the same if you have one kid or are an Octomom (she did move to Rockville I think, so it's not out of the question).

Now I have seen things in the past where the second kid costs less than the first, but I wonder why they don't charge different prices depending on the number of kids?

Some possibilities.

1. It might not matter much in a place like Silver Spring with a lot of single child families.

2. They plan to open a cafe soon, so families with more kids would bring in profits in other ways.

3. The pricing is a result of what economists call price discrimination. Usually discrimination is a bad word I don't want you to think that it is on economics, but other examples of price discrimination include senior and student discounts. In some sense they are charging the same price to both families with one kid or more than one kid. In another they are charging different prices per kid to these two groups. Usually price discrimination happens when two groups are different (like students or senior have less money than the average person). So perhaps families with more than 1 kid have less disposal income.

Either way Sylvia had a good time so that's all that matters!
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Thursday, October 28, 2010

Is This Restaraunt Worth My Time?

I like to read Todd Kliman the Washingtonian's food critic's weekly chat about places to eat in the DC area.

This week in answering a question about a local restaraunt Kliman said
"For years my wife and I have assigned "minute-marks" to restaurants as a way of rating them -- not stars.

"In my book, I would drive an hour-and-twenty minutes to dine at Komi. Nooshi, on the other hand, I would consider a 6-minute restaurant.
The Source: a 45-minute restaurant. Sonoma: a 15-minute restaurant.
2 Amys: a 40-minute restaurant. Dino: a 20-minute restaurant."
(link to chat)

I love this method. Economists favorite example is the free lunch. Whenever we eat out one place we give up eating at another place, so even if we get free sushi we give up eating Indian food.

Now if I set a minute rating on local restaraunts several things should be taken into account.

1. Obviosally how good is the restaraunt in terms of food quality and service. The highest drive time on Kliman's list is also a restaraunt he ranks in the Top 5 in his yearly dinning guide. I haven't been to Komi yet but I have been meaning to do it.
2. Second is price. There is an Indian restaraunt a 10 minute walk from where I live. But I always seem to spend 20% more than I think I should.
3. Other available restaraunts play a factor. When I lived in Grinnell, Iowa in undergrad the Indian restaraunts 1 hour away in Iowa City were rated 1 hour restaraunts. Indian restaraunts of the same quality as those in Iowa City would be much lower as now that I live with in 10 minute walk of at least 2 (Indian Thai, Vietenemess, Ethopian, Italian, Peruvian Chicken, Sushi)
4. There ability to not put cilantro in my take out order. This may not factor into your ratings but my wife really hates cilantro. So that Indian restaraunt within 10 minute walk of my house I never go to (well that and see #2). Instead I drive 15 minutes to another place, which is really good.

Final thought when recommending restaraunts I don't know if Silver Spring where I live and has a lot of good places to eat has any restaraunts I would say are 30 minutes or more places for people in the DC area.

I would like to give a thought that my favorite place in Silver Spring right now 8407
is getting close to a 30 minute place. So Bethesda and Rockville should try it, Arlington I'm not sure it is worthy of getting on the beltway.

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Wednesday, October 27, 2010

Microcredit will it work in the long run?

In India, people in the slums that had access to microcredit were more likely to cut down on things like tobacco and alcohol in favour of durable goods (particularly items such as pushcarts or cooking pans that are used heavily by traders and food-stall owners

From a recent article in the Economist describing two new studies of microcredit that used randomized experiments to test for impacts of microcredit. In the short run consumption does not seem to go up and poverty does not seem to go down with microcredit. The possible good news that one article finds is that more durable goods are purchased particularly those that are small business related.

I worry though if too many people start buying pans and carts to sell food that the gains from selling food on the street will be really small. For example see Alex Tabarokk's discussion of his recent trip to El Salvador about "a pueblo with about 8 or 9 pupuserías in direct competition." How much money can be made in a village with several pupusa vendors.

Both analyses discussed in the article plan to continue to follow the groups they are studying so perhaps long term influences will start to become clearer.
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Tuesday, October 26, 2010

Feed the Meter and the Homeless

A new type of parking meter is going up in various cities throughout the US including Silver Spring. The meters collect coins for the homeless to provide funds to shelters and soup kitchens (see some pictures here). They also provide a substitute for those donating to give their money to the meter instead of the panhandler on the street. The meters also decrease revenue for pan handlers lowering the benefit to asking for money on the street.

One result is that instead of asking for money those panhandling may increase their use of shelter and soup kitchen services. Another possible result is that the relative payoff of petty crime may increase.

This could be a neat experiment for a city. Put homeless meters up in some part of the city and not in others. Also collect data from panhandlers (difficult, but I think doable). Do they move? Do people give more or less when meters are around? Does crime increase?

All sorts of things can happen. I don't think it's clear what the result will be if meters are installed in most busy places.

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Monday, October 25, 2010

Pricing of Baby Formula

My daughter like many babies drinks formula. About a month ago Similac one of the major formula brands announced a large recall of its products because they contained beetle parts. Not surprisingly this recall led us to switch formula to the 50% cheaper store brand. I had been meaning to try to switch earlier, but inertia had set in just like Similac had hoped when the doctors office gave us free samples

At first I was suprised that formula prices for the store brand were cheaper after the recall. One would think if a lot of product was removed from the market (Similac Recall) that prices would go up. The recall may encourage some mothers to breast feed or get their children off of formula sooner, but most children who drink formula can't easily change. Since formula consumption does not change much with price (its an inelastic good) you would think prices would go up after the recall.

Then I remembered the intertia that we had for our daughter's formula brand once we tried a new one. Like the free samples we were offered at the doctors office for Similac, formula brands are likely lowering prices to attract former Similac buyers. Once we get used to buying the new brand prices will likely increase again.

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