Wednesday, December 22, 2010

Why Jews Eat Chinese Food and Watch Movies on Christmas

Growing up Jewish my family celebrated Christmas in a very traditional Jewish way, we ate Chinese food and watched movies. The video below helps my fellow Jews improve their Chinese.

But why are Chinese restaurants different from all other restaurants? Most Chinese restaurants are staffed by Chinese people who don't celebrate Christmas. So the opportunity cost of working that day is a lot smaller than a Christian waiter. Even in Columbus Ohio a decent size city where I grew up it was hard to find much ethnic food other than Chinese until the mid 90s, this trend was similar throughout the country. Now I would guess there are more Thai and Indian places open for Christmas. However, if people associate Christmas with Chinese food, then other ethnic restaurants might not bother opening. Local DC food critics though suggest looking into non-Chinese options, since DC seems to do both Thai and Indian better than Chinese food.

Now why are the movies open? Movies are a capital intensive business. A movie theater only needs a couple of people to run it. Also movies are a great way to spend time together without talking to each other, a much needed gift during the holidays.

So enjoy your Christmas!

Bookmark and Share

Tuesday, December 21, 2010

Pricing at the IMAX and Silver Spring Econ #1

Just blocks from my house is a 20 screen movie theater, The Majestic, which just added an IMAX screen. Silver Spring Singular (a local blog) has a really great break down of some of the pricing for the IMAX screen (link).

For adults regular movies are $11 and IMAX are $17.50. We shouldn't be surprised by this the IMAX is according to most a better movie experience. Further there are fewer IMAX screen in the area then regular movie screens so competition is lower. The Majestic has a local monopoly on IMAX (the closest ones being about 30-40 minutes away).

Next as Singular points out for regular movies there are cheaper prices during the day, but not for IMAX it is $17.50 regardless of when you want to see the movie. Cheaper prices for matinée is what economists call price discrimination. The different prices allow the Majestic to get the most ticket sales depending on the demand for the time of day, it also allows the theater to attract cheap skates to the early show.

Finally, the convienance fee for printing your tickets at home for the IMAX is $2 compared to $1.25 for a regular movie. My guess is that people who are willing to see the IMAX are likely doing it for a special event (like the opening of Harry Potter) and probably willing to pay more to reserve a ticket. It could also be that as Singular puts it the people going to IMAX are "just rich as hell and don't give a damn"

Silver Spring Singular is a great local blog, but other local blogs haven't been posting as much. Perhaps I can add to the discussion about Silver Spring. I'm going to try to do some more Economics of Silver Spring (I realize this post wasn't too original) hopefully I can find things that both Silver Spring residents and non-residents find interesting. I'll be tagging the posts with Silver Spring Econ.

Final thought. Just one block further from the Majestic is the American Film Institute, where for $17.50 I can get a ticket, a beer, and a small popcorn. I'm guessing I'll do that more than go to the IMAX.

Bookmark and Share

Monday, December 20, 2010

How I avoided the lines at the post office on Saturday

Saturday was insane at the post office!!! I took one look at the line that ran out the door and was 9 deep for the one automated machine and ran away. I went straight to my local Office Depot. I knew they shipped UPS, so I figured even if spent twice as much to mail my package the savings in time and sanity would be well worth it. I got into Office Depot and they had no line. They also provide the same service that my post office does, literally they ship USPS mail.

Declaring my victory over opportunity costs and monopoly I walked over to Starbucks for a celebratory coffee (which was free with purchase of 1lb of whole beans).

Now to convince Office Depot to perform other government services.

Bookmark and Share

Thursday, December 16, 2010

The Public Good of Verifying Medical Claims?

"Companies like Dannon shouldn’t exaggerate the strength of scientific support for their products." FTC Chairman Jon Leibowitz in a statement.

The company, though, stands by its products' abilities to keep the bowels moving brisky....the company will now have to let consumers know that any statements about benefits for digestion or the immune system are based on European studies involving three servings a day of yogurt.

From NPR
My inner middle school child is amused by the story linked about how Dannon was fined $21 million dollars for exaggerating the ability of their yogurt Activa to keep you regular.

I'm not sure this is the best use of the FTC, since you can verify pretty easily how well activa works in this manner. Although, it would seem harder to verify its impact on the immune system.

So my quick analysis is that the FTC should work harder investigating claims that are less verifiable without research.

Bookmark and Share

Wednesday, December 15, 2010

Economics of Festivus

Frank Costanza: "Many Christmases ago, I went to buy a doll for my son. I reached for the last one they had, but so did another man. As I rained blows upon him, I realized there had to be another way."
Cosmo Kramer: "What happened to the doll?"
Frank Costanza: "It was destroyed. But out of that a new holiday was born: a Festivus for the rest of us!"

If you don't know Festivus, it is a holiday made popular by Seinfeld a late 90s TV show. From the above quote you can see Festivus avoids the problems associated with fighting over gifts. Many economists (not me I like gifts) have pointed out the problems with holiday gifts including the book "Scroogonomics: why you shouldn't buy presents for the holidays"

What about Festivus traditions how would economists judge them?

Decorations: Instead of a Christmas Tree or Menorah, Festivus is celebrated with a alumin pole. On the one hand the pole is likely cheaper and the set up time lowers the opportunity cost of celebrating the holiday. Assuming revealed preferences and rationality I think it is a wash which decoration is better from an economics perspective. However, behavioral economists should look into this further as the Constanzas may not be perfectly rational.

Festivus Dinner: Holiday dinners are very optimal! They build social capital (Ok maybe not the Constanzas) and utilize increasing returns to scale of food production between 1 and 20 people or so.

Airing of Grievances: Many economists are also professors so December is a good time to air our grievances. However, unless airing grievances brings satisfaction or change in relatives behaviour, I'm not sure it is optimal.

Feats of Strength: Awesome potential game theory problem. In the feat of strength the head of household challenges another household member to a wrestling match. This is a great signaling and reputation game similar to the beer and quiche problem. Really the best game theory problem ever.

I'm not sure how many economists celebrate Festivus, but I wish any who do a joyous Festivus.

Bookmark and Share

Tuesday, December 14, 2010

The control group won't get what it wants, but if we try we might just find what it needs

Unfortunately, it’s often impossible to tell what will have the biggest impact if we always give everyone what they think they want. Science is a bitch sometimes.
-Jodi Beggs my favorite keyboard playing economist on her blog Economists Do It with Models.

She has a great post up about a program in New York that is randomly denying funds to people who apply to get help with their rent to avoid becoming homeless. The program has found that 90% of people who get help stay in their home, but the question is what would it be if there was no help. Perhaps it would 0% or 89% would still stay in their homes, a random experiment is the most accurate way of measuring the effect. However, it might not be the nicest.

One thing that happens in the developing world when a new program comes the group who doesn't receive the benefit(the control group) gets some other benefit even if it is not part of the design. For example I heard of one country where in half of villages children were payed to go to school and in the other half no benefits should have been received. But the government added in free school meal programs in many of the control communities increasing school enrollment in control communities and biasing the effect size downward.

I also heard of a randomize worker training program where those in the control group were given extra information about where else they could look for jobs.

So yes science can be a pain!

Bookmark and Share

Friday, December 10, 2010

Borrowing to Save and Financial Literacy

I blogged recently about the micro credit crisis that may be emerging in India and other developing countries, where repayments rates are falling. One issue is that poor families often use micro credit as a way to save instead of invest. Micro savings might not be viable as transaction costs are too high (see this post) . The distinction between savings and investment is important in economics. Savings is income minus consumption, while investment is purchasing things that will increase your income later (we call this capital). If you use all left over income to purchase capital then savings = investment.

Ideally micro credit would be used for investment. Since households must repay their loan at 50% interest. In some cases households use micro credit to save but not invest in income improving capital. In other cases micro credit is used to pay for school or medicine, which is an investment but the payoff is likely much further down the road. In any case it is hard to tell what is actually purchased with micro credit, since money as economist say in fungible. That is if you give someone $100 they could say they are using it for their business, but if they would have spent $100 on materials anyway and instead only increased their spending on schooling, then it is actually for school.

Perhaps most important is having financial literacy so that those who use micro credit can make better choices. This post is a couple months old, but Bilal Zia at the World Bank has a good description of current research in financial literacy.

Bookmark and Share

Thursday, December 9, 2010

9th night of Hannukah

Thanks so much to Jodi Beggs from Economists Do it with Models for putting music to my Economists Hannukah song! I never thought I would write a song.

Here are the original lyrics that Jodi improved.

Bookmark and Share

Are Economists Wrong About Secondary Ticket Sales?

Truly, there is a special place in Hell for people who buy Rose Bowl tickets with the sole intention of profiting from them. It is entirely unfair to those who actually love this football team and were counting on a cheap face value ticket in order to make the trip to Pasadena an economic reality

From University of Wisconsin's student paper the Badger Herald. The knee jerk economists reaction is that reselling tickets is efficient. If you can resell those who are willing to pay the most will get the tickets and those who want to pay less and win the lottery for tickets will get extra money. Those who lose the lottery should be indifferent. Now one point could be that the chance of losing is greater if the number of people participating in the lottery increases, because there are easy profits to be made. It should be noted although I didn't do it, I kept meaning in grad school at Wisconsin to sign up for football season tickets to resell them at a profit and get a couple of games free.

Now what economists may miss. I think most economists would do the analysis using consumer surplus that is the benefit is measured by the
#1) benefit = the most someone would pay - what they paid

Instead I think most people think the benefit might be measured as
#2) benefit = happiness from going to the Rosebowl - what they paid.

For students with limited funds, it's possible that way#1 and way #2 will yield different socially optimal distributions. It comes down to how close money and happiness are linked, which is a whole other line of research.

This is just a thought exercise, but it is worth thinking when economists disagree with public reaction strongly, how we reach our conclusions

h/t to Phil Miller at the Sports Economist

Bookmark and Share

Wednesday, December 8, 2010

Hi Marginal Revolution and Economix Readers

If you clicked on the link because you love Hannukah and Economics may I suggest you also see my Economists Hannukah song from 2007.

Enjoy your last night of Hannukah my jewish econ friends!

Or start get an early start on Passover with the economics of Passover posts.

Bookmark and Share

Money for me or jobs for the unemployed?

The compromise includes a one-year cut in the payroll tax by 2 percentage points. The tax cut will be entirely in the employees' share. Why do you think they designed the policy in this way? Was it the right choice

From Greg Mankiw's blog describing the agreement between Obama and republicans, which trades a cut in payroll taxes for a cut of taxes for income over $250,000.

Mankiw notes that for most goods making the buyer or seller pay the tax shouldn't matter. However, wages tend not to change fast particularly they tend not to drop (economists call this sticky wages).

In short to summarize Mankiw by cutting the employees' share that means more money in the pocket of anyone who gets a pay check (hey that's me!). If you cut the employers share it means they could hire workers for 2% less than they are paying now or use the savings for investment in new capital. So as I understand it giving the tax break to workers should increase spending faster, while giving it to employers should decrease unemployment faster.

As an economist #2 seems better, as a person keeping 2% more of my income sounds better. So perhaps the best political decision is to give the money to the employee.

Bookmark and Share

Tuesday, December 7, 2010

Discussing my research in class

In class today I'm discussing a paper I wrote with my favorite co-author/father. Below is the abstract. Here is a link to the full paper.

Coming to Homerica: The Economics of Immigration
by Seth R. Gitter and Robert J. Gitter

Abstract: Like many people throughout history Apu Nahasapeemapetilon’s decision to migrate from a poorer place (India) to a richer one (Springfield) has been in part an economic one. We use him as a case study from the episode “Much Apu about Nothing” to demonstrate how economists study migration. As the standard models suggest, Apu receives benefits and pays costs as a result of migrating. We also analyze the impact of a large migration on an economy using the great wave of Ogdenvillians who came to Springfield in “Coming to Homerica.” We look at the effect of immigration on wages, taxes, and government spending. For readers like Lisa Simpson we conclude with some suggestions for further reading and pose policy questions. For readers like Bart Simpson we write in a style that can best be described as “eat my shorts.”

Bookmark and Share

Friday, December 3, 2010

Sometimes when you win you lose

With a win over Nevada, Boise State would play in a championship bowl. If Boise State makes a championship bowl, then all of the teams in its conference would also receive a 1 million dollar payout. Nevada is in Boise State's conference so if Nevada lost they would receive the million dollar payout (see this article). Now a more complex analysis would consider some other things, but I think looking at all the possibilities, Nevada would lose money by winning the game.

Nevada lost the million dollars, but won the game.

This reminds me of the story of trying to score on yourself. The game was Barbados vs Grenada in the 1994 Caribbean soccer cup. Due to tie breakers Barbados would advance to the next round if they won by 2 or more goals. With 3 minutes left Barbados was only leading by one goal. But a tournament rule declared a team won by two if they won in overtime. So Barbados scored on themselves on purpose forcing the game in overtime. Then they won in overtime and went to the next round.

h/t to John for sharing this article

Bookmark and Share

Thursday, December 2, 2010

How Many Economists Does It Take to Clean a Microwave?

So it looks like from an e-mail I got our cleaning services people won't clean the microwave in our departmental common area. The question then becomes.

How Many Economists Does It Take to Clean a Microwave?

Answers (in jest):
None, if it was optimal to clean the microwave one would have already done it.

One, once the dirtiness level surpasses the economist with the lowest threshold they will clean it themselves creating a public good.

Two, one to clean it and the other to point out that the other does not have a comparative advantage in cleaning.

Never more than three because there are diminishing returns to labor when cleaning a microwave

Bookmark and Share

Wednesday, December 1, 2010

A Miracle PPF Happy Hanukkah

If that isn't enough here is my economists' chanuka song from 3 years ago.
Bookmark and Share