Dining Under The Table in Silver Spring

If you are the type of person who would think about going to an underground restaurant then you will like Dining Under the Table.
-From a review of an underground restaurant in Silver Spring

In economics we often make an assumption that everyone has the same preferences, let's just say we can assume the reviewer and me along with my wife and the reviewer's wife have similar preferences.

Underground restaurants avoid some of the fixed costs of being a restaurant. The benefit is that they can have smaller number of diners (for example under the Table has 6). It can also allow people to cook and experience the pleasure of serving good food to people, without fully investing in a restaurant.

There are draw backs of underground restaurants too, but the reviewer's description of the meal sounds too good to worry about that for the moment.

Postdoctoral Fellowship in Renewable Energy

"We're looking to combine deep scientific thinking with a young person's perspective," says Marie Mapes, a physical chemist who is overseeing the new fellowship program along with her regular duties in EERE's Solar Energy Technologies Program. "And we thought postdocs would be the best way to do it."
-From an interview in Science Magazine

The new postdoctoral program described in the article, that Marie (my wife) is working with, will fund researchers to not only work with top scientists, but also encourage them to spend 20% of their time working on their own projects. The 20% idea comes from the tech industry, which has had some of the biggest growth of any industry.

I also think the postdoctoral program is a good idea based on research I was working on as an RA on in graduate school. In general the research found that post-docs were one of the best ways to improve university production of patents (a sign for technological progress).

Shortage of dogfish beer, why not raise prices

"Every market that we have has had more demand than we can support,"
from The Dogfish Head Brewery's vice president, Mariah Calagione.

Dogfish Head is one of the top microbrews in the nation and with Sam Calagione, the brewer and founder of the company, gaining national fame through a TV show and nomination for a James Beard Award, Dogfish is having trouble keeping its beer in stock. They have taken the step of eliminating distribution in four states Tennessee, Indiana, Rhode Island and Wisconsin, because as the quote above notes they can't keep up with the demand. The brewery has expanded production increasing in size 4 times it output from 2006.

Here's an article describing what Dogfish head is up to. Basic economic theory would tell us when a sellers sees that there is excess demand for their good they should raise prices. There is no mention of raising prices in the article. I think we can conclude one of two things, and I think 2 is more likely

1. They are actually raising prices, they just don't want to mention it in the article.
2. They aren't profit maximizers. If you have read or seen anything about Sam Calagion you know he seems much more motivated by making awesome beer than maximizing profit. As he points out in the article they could make more money by only selling their 60 minute IPA (and a fine beer it is).

Of course #2 is good for drinkers who can still find Dogfish Head at their local stores, but bad for those in the four state who can no longer but dogfish head locally (well except Wisconsin, they'll be fine plenty of good beer there).

Finally, the good news is you can always make your own Dogfish Head beer at home. I made the 60 minute once, turned out well.

Your Food is Half Price if You Eat Next to the Bathroom

Alexander’s Steakhouse has embraced its terrible table, located between the two bathrooms, in a rather novel way. For diners who opt to sit there, sense of humor in hand (and presumably sans a super sense of smell), Alexander’s will take 50% off the entire bill — both food and beverage.

From SFGate


The deal is mentioned on their facebook page, although it wasn't obvious from their website. In Europe and a few US restaurants it is common to pay less to eat at the bar (actually our campus sports bar has bar only specials). I like that this restaurant has taken it to the extreme.

It is a good gimic that could be copied elsewhere. I wonder what type of restaraunt this is best for. If a place is too fancy it might take away from the ambience, if it is too cheap the marginal benefit of a nice table isn't much. A steak house seems like just the right place. In Silver Spring this wouldn't work because the $7 burger at Rays is already too good a deal.

No BLTs at Silver Spring Potbelly

The downtown Silver Spring Potbelly (a sandwich fast food place) had a sign that said due to cold weather there weren't enough tomatoes, so for a temporary time sandwiches would come without them.

Not surprisingly since this is not the time of year to buy Maryland tomatoes, this is happening throughout the country.

Potbelly Sandwich Works in downtown Fort Worth put up a sign saying it was not packing subs with tomato slices because of the situation. Sysco, a major food service distributor, told its wholesale customers that produce suppliers have broken contracts, using a weather-related "act of God" clause, according to its Internet posting.

-From this article

Wendy's is using a different trick, which is not putting on tomatoes unless people ask (link)

An economic analysis would suggest that it is not that there aren't enough tomatoes, it's that they have gotten too expensive to give away free on a sandwich. Potbelly could add a tomato charge, but the hassle of figuring out the pricing and customer push back might not be worth the extra bit of revenue.

Plus, given the quality of tomatoes the above sandwiches use, I don't think we are missing much.

Irrational Super Market Shopping or Something Else

Thyme is cheap. Twenty five cents worth is plenty for a family of four.

Hang out at the market and watch people buy expensive fish, chicken or beef to cook for a family gathering. Amost no one is buying fresh herbs. What's that about?

From Seth Godin

Godin suggests that when people spend $10 on the meat for their meal they don't want to also spend an extra quarter to buy fresh herbs. This reminds me of a classic economics example that shows people are sometimes irrational. In short more people would drive across town to save $5 on a $10 calculator than save $5 on $100 stereo even if they planned to buy both. The person should be indifferent, but our brains likes to save more on the cheap items.

I think one thing Godin misses is that fresh herbs are usually sold in packages that cost about $2. This makes it hard to spend just 20 cents on thyme for one meal.

An alternative, which my wife and I do is grow your own herbs at home.

Incentives for Teachers May Not Influence Test Scores

Given the recent debates about teacher pay, a recent NBER paper by Harvard Economist, Roland Fryer, throws a wrench into the debate. His study finds that providing incentives (ie money) to teachers for improving math and reading scores in NYC had no positive impact on their students test scores, and if anything led to slight declines.

This article has a good overview of the study. In short Fryer hypothesizes the payment may have been too small and that the relationship between teacher effort and student achievement may have been unclear.

Another issue is that teachers split bonuses among all faculty in their school not just those that led to the improvement. Fryer sites other work that this shouldn't matter, although I find that hard to believe.

Economists always say that incentives matter, but this result shows how difficult it is to really improve test scores and achievement.

The Economics of Sleep Training

My wife Marie went away for the weekend, so borrowing an idea from Spousonomics, I tried to work on sleep training our daughter Sylvia (ie getting her to actually sleep in her crib all night). Here are some economic thoughts on it.

First, like the Spousonomics example Marie and I agreed I had the comparative advantage in sleep training (ie I'm better at sleeping through her crying unless she really wakes up). Granted our parenting resources are diminished when Marie is out of town, but the sleep training job only requires one parent.

Past performance does not necessarily indicate future returns, but Sylvia has adapted to this crazy concept of sleeping all night in her crib. On the first night she needed 15 minutes to go from anger at being in the crib to asleep in the past 3 nights each night it has taken half as much time as the night before. She has also slept through the night for 3 nights in a row!

Parenting is a repeated game. We have to continue to signal to lead Sylvia to believe that sleeping is her best choice (a dominant strategy).

Information is not perfect, I'm not 100% about how Sylvia feels about sleep training so I never know exactly how she'll react.

Not all sleep economies are the same, what works for Sylvia might not work for another baby or might not work for Sylvia next week.

Unexpected changes (stochastic shocks) can bring everything down. A housing crisis, a vacation, high oil prices, or a cold.

Finally, most people focus more on losses or bad outcome than good outcomes. So this is my effort to celebrate the good outcome before the bubble bursts!

You Say You Can Predict Revolution: Shoe Throwers Index

In my development class I have my students read Paul Collier's book The Bottom Billion, where Collier's hypothesis is that revolutions/civil wars/coups are the result of low gdp per capita (being poor) and low gdp growth (bad economic times). He has academic works to back up this hypothesis.

The economist magazine has come out with its own index for the likelihood of a revolution the shoe throwers index. I'm not sure they have tested it yet against data, but their method is "weighting of 35% for the share of the population that is under 25; 15% for the number of years the government has been in power; 15% for both corruption and lack of democracy as measured by existing indices; 10% for GDP per person; 5% for an index of censorship and 5%"

Sounds like a good start. In the comments people suggest % of the population that is college educated and internet usage. I'm sure will see some academic papers on the topic soon.

h/t Texas in Africa