Prixe Fixing

During restaurant week several DC eating establishments offer 3 course lunches and dinners for $20 and $30, respectively. My wife and I took advantage of this promotion and went to Ceviche a Latin restaurant in Silver Spring this past weekend. I began to wonder why is there a restaurant week? I think there are two main reasons. First, it is likely a period where few people go out to eat, since it is ridiculously hot and muggy outside people do not want to leave their air conditioned homes. So to get extra business everyone lowers the price. This might also explain why lunch is cheaper than dinner, since few people eat 3 course lunches. The Nationals, the DC baseball team, do something similar. When the Nationals play popular opponents such as the Mets and Cubs ticket prices are 25% to 50% higher. Or think about cheaper prices for matinee movies. Second it is a way to attract new customers. I might not be willing to risk $50 a person to try Ceviche, but at $30 I will give it a chance and may come back again. Finally, I wonder if this is a minor form of collusion among restaurants. Perhaps without restaurant week there would be even better August specials. A few years ago in my graduate school home of Madison, Wisconsin a group of bars got together and outlawed drink specials near campus. In the case of Restaurant week prices are dropping so people are unlikely to complain, but whenever a group of businesses get together and set a price we should keep an eye out.

As for dinner, we liked Ceviche. My wife, Marie, got the ceviche sampler for her appetizer and I got scallops in the shell topped with gruyere. Both were well presented and seasoned, we both made noises of delighted when trying these dishes. We also both got drinks, I had a daiquiri which was more the traditional sort with a nice grapefruit flavor and Marie got something flavored with passion fruit. The main courses a yucca lasagna and beef roast were good not great. The desserts a hazel nut chocolate cake was mainly moose and less cake like to the pleasure of Marie. I had tres leches it was good not great, a little spongy and I would have liked more fruit with it. The waitress was excellent and did a great job explaining the dishes. She also helped make sure no cilantro was present in Marie’s food. Their espresso machine was not working, and I would have liked espresso with dessert. Overall I would give it 3/5. A good overall place, but I would suggest going for appetizers and drinks over the main meal.

A Wonderful (Second) Life

What a 100% interest rate is not sustainable? Second Life banks are offering 100% interest rates, and a big surprise those banks are failing. With those rates there would be the potential to convert real US dollars to the games virtual Linden dollars then cash out. But as this blog suggests much like Itchy and Scratch money you can buy it, but you cannot sell it.

High School Economics is OK

Although most high school students do not get the benefit of taking an economics class a recent nationally administered test shows they are not doing too bad. Not sure what the standards were, but 79% of students showed a basic understanding of economics. The test did show that most people understood the idea of opportunity cost as around 72% could give a benefit and cost to leaving a job to receive more education. Recently Greg Mankiw suggested he would like students to learn three things in High School about economics: (1) Comparative Advantage (2) Supply/Demand and Efficiency of the Market (3) Market Failure and Externalities.

Although, my favorite of Mankiw’s Economic principles from his textbook is people respond to incentives. I often wonder what are the incentives for students to do well on these nationally administered tests? It reminds me of my 12 grade year in Ohio where we took a state wide 12th grade test. Students received no benefit for doing well on the test as it was only used to collect data for the Ohio school system, so I knew many students who just did not bother trying.

Snack Time!

Advertising serves two main purposes: it shapes our tastes and makes us aware of potential purchases along with their prices. In my intro to economics class room we typically assume people know where to purchase things. Additionally, we do not normally address the potential of companies to impact our preferences (or tastes). I guess not surprisingly, McDonalds has seemed to impact children as young as 3-5’s taste. According to a resent study by Thomas Robinson from Stanford, children that age when presented with the same foods (burgers, fries, chicken nuggets, carrots, and milk) in different wrappers one featuring a McDonalds logo and one with no logo they preferred the McDonald logo food. The first three items were purchased at McDonalds and the last two purchased at a local supper market. It is worth noting the tests were done on a total of 63 children in a low income head start program that is predominantly Hispanic. Interesting results, but I wish the sample size was a little larger, for what should not be a terribly difficult experiment to replicate if you have a room full of hungry preschoolers!

Link to the study:
Link to an article in Forbes about the Study:

Hop on the bus

In response to the recent airplane crash in Brazil it seems more Brazilians are opting for the bus. With the airline industry basically supply constrained by available routes and reaching capacity on loads, perhaps Americans will turn to other forms of transportation (as airline prices should rise). I guess I shouldn’t be surprise, but bussing is a very viable option on the east coast, much more so than the Midwest. There are direct buses from DC to New York, which run between $40-50 a round trip. One reason might be the large number of people going between the two cities, but I would guess the main reason there are more buses and trains for transport is people are less likely to have a car in a city like New York or DC. Even if they do (and one reason they might not) is parking in either city can is expensive. Perhaps though as one book suggests parking spaces do not cost enough in other cities, as free parking has its own cost by taking up space that could be used for other things.

Who reads these things?

I keep meaning to get this blog going again, but I had been a little down about it. I see that even great econ bloggers like Tyler Cowen at Marginal Revolution only get 7-10 comments per post. It made me wonder how few people read these things, even if you are well known. Then yesterday Tyler Cowen offered free copies of his new book to 15 people posting comments and he received over 200 comments. I read a few blogs daily, but I generally don’t post comments either so perhaps I was mistaken and there is a large set of unobservable readers like me. You could look at page view counts, but the Econ bloggers do not seem to prominently feature them. Anyways, I decided not to try to win a free copy of Tyler Cowen’s new book. I’m going to purchase it this weekend as I have gotten plenty of free entertainment from the marginal revolution blog.

I'm back and

I have decided to try to start bloging again. I was inspired by a recent book I was browsing in the library Strapped by Tamara Draut. I have not read the whole book, but it seems the major thesis is that it is more difficult for today’s young adults to get financially ahead. In particular, she points out large college loans, higher health care and child care costs, and today’s consumer driven consumption as causes.

So are costs increasing faster or income more slowly than other age groups. I cannot find separate inflation figures by age. However, the Bureau of Labor Statistics, which calculates the inflation rate recently calculated inflation for those over 62 years old and find from 1998 to 2005 (link here) and found in that 8 year period inflation for that age group was 24% compared to 22% for everyone else. This was mainly driven by increases in health care cost. If the BLS did the same thing for adult 25-35, my guess is we would find slightly higher, but not dramatically different inflation rates driven by increases in college tuition fees, which young adults are still repaying in loans. In that time period college costs increased 60% compared to medical expenses which increased 40%. My guess is there are not huge differences in terms of income either. It is probably more on the growth in loans/credit card debt to young adults, who might over extend themselves.

Unrelated, Strapped also suggested that debt was caused by overspending, but also by unexpected spending like trips to wedding and family gatherings. I never thought about how an unexpected trip can really throw someone off financially. Some tips to save you on your next outing can be found at The Simple Dollar, a personal finance blog I have been reading lately and highly recommend.