Sam Adams Brewer, Patriot, and America’s #1 Brewer

Inbev the Belgian/Brazilian brewing conglomerate finalized its purchase of Anheuser-Busch the U.S. #1 in terms of sales brewer (link). With both Coors and Miller being part of similar international conglomerates, Sam Adams is now America’s largest brewer followed by Yuengling and Sierra Nevada.

An interesting question though is what makes an American beer (besides a lot of water and little hops). If Budweiser, Coors, and Miller are all produced in the US, using American grain, with mainly American workers, but the company is owned by an international conglomerate is the American? What about Toyota and Honda, both Japanese companies, but if they produce their cars in the U.S. with American parts and workers are they American companies? What about Coca-Cola, which has local bottling plants around the world, which produce and distribute their product is Coca-Cola American if it is produced in Colombia or Angola?

Economists have different ways of measuring economic output depending on which definition you want to use. For the most part, I’m under the impression that it does not make a big difference. What is worth noting is with the U.S.’s large trade deficits we have to exchange something for all the imports we get. One way is to sell off businesses and other assets. Along with the growing economies of scale in a global market for beer and other products, I think we’ll see more of these types of buyouts.

I don’t know what’s next, but I wouldn’t be surprised if one of the big 3 automakers was purchased by a foreign conglomerate. Until then let’s be proud to call Sam Adams America’s #1 beer.

I’m Speculating The Weak Dollar is The Problem: High Oil Prices and Airlines

The author of Less Than a Shoe String, a great budget travel blog, forwarded me an open letter from American airline CEOs. The letter described here basically points to speculation in the oil futures market as the cause of the sharp increase in oil prices over the last year or so. It urges everyone to contact their congressperson to stop oil futures trading to save the airline industry

I’m speculating here, but at the same time oil prices have been increasing the value of dollar compared to other currencies has been decreasing. As currencies depreciate (lose value) imports become more expensive.
If $1 is worth half of what it used to be, we can buy half as much oil.

Econobrowser, graphs oil prices in both US $ and Euros. I have included his graph below. You can see oil prices in Euros have increased but not as much as in $s.

So although speculation may be part of it (my guess is a small part), the really big force seems to be the weak US dollar.

In India Pay Toilet Pays You

In many major cities it is hard to find a public restroom. This article in Slate details the building of public pay toilets in the U.S.. In most cases pay toilets in the US bring in far less “sales” (25 cents per use) than maintenance cost. Cities make toilets profitable to companies by allowing advertising on the outside of the booth.

In many cases extra toilets are located in places where homeless people would congregate, losing the 25 cents fare might be a good trade off if it prevents public urination.

However, in some places free toilets might not be enough to encourage the use. The slate article discusses payments to villagers in India to use the public toilet in order to prevent human waste pollution. Another idea is to try to change the norm of public deffication and urination. A paper presented at a conference I attended recently by Dickinson and Pattanayak (linked here) highlights a program in India that successfully combined subsidies for latrine construction with social mobilization programs to encourage the use of latrines.

Face It, You Want to Meet in Person

After discussing all the new/newish ways to keep in touch last night over beers, I’m thinking the newer technologies (e-mail, file sharing, video chat, twitter, facebook) actually increase the benefit of meeting in person at least for academics.For non-academics technological connections may improve the face to face interactions, if I'm keeping up our relationship through one of the above technologies.

For an academic, if I go to a conference I can see new research and maybe find someone new to write a paper with. But I have to travel, which has both a monetary and opportunity cost. Unlike, say 10 or 15 years ago it’s a lot easier to work with someone in another part of the country or the world. Yet, even though academics could probably all put their presentations on Youtube for much lower costs than travel we still go to meetings indicating that meeting in person is still superior to the technological alternative.

Granted sometimes as I’m sure a co-author of mine will attest there are benefits to say a conference in Hawaii

Chili Cook Off: How to Deal with Imperfect Information

So I spent my Fourth of July at the Palo Alto chili cook off. I arrived about an hour into the chili eating. So here is how the tasting worked there were 22 chili stands each staffed by a local community organization that had prepared their own version of chili. For $5 I purchased a tasting packet, which included 5 tickets. Each ticket could be exchanged for one serving (a few ounces) of chili. So I could sample 5 of the 22 booths. Additionally the lines for the booths varied greatly from getting served in a minute to 15 minutes. So the question arises which booth should I choose?

I could assume that no one knows anything about the booths and go to the shortest line. But the cook off had been going on for about 1 hour so I assume some information about the best chili had been passed. So perhaps the longest lines have the best chili. However, I don’t like to wait in line. But waiting in line is more enjoyable if you are currently eating chili.

So solution. Assume other people have similar taste to you in terms of chili and get one less preferred chilli from a short line, while venturing into a longer line.
Further experimentation proved that beer and chili are complements.

Most of You Like Weak Coffee or Starbucks is Wrong

Starbucks recently released a new line of coffee Pike Place roast. As this Wall Street journal article describes the new line is weak and is upsetting many loyal customers who wanted bold strong coffee.

This article made me think of a Malcolm Gladwell TED talk. In the talk which you can watch below he describes a great breakthrough in the canned spaghetti sauce industry. When a food scientist was hired to create the perfect spaghetti sauce he found when he tested three varieties which differed on thickness that about 1/3 of people preferred each type. His great revelation was, why not make 3 different types of spaghetti sauces? The new line of differing spaghetti sauces increased sales and customer satisfaction.

Relating back to Starbucks, Gladwell also talks at the very end briefly about how the same division can be made for coffee. By offering different types of coffee, Gladwell citing the same food sciencetist says that satisfaction for coffee can greatly increase. So why not follow Gladwell’s example and serve a couple of types of coffee one weak and one bold. Actually Starbucks does this for part of the day brewing a dark roast and Pike Place roast during the morning. But, in the afternoon they serve only the weak Pike Place roast. There must not be enough bold coffee drinkers, or bold coffee drinkers like weak coffee more than weak coffee drinkers like bold coffee.

Starbucks seems to be bucking the trend toward increasing choice discussed by Gladwell. This must mean that offering more variety of coffee increases costs, likely resulting from unused brewed coffee. So either Starbucks is wrong about most people’s preference for weak coffee or decreasing variety and sales might lead to more profits by lowering the cost of offering variety.

Find a Penny Pick It Up? Depends on Who You Are

Boston Gal, a personal finance blogger, has a nice little story about Russell Sage (link). Sage was a late 19th century wealthy financier. One day he received an advertisement in the mail for a play, which included a check for 4 cents and a note.

“Assuming that your income is $15,000 a year, and that you appreciate the fact that time is money, we enclose check for 4 cents in payment of two minutes of your time at that rate, to be employed in carefully reading a brief and honest statement of the novel, applause-winning features in our new musical farce"

Boston Gal estimates Sage’s income in the 5-10 million dollar range, meaning a minute of Sage’s time was worth $12, but Sage signed and cashed the check anyway. This is a common example, see Brad Templeton’s discussion of the value of Bill Gate’s time, which was estimated at $31 a second at one point.

These type of estimates are good for a first pass of if something worth your time. However, in some sense they are also an over estimate. If Sage or Gates worked a minute more they are likely to make less than their average wage per minute and in fact might not increase their income any. Same thing if you try to work a minute or few hours extra.

But, perhaps there is also something great about finding money. Never underestimate the fact that people like getting free (opportunity cost not included) money and services. If you don’t believe me just watch what people do for free t-shirts at a baseball game.