The Hotel Rwanda and Your Netflix Queue: You Can Check Out Anytime You Like, But It Will Never Leave

I love Netflix! I put movies in a queue on their website they send me two at a time and each time I send one back, usually after a couple of days they send me a new one. Sometimes it takes me a week or two to watch a movie, but after that since I have the 2 at a time package I send the movie back if I have not watched it. Some Netflix users hold on to their movies for months. In fact so long that it would have been cheaper to buy a copy of the movie then to pay for the extra disc on Netflix.

Slate recently collected information from readers on what type of movies people held on to the longest from their Netflix queue (great article here). At the top of the list were Hotel Rwanda and Schindler’s List. Like many other movies at the top of the list they were highly acclaimed, but not bag of popcorn and a beer to forget about your tough day at work type movies.

The article is a good insight into the work of behavioral economics. Sometimes people are not good at judging what they want to do, but instead judge what they wish they wanted to do. The other thing is that depending on the day people’s taste change.

This also verifies the Stand Up Economists Principles of Economics that Choices are Bad and People are Stupid (nerdy econ types who haven't seen this watch here).

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.

Perfect Competition and Ebay Sellers

In my intro to economics class, I teach my students a standard economic theory. That usually when anyone can sell something, then in the long run profits for a business will go to zero. These situations are called perfect competition.

I have often thought about perfect competition and Ebay. I would guess most (at least 90%) of the stuff sold on Ebay is not made by the person selling it. Since anyone in the US can pretty much sell stuff on Ebay, if there are profits to be made more people will start selling things on Ebay. When more people start to sell, the price of the good sold will generally fall until profits are zero.

Daniel Gross at Slate has an article today about how Ebay claims that 1.3 million people a year make their living off of Ebay and most of these people are in the US. Like Daniel Gross, I’m skeptical of this figure, it looks like the actual figure is referring to people who make their fist or secondary income from Ebay. What percentage of those people actually earn enough to live on from Ebay is hard to pin down.

In graduate school, I sold coins on Ebay for my father in law. I think the amount I made was something like 10% of my graduate school stipend. Having sold about 50 items on Ebay and not having to get my own merchandise, my guess is have to find just the right niche or have some special ability to find stuff at garage sales to make a living at Ebay.

$11,000 Coffee Maker,! How much for the coffee? The Clover Coffee Maker.

How much do you think a cup of coffee would cost from a new $11,000 coffee maker on the market, the Clover? You might think a lot, but as the Economist Magazine points out the Clover costs about as much as the typical espresso machine found in a coffee shop. Given this description in Slate it sounds like it takes about as much work to make a cup of coffee in a Clover as it does to brew an espresso. So the costs are similar to an espresso drink so given the plethora of coffee shops the price should approach costs or price of espresso drinks. So not surprisingly coffee from the Clover goes for $3.50 a cup.

But if you pay $3.50 a cup for clover coffee and $1.75 for a regular non-clover cup, there must be something different between the two. In the description of the Clover it seems the real key is the ability to control the coffee making process so the same great cup of coffee can be made each time. This allows coffee shops to use high end beans and distinguish the difference between regular beans.

It looks like (link) Alexandria’s Grape and Bean is the first DC area coffee shop to get one. Perhaps a field trip is in order.

Password Protection and Economics:

On a recent blog post Tim Harford’s, The Undercover Economist, answers a reader’s question:

Dear Economist,
I use the same password for all my e-mail and internet-portal accounts (online shopping, etc). Now I am worried about losing it to an identity thief. What should I do?
Confused Kid

Hardford gives some good suggestions for password creation (acronyms, song lyrics), but warns against writing passwords down. I think you can write your passwords down, you just need to put them in a code you understand. So for example if your password is (jenny8675309) on a piece of paper you put in your wallet write

369jenny86743097272

What the heck does this mean? It’s a password but jammed between a phone number that I know well (Papa John’s in the town I grew up in). Given the chances that someone finds this card in my wallet and can decipher it is really low, but now I can easily pull out the password.

Back to the economics of passwords. As passwords become more and more complicated, people are more likely to forget their password and need a reminder. They then have to call someone to reset their password, but that costs the company money. So instead they have invented security questions to recover passwords “What City did You Honey Moon in?” and “What is the name of your favorite pet”, with enough googleing these answers might be on the web. Josh Levin at Slate has an excellent article on the problems with these security questions.