Bruised Mangos

Economic development isn't easy. This American Life had a great recent episode on Haiti. The first story focuses on the mango industry. The reporters talk to a local exporter named the Mango Man who is trying to earn more money and in turn help the poor farmers that sell him mangoes. He could sell a lot more mangoes to Americans if only the mangoes weren't bruised from sitting around on farms or under beds of poor mango farmers. He tries to give out plastic crates to have the farmers store the mangoes and preventing bruising. The crates aren't used for mangoes but for chairs and he looks for other help. He tries an NGO who specializes in mangoes, but it only leads to more problems stemming from NGO rules, land tenure, lack of credit access, farming knowledge, port access, and then finally the earth quake.

The story really shows that even with a bunch of smart people with good intentions with local knowledge improving economic conditions is hard because there are so many problems.

Why I don't do all you can eat or upload

For a man of about 30 I just don't eat that much. I like to say I eat like a 6 year old who just ate dinner. My wife likes to point out this is a good thing.

Because I don't eat a lot I tend to avoid all you can eat buffets (well that and food quality). I never quite feel I'm getting my money's worth, when I see the person next to me getting their 4 or 5th plate of food. Generally economic theory says that when businesses are competitive that prices should go to average cost. The people getting 4 or 5 plates are driving up the average cost and the price.

I also don't have a smartphone. If I did have one, I would probably use it for GPS and the occasional surfing. Most cell phone carriers have all you can use (eat?) data plans costing $30 a month. AT&T has just announced it will offer plans based on your data usage instead of an all you can use. For heavy users this will be bad, but for me it makes a phone with a data plan more enticing.

But I'm still a Luddite, and think I'll keep going without the smartphone even for only $15 a month.

Game Theory and Bros Icing Bros

The rules for bros icing bros are simple. Suppose two players bro 1 and bro 2

If bro 1 hands bro 2 a Smirnoff Ice bro 2 has been iced and must get on one knee and chug the bottle.Unless bro 2 also has a Smirnoff Ice on his person in which case bro 1 must drink both Smirnoff ices.If bro 2 refuses to drink when he has been iced then he is banned from future play.


First, many of you may ask why would anyone do this. It looks like the hilarity comes from making your bros drink a terrible tasting beverage. There also might be a macho element, since Smirnoff ice is considered a "girly" drink.

Bros icing bros can be modeled as a repeated game. I think three solutions are likely.

Solution #1) bro 2 refuses the first ice and the game ends
solution #2) bro 1 and bro 2 always carry a Smirnoff ice on them at all times and no one is iced
Solution #3) no one ices anyone

Bros icing bros reminds me of a recent paper on the economics of dueling by Kingston and Wright (link). In short then found that dueling may have been used to maintain honor. They argue when credit depended on honor in the 19th century it may have made sense to duel, since those refusing to defend their honor would have lost their livelihood.

Will a paper some day prove bros icing bros incentive-compatible?

I doubt it...

Economics Tattoos

I saw a group of pictures of nerdy tattoos yesterday, but I can't find the link. There were pictures of maybe 50 tattooed people with things like DNA, Darwin's drawings, physics formulas, and chemical bonds as well as a few famous lines from great books. There were no tattoos related to economics. Then I did a google search on economics tattoos no luck.

A search of Supply and Demand tattoo shows that Peter Leeson author of The Invisible Hook: The Hidden Economics of Pirates has the curves tattooed on his bicep (From Economists Do it With Models)

I'm not really into tattoos but if I had to get an economics tattoo, I think I would go with a set of indifference curves with a budget constraint.

Lucky for my family my indifference curves on the two axis of tattoos and nontattoo goods intersect at no economics tattoos.

Monopoly = 1 firm and Confusopoly = ?

Over at Economists Do it With Models (ECDIWM) a recent post attempts to explain why airline prices move around so much and why there are so many little fees (checked baggage, sodas, pillows ect.).


I need to buy airline tickets this week. We'll be traveling with my 6 month old daughter so we'll be checking luggage. I don't have time to check out each companies' luggage policy.

I agree with ECDIWM that part of the little fees is to separate types of customers and get increased profits. If I don't check bags and don't drink soda the ticket may even be cheaper for me. But I'm wondering at what point it becomes too hard to compare airlines if they have prices for several different parts of the trip.

This makes me think of a term Scott Adams the writer of the comic strip Dilbert coined a few years ago.

Confusopoly --"a group of companies with similar products who intentionally confuse customers instead of competing on price"

Luckily the Internet is on our side. Will it be long before travel search sites like kayak allow you to compute costs based on the number of bags you would check and sodas you would drink.

Convincing the Most Important People Aid Works

Over at Aidwatch William Easterly & Laura Freschi have a great post on a puzzle of economic development. The world's poor (those living on $1-$2 a day) might actually have enough money to pay for things that would aid their economic success. In short research shows the poor spend 10% of their incomes on what we might think of as luxury goods alcohol, tobacco, soft drinks, and celebrations (e.g. weddings, funerals, holidays).

I have two thoughts:

1.) Easterly and Freschi are right people rich and poor make questionable decisions I like their line about a white American middle class dad "driving while talking on his cell-phone after having a few beers, risking the lives of his children in the car." So to get people to spend more money on school or not drink and pay attention on the road you have to convince them it’s the right thing to do.

2.) Relating to point #1 it is really hard to convince those living on $1-$2 that the strategies that development agencies think work will actually help. I like to think of the example of agricultural production. Several studies have shown that poor farmers will not use new crops or new techniques until they see that it works for others like them. With crops you can show that fertilizer increases yields or that farm profits increase with growing pineapples in a year or two. With bed nets and school two items mentioned in the post it is really hard to convince people they work, since the benefits are hard to observe.

The Economics of Daycare and Douglas North

Below that’s a picture of my daughter Sylvia and me reading a book about farming. Taking care of Sylvia has taken precedence over taking care of the blog for the last six months. Today, however is Sylvia’s first day at daycare. So in her honor here is a post on the economics of daycare.




One thing I have been thinking about lately is how pre-school and daycare might be part of a national development strategy. I’ve been participating in a couple of seminars at the InterAmerican Development Bank on early childhood development. In the US there has been a growing body of evidence that early interventions before kindergarten have a huge payoff for the individual child (a previous post). At the seminar one participant mentioned that the payoff to daycare often isn’t in terms of test scores in math or reading, but that it increases children’s ability to socialize when they get older.

Douglas North, a Nobel Prize winning economist, theorized that much of economic development is based on the institutions and social norms that a society forms. These social norms will certainly play a role in what is taught in daycare. I wonder if it might work the other way around, if daycare increases in a country could it improve how people get along and trust each other thirty years later. It’s a hard empirical question to answer, but if as North points out trust is central to economic development and early childhood development formed in daycares shapes the ability to trust then it might follow that daycares are a driving force of a country's economic development.