Thursday, December 27, 2012

Now it is the time to....diversify!

Good morning everyone. I hope you enjoyed your holidays with your families and friends. As I promised last week, the Everyday Economist is back with some more amusing economic stories. First of all, I would like to thank the people over at who ranked the Everyday Economist blog as one of the top economic blogs worldwide. I would like to thank them for their nice words.

Now, the story of the day. Today, I was planning to visit my barber for my regular hair cut. Unfortunately (for me), it seems that my barber is on vacation, taking advantage of the holidays. I had the option of waiting for my barber to come back from his time off, or I could have a hair cut at a barber shop down the same street. I chose the second option and I was rewarded with a descent haircut and a rather unusual story.

Upon entering the barber shop, I was greeted by an elderly gentleman who was eager to assist me. Meanwhile, there was another customer who was getting a haircut from a lady in her late twenties, who was very presentable. I did not think much at the time and the elderly barber was quick to strike a conversation with me. While I was getting a haircut I noticed a sign in Greek which read:

"Appointments for massage only on Saturdays. The massage will be given by Marianna." Now, I do not know who Marianna is, nor did I ask. I only assumed that it was the young lady who was cutting the other customer's hair. I do have to admit though that I could not see a spot anywhere in the barber shop that could facilitate a massage service. Although I found it interesting that the barber shop was in effect diversifying its operations, I did question the legality of the diversified operation.

Needless to say, I will be visiting my regular barber when in need of a haircut in the future.

Have a great day!

Friday, December 21, 2012

Season's greetings!

Good afternoon everyone! The last couple of days have been hectic as I have been busy with the publication of the Cyprus International Journal of Management. I am proud of the end result and I believe that the Journal is slowly becoming one of the leading publications in the academic and professional world.

As we are now entering the holiday season, I will take a couple of days off to unwind from my otherwise busy schedule. The Everyday Economist will be back on Thursday, December 27th with more interesting and entertaining stories.

Until then, enjoy your holidays!

Tuesday, December 18, 2012

Can I have a Porsche Cayenne please?

Good morning economists! A couple of days ago, some fishermen were glad to think that they had caught something big in their nets at South China Sea. They quickly discovered that they had caught a...Porsche Cayenne!
The car was of course pretty much destroyed as it was estimated that it had been sitting at the bottom of the sea for at least 2 years. The fishermen ended up selling the car to a local scrap yard for $650 (shame really those alloy wheels are valued much more than the sale price).

It seems that through the South China Sea, smugglers attempt to sneak into China luxury items such as this car in order to avoid paying import taxes. The Porsche may have been pushed in the sea out of fear of getting caught by the authorities.

What a waste!

Have a great day.

The opportunity cost of being late!

Good morning economists. I will start today's post with the obvious statement that "you cannot be in two places at the same time". Technology nowadays allows people to communicate via teleconference thus defying this statement. But what happens when you physically need to be in two places at the same time?

Timothy Thompson managed to find himself in jail (over an undisclosed event) the exact day that he was getting married. Upon his release, he got in his Jeep and sped to church. Unfortunately for him on his way there, he was stopped by police officers as he was clocked at 100 miles per hour, that is, 30 miles over the legal speed limit. He quickly explained that he was late for his own wedding and pleaded with the officers to let him go. When the impatient groom saw that it was taking too long, he attempted to get away because he was "late for a party in Chicago". Timothy ended up getting arrested and spent the remainder of the day in jail where he was just released from.
What is the economic and moral lesson of the story? You cannot physically be in two places at the same time no matter how hard you try. In fact, trying to pull a "beam me up Scotty" by speeding and driving recklessly will end up costing you quite a bit and even land you in jail. So weigh your options carefully and for God's sake...avoid getting arrested on your wedding day! Friendly advise.

Have a nice day.

Sunday, December 16, 2012

Crazy thefts in the name of recession

Good morning economists and have a lovely week. Everyone is worried nowadays of the rising number of criminal activities around the globe. As more people find themselves without work and a steady income they are forced to turn to crime as a means of supporting themselves and their families. Unfortunately this is the social cost of a recession, a cost that is difficult to quantify in money terms.

But what are the craziest crimes that have occurred in the name of economic recession? We all heard the stolen car stories or the occasional breaking and entering into someone's home.

A couple of weeks ago in Nicosia, Cyprus, three men with a truck actually stole a...bus stop! A witness mentioned on a popular radio show that the men stopped the truck in front of the steel structure, used an electric saw to cut it loose from its foundation and loaded the thing onto the truck. I guess the increasing price of recycled steel was something that these three men could not refuse. By the way, the culprits are still at large.

The second story comes from Reddick, Florida, where a 40 year old woman returned to her house after work only to find that her driveway was stolen! The bricks that comprised the paved road were gone! Police arrived at the scene but once again the "burglar" remains free.

Do you have any weird theft stories?

Have a safe day!

Friday, December 14, 2012

Gangnam style dancing can be harmful for your health!

Good morning economists. Today I would like to talk about anecdotal evidence. Allow me to explain. Have you heard about the slogan "seat belts save lives"? It is generally accepted by everyone and in fact it is backed up by statistics that seat belts constitute a vital safety feature in automobiles. However there are those who would argue the opposite.

A friend of mine was telling me how a distant uncle of his was involved in an accident and was not wearing his seat belt at the time. "He was thrown out of the car when he hit a wall. The car immediately burst into flames. If he was wearing his seat belt he would probably be killed". This was his argument. And he concluded..."in the end it is better not to wear seat belts at all".

See how my friend generalized an otherwise isolated incident? It would be very difficult indeed to replicate the exact conditions of the accident so such generalizations are incorrect and dangerous.
 A couple of days ago, Earmonn Kilbride, 46 from the UK collapsed after dancing to the rhythms of the Gangnam style song during his office Christmas party. Earmonn unfortunately suffered a heart attack and passed on. Immediately the media jumped on the story portraying the idea that Gangnam dancing can be harmful to one's health. Of course it goes without saying that this is just another example of anecdotal evidence.

So steer away from arguments based on anecdotal evidence. They are bound to affect your decision making process in a negative manner.

Have a nice day!

Tuesday, December 11, 2012

Sex and chocolates part 2

Good morning everyone! Back in September I posted an article regarding the relationship of sex and chocolates. At the time I wondered whether the two were substitutes or complements. Substitutes are goods that can be used interchangeably, like Pepsi or Coke, and complements are goods that are used simultaneously, like DVD and DVD players.

An anecdotal partial solution to my question was provided by a trio of 13 year old teens who robbed a Wisconsin Walgreens pharmacy. The teens went after condoms and candy most probably because they were shelved together. The teens threatened the attendant at knife point.
Is it possible that condom and candy usage changes with age? Can they be substitutes or complements based on adolescence or adulthood?

Candy for thought.

Have a great day!

Monday, December 10, 2012

So you want to buy an iPhone 5...

Good morning economists. I heard a rumor that you want to buy the iPhone 5 this holiday season. In most countries around the world where there is an official Apple store, prices are kept around the range of the suggested retail price. In countries where the only available option of getting the iPhone 5 is through resale retailers though, it is a whole new ballgame.

Last week myself and my significant other visited a well known store in Cyprus which specializes in providing mobile telephony services. We noticed that there was an iPhone 5 on display, however there was no price tag for the phone. We knew that the retail price for a 16 GB iPhone 5 in the UK is currently at 530 pound sterling which is approximately 660 Euros. We assumed that the UK price would be indicative of the iPhone 5 price in Europe. We were shocked to discover that the particular retailer demanded 900 Euros. 900 Euros!!! That's 724 pound sterling, almost 200 pounds above the suggested retail price. That's $1165 which is double the retail price in the USA!!!

When confronted about the outrageous price, the store manager explained that the difference was because of exchange rate discrepancies. "Convert the pound sterling into Euros", he said. "You will see that it comes out to 900 Euros." Cheap excuse made to fool ignorant buyers.

The goal is of course to sell as many iPhones during the Christmas season and then drop the price to regular levels in February. Plus, they have the chance to sell the iPhone 4s which they still have in stock for 650 Euros, which was its retail price before the new version made an appearance.

What's even worse is that the rest of the retailers are following the same example of charging outrageous prices in the holiday season and decreasing them to regular levels in January or February.

In the end we did not buy the phone for those of you who wonder. But another buyer who was at the store with us did! I looked at him in a funny way. Afterall it was because of people like him, who are prepared to pay a ridiculous sum in order to be among the first to own a gadget, that the retailer is overcharging.

So who is to blame for the high price? The retailer or the buyer?

Have a nice day!

Sunday, December 9, 2012

What's on your Christmas wish list?

Good morning economists and have a great week. I remember the feeling of waking up on Christmas morning to a smell of fresh coffee and breakfast. I remember opening my presents in a frenzy of joy eager to play with my new games. Hey, afterall I was five at the time.

Growing up, I still had my Christmas wish list prepared. Sometimes my wishes were realized. Some other times...not so much (darn clothing gifts!).

Sometimes though, money cannot buy that special gift! Take the example of Marc Paskin, a San Diego millionaire who is well known for his charity work. Marc lost his wife back in 2002. Although he dedicated his life in helping the poor, he now wants something from Santa in return.

So there you go...Marc wants a Latina girlfriend and he is not afraid to let the world know about it. Call me crazy, but I know that Marc will eventually find his Latina girlfriend.

They say that money cannot buy happiness but does that apply in the case of Marc? Will his future girlfriend love him for the person that he is or will his money act as an extra motive? Are we sure that money cannot buy happiness?

Have a wishful day!

Wednesday, December 5, 2012

Handyman kidnapped, forced to conduct repairs.

Good morning everyone! Everyone knows how hard it is to find a decent handyman. The good ones may have a mile long waiting list. But this was not really an obstacle for California couple Jason De Jesus and Chanelle Troedson who kidnapped their handyman and forced him at gunpoint to conduct repairs on their home.
Now I know what you are thinking. That poor couple. They must have run out of money and really needed a handyman. Did I forget to mention that their home was actually a five bedroom mansion? What is the world coming to when the rich engage in such behavior? I guess their marginal utility of money must be increasing at an exponential rate!

Have a "handy" day!

Tuesday, December 4, 2012

When do you need to rent a grandma?

Good morning economists. It appears that during times of recession, entrepreneurs or wannabes come up with some innovative marketing ideas some of which are indeed successful. One such idea hit Todd Pliss who came up with the "rent a grandma" babysitting service.
Older women usually transmit a feeling of trust and are more experienced with taking care of young children. As such they make desirable babysitters. I guess a "grandma" would be a whole lot more responsible than teenagers who are usually hired to babysit.

That is an example of a simple idea that just works. Who said that the most successful ideas need to be complicated?

Have a great day!

Monday, December 3, 2012

Meet the man who found a way to be more productive

Good morning economists. Let's admit it. We all had slow days before. Days that all we want to do is sit in front of the TV and just do nothing. Some people have more slower days than others. I guess this is what labels them as being lazy.

But what happens when you have lots of work to be done during one of these slow days? You cannot afford to procrastinate and you are too lazy to work! Well, meet Maneesh Sethi, the man who actually found the answer to becoming more productive.
Maneesh hired someone via Craigslist to slap him in the face every time he went off task. Amazingly, his productivity rose from 38% to 98% ( I guess he did get slapped a couple of times even during his most productive day). Maneesh managed to convert procrastination into physical pain, an activity which he would like to avoid at all costs.

Procrastination would yield some future disutility in the form of a pay-cut or even job loss. The slapper's job was to convert the future disutility to its present value by inflicting physical pain. works!

Funny thing, it is not the first time that I am posting about slapping services. A month back I posted an article on slapping as a means of maintaining firm skin! Is slapping a new trend?

Have a "slapping" day!

Sunday, December 2, 2012

The art of negotiating

Good morning economists. A couple of days ago, I was watching an episode of "Dealers" where different people are trying to sell their family heirlooms or artifacts to five dealers from all over the world. The seller negotiates with the five dealers and each dealer makes his or her own offer. The seller can choose to sell the item or reject the bids. Although this is not really strange, I was surprised by the asking price and the negotiated price. I have seen items that the seller was asking $10.000 for, negotiated down to $3.500. And that was not just an isolated example. In fact in most of the episodes I have watched so far, the dealers make an offer below 50% of the seller's asking price.

In the end, only a handful of people agree to the exchange. The question is why are they prepared to discount their asking price by so much? The obvious answer is that they need the money, but there is another reason as well!
 (An example of a buyers' market. Firms hire labor at a given wage rate on a take it or leave it basis.)

"Dealers" is an example of a buyers' market, a situation where the buyer is the one who is really setting the price. Anything above that price will not be sold. But what is really interesting to see in this micro market, is the effect of information on the negotiated price. Each dealer is specializing in a particular item. Thus the seller is unable to lie or trick the dealers in paying for an overvalued item.

This is something that can be observed on a larger scale in everyday life as well. Sellers know that buyers will be more informed when making a purchase during times of economic contraction. As such this is reflected in the discounted prices they offer their products for in order to make them more attractive.

Have a great "offer" day!

Friday, November 30, 2012

What can you buy for $5?

Good morning economists! The budget constraints nowadays have an adverse effect on consumption. So when someone advertises a product or service which he/she can perform for $5 then that is what I call an attention grabber. So what can you buy for $5? Here is a list with the most weird services offered over the internet:

1) A person willing to eat catfood. Apparently this person is willing to eat feline food for a fiver...Although a small dosage may not really pose a problem, I suspect that if the "service" hit, she will be spending her hard earned money on doctor visits. Here is the link.

2) For a fiver, a woman with the alias Natalia, is willing to flirt with husband, wife, boyfriend, girlfriend to test their loyalty. Be have been warned. Here is the link.

3) Another person over at fiver, is willing to write a message on her lips and take photos as a means of promotion. I would very much like to see a promotion of the firm "Ziffren, Brittenham, Branca, Fischer, Gilbert-Lurie, Stiffelman, Cook, Johnson, Lande & Wolf." And yes, there is such a company! The link!

4) A "brave" user on fiver is willing to fill his shoes with ketchup or mustard and wear them for five minutes. Yes the buyer has the option of ketchup vs mustard! (link
Have a high "fiver" day!

Thursday, November 29, 2012

Meet the man that was run over by his own car

Good morning economists. Are you familiar with the term "preemptive fines"? These are fines (penalties) that people have to pay if they demonstrate indifferent behavior which may result to a crime. For example, recently a woman had her car stolen outside a newspaper kiosk where she stopped to buy a newspaper but left the car running. She was hit with a police fine because her behavior caused the thief to steal her car.

Yesterday, police were shocked to find Brian Reynolds laying injured after he attempted to stop a car with his bare feet, in other words he tried to pull a Flintstone. This was after the brakes on his 1987 Chevy failed. The otherwise victim in this case was given a $35 fine for handling defective equipment.

As we find ourselves in the midst of a recession, are these preemptive fines effective? A brake change can cost up to several hundreds of dollars. A $35 fine is unlikely to deter putting off the brake change up to the point of failure. Should fines be revised in periods of recession and if so in what way?

Have a "fine" day!

Tuesday, November 27, 2012

The theory of relativity in economics

Good morning economists. We have all heard of the saying that "one man's trash is another man's treasure." Or the more classic "the beauty is in the eye of the beholder". Today we will talk about the subjective valuation of goods and services.

Have you ever tried to buy a used car? The salesman will try to highlight all the extras that come with the car arguing that they normally cost hundreds of dollars to have them installed.

Now have you ever tried selling a used car? When you let the salesman know about all the extras, he is quick to dismiss them. In fact all of the salesmen that I talked to argue that the extras do not add to the real value of the car.
So I will rephrase the good old saying. It seems that "the value is in the eye of the beholder". Come to think of it. Is there such a thing as an objective valuation?

Have a valuable day!

Monday, November 26, 2012

On the economics of generosity

Good morning economists. A while back, we discussed the idea of the dictator game in economics where a subject is given a specific amount of money and is presented with an opportunity to share his/her endowment with a second person. The conclusions for this game reveal that people are more altruistic than economic theory presents them to be. They are indeed prepared to share as opposed to keeping the entire amount for themselves, however, one needs to ask what their guiding motive is.

A while back, I was walking along a busy street with my significant other, when we discovered a wallet lying on the pavement. We picked it up and noticed that there were a couple of credit cards inside together with a photo ID of the owner and also some cash as well. Without a second thought we presented the wallet to the police that returned it to its rightful owner. Of course a wallet with 30 something Euro did not impose any moral dilemma.

The second story from Sacramento USA, involves two ventilation workers who discovered $300.000 worth of gold dust stored away in 12 jars of baby food as they were working underneath the floor grid. They were both extremely surprised. One of the workers admitted that he thought about keeping the gold, but eventually he returned it to the homeowner. Could it be that he was forced into this action since his co-worker knew about the find? Plus, let us face would have been difficult to remove 12 jars of gold dust without being discovered by the homeowner.

Herein lies the answer as to why the dictator game shows behavior which departs from the parameters of economic theory. INFORMATION. In the dictator game all the subjects know how the game is played. Even the receiver knows that the dictator has an endowment that may be shared between the two. If the receiver did not know about the endowment, the sense of altruism that the dictator feels from sharing is immediately nullified. As such he/she would most probably keep the entire sum instead of sharing. I am willing to bet that if the worker described above was working alone and the owner was not at home those jars of gold would have disappeared in a few seconds.

Overall, generosity can be triggered by symmetric information between two or more subjects. The greater the asymmetry, the lower the urge to be generous!

Have a generous day!

Sunday, November 25, 2012

The economics of lying

Good morning economists and have a lovely week. I was reading on the news the other day about Perse school in Cambridge, England, where a strange rule allows students to get out of trouble with the headmaster (principal) if they manage to come up with a creative excuse within a time limit of 10 seconds. Thus, it is possible to talk their way out of punishment by lying and doing it so in a creative manner. Even though the principal of the school was criticized for allowing such a rule, he is convinced that students are forced to think "on their feet" therefore allowing them to develop mentally. The unorthodox rule, however, creates a problem in that it raises bad behavior activity that is premeditated. Allow me to explain.

We can classify lying into two general categories: premeditated lies and instantaneous lies. A premeditated lie is one that is prepared in advance because it is known to the culprit that he/she will engage in an inappropriate activity in the future. In case that he/she will get caught, the excuse will be already prepared. Even in this case though, the culprit knows that the lie may be accepted or rejected by a court of law.
 The second category is instantaneous lies. In this case, the culprit is accused of doing something which was not premeditated. In this case, the accused needs to come up with an excuse on the spot. Perse school's "get out of jail for free" card applies strictly to this category of lies and will not work in the case of a premeditated activity. In fact one can argue that because students are familiar with the rule, they will switch their behavior to premeditated activities that will allow them to defend themselves when they face the headmaster.

Is this a good thing you may ask? Let me remind you that premeditated crime is punished harsher because it shows intention! Time for the headmaster to change his tactics.

Have a truthful day!

Friday, November 23, 2012

Black Friday stories and lessons to be learnt

Good morning economists. By the time some of you will be reading this, you will have already concluded your Black Friday shopping. In fact I am writing this post at 3:37 am Eastern time and many of you are probably standing in line in front of your favorite store.

I have posted in the past about how special offers or low prices can affect a person's judgement. If the price is low enough, this can cause consumers to buy a product even though they do not actually really need it. They just consider that the offer is "too good to pass up".

I remember back in 2007 I was affected by the Nintendo Wii hype. The new games console was just released and people were lining up in front of stores on Black Friday to secure one of the limited pieces available. I was one of the many people who lined up in front of my local Target store anxiously waiting for the doors to open. Thankfully I was first in line because I arrived there at 12:30 am. The doors were opening at 6:00 am. Soon enough, about 200 people were lining up behind me.

At around 4:00 am the store manager opened the door and informed us that only 10 units of the games console arrived at that store. He handed 10 coupons to the first ten people standing in line that gave the bearer the right to buy the console in store within the next 24 hours. I was happy and relieved at the same time because I had the valuable coupon in my hand. The people who got the coupons agreed to go home, rest, and come back later in the day to claim their Wii. Upon leaving, I asked the remaining 190 people in line whether they were waiting to buy the console. Pretty much everyone said yes. I informed them that only 10 consoles had arrived and that we already had the coupons, so they could go home or to another store if they wanted.

The result? Nobody believed me even though I was telling the truth. Nobody moved from their spot and when the doors opened two hours later they found out the hard way!

Long story short I ended up buying the Wii only to sell it a couple of weeks later for a hefty profit on the black market (quantity demanded was a lot higher than quantity supplied boosting up the prices).

Moral of the story? Exercise good judgement. Do not allow the special offers to manipulate you into buying things you do not need. Black Friday is based on this phenomenon.

Have a nice, shop hunting Black Friday!

Thursday, November 22, 2012

Say yes to the dress...the everyday economist style

Good morning economists. Last night, I was watching an episode of "Say yes to the dress" on TLC. For those of you who have not heard about the show before, future brides visit the Kleinfeld bridal store where they hope to find their dress for that special day. (For those of you who wonder why I was watching the show, it suffices to say that there was nothing else on TV.)

The funny thing is that the producers of the show came up with an episode which is a classic case study for economists! For the sake of anonymity, I will give you the gist of the story using generic names for the brides involved.

Two brides entered the store each with their respective families. The brides did not know each other and the fittings were conducted in independent rooms. Both bride A and bride B had a budget of $5000 for their dress. Both appeared to have the same taste and from what I could perceive they both belonged to the same social class. Both brides were trying on dresses within their budget when all of a sudden an important variable changed for bride A.
Bride A's mother handed her an open check informing her that she now had an unlimited budget for her dress. Suddenly, bride A was not satisfied with the $5000 dresses and opted for dresses with a higher price tag. She even tried on a $12000 dress before she settled to $7000 out of guilt that she did not want to spend a ridiculous amount even though she had an unlimited budget. She was satisfied with the price tag of $7000.

Bride B was trying dress after dress and when she was informed that there was one on sale for $2500 she was ecstatic! She tried the dress on and she immediately liked it. When she informed her family of the price, they were extremely surprised and were enthusiastic when she announced that the specific dress constituted her final choice.

To recap, bride A had to compromise for a dress that was worth a lot more in terms of money then bride B's dress. Bride B was ecstatic because she found what she wanted and was well under budget. Given the case study above, does unlimited budget always yield higher utility (satisfaction)? Apparently not!

Have a nice day!

Tuesday, November 20, 2012

Meet Noodles, a dog with a bank account!

Good morning everyone. No matter the country they are located in, nowadays, banks seem to complain about liquidity problems and insufficient deposits due to the recession. And yet Nat West bank in Leicestershire, England opened an account for Noodles, an otherwise sympathetic four legged creature. This came to the attention of the bank officials when Noodles the dog withdrew more money than there was available in his account.
As a result a letter went out charging Noodles an overdraft fee of $10. However, the fee was not recovered since Noodles and his owner moved house. Metro newspaper suggests that many dog owners open accounts for their pets in order to pay vet bills and other pet related expenses.

You know what they say..."it's a dog eat dog world out there". And apparently they have bank accounts as well!

Have a nice day!

Monday, November 19, 2012

Do you shop while on the toilet?

Good morning everyone! A new survey by CashStar and Harris Interactive reveals that more than 38 million Americans have purchased stuff online while using the restroom. The same survey also revealed that more than 4 million people shop while driving!

Welcome to the digital age where people shop in all types of weird places. Smartphones, tablets, laptop computers as well as the rise of deals that can only be found online are the reasons for this phenomenon. If simple actions like going to the restroom complement shopping online (hey the restroom may be the source of inspiration for some people) then why not do it properly. Meet the new gadget that is a must for a new home...
Personally, I would like to know what stuff people buy while on the toilet. In what room do YOU do your internet shopping?

Have a relaxing restroom day!

Sunday, November 18, 2012

Public servant looking for a date...

Good morning economists! Back in September, I posted about the economics of dating. Yesterday night I was out for coffee with some friends and the discussion shifted over to dating classifieds in newspapers and magazines. I have always found this classified section of the newspaper interesting as I am intrigued by the choice of language and content that some people choose to include in their ads.

Traditionally, men tend to highlight their social status in order to attract women. Ladies on the other hand, place greater importance on physical looks in their classifieds as a means of attracting men. This behavior according to my old sociology professor is inherently tied to the fact that the man has traditionally been the breadwinner in the family. Social theory suggests that a relationship is actually a contract where two parties agree to an exchange of characteristics that they bring to the table. This contract, however, does not remain untouched by the current economic recession.
Classifieds nowadays have financial stability and security as the main highlight, for both genders. Public servants have always enjoyed the feeling of job security so there are literally hundreds of ads daily about public servants looking for dates. Indeed there are so many of them one may think that either the public service is disproportionately huge, or, that it is comprised solely of single people who are looking for a date.

But as the government is looking to fight the budget deficit, public service will undoubtedly shrink. Will that change the world of dating classifieds? (See pic above!!!)

Have a lovely week! 

Thursday, November 15, 2012

Chili powder vs robber with a gun!

Good morning everyone! We have discussed in the past the increase in criminal behavior which is a consequence of the existing economic condition worldwide. As more and more people find themselves falling below the poverty level, some turn to illegal activities in order to compensate for their loss of income. In fact I was watching the news the other day and I was surprised to see that certain stores constitute regular targets for robbers. There are plenty of examples of store that have been hit repeatedly over the past few weeks. Convenience stores are especially susceptible to robberies. The fact of the matter is though, that convenience store owners are so tired of getting robbed that they have become specialists in thwarting potential criminals.

Would you prepared to defend your store if you were asked to hand all your money at gunpoint? Well, just like people find themselves in a desperate position so as to turn to robberies, victims are also desperate enough so they find the courage to defend themselves against crime. An example of this was witnessed in Massachusetts where a convenience store owner found a new innovative weapon to defend against a gunned robber.
Let me tell you, finding the courage to throw chili powder in the eyes of a man who was holding a gun reveals that the owner was desperate not to get robbed.

Would you hand over your wallet if you were robbed at gunpoint? Some people would, some others would be prepared to fight. In fact we can argue from an economic perspective that people with high marginal utility of money (people who value money more are usually in lower income groups) will fight and  people with lower marginal utility of money will hand over their wallets.

What would YOU do?

Have a nice weekend!

Wednesday, November 14, 2012

Marijuana legalized in the US, Europe to follow?

Good morning economists. Well, it seems that more people are now supporting the legalization of marijuana. In the past, the drug was legal for medical use but states like Colorado are now passing initiatives to legalize pot for recreational use. In Europe, marijuana is legal in Holland but with an estimated 1,7 billion dollars worth of merchandise being sold in 2011 alone, I am wondering whether other countries may be tempted to legalize it as well. Economic reasons alone could lead to legalization as in the midst of the recession taxing marijuana may be in the best interest of public economics.

A drug dealer in Brooklyn New York, who wished to remain anonymous donated half of the money he made in two days from the sale of marijuana to victims of hurricane Sandy. He donated 700 dollars, which means that his monthly income is estimated at 21,000 dollars. That's a lot of money to tax!
Meanwhile, investors are looking for ways to take advantage of this wave of legalization. Already, people are buying shares from medical companies that produce machines that identify people who are eligible to receive their dosage of the drug via fingerprints. It will be interesting to see what other types of companies will enter the stock exchange. Meanwhile the market price of a regular legal dose is 12 dollars.

Have a nice day!

Tuesday, November 13, 2012

The telephone game (Bitcoins part 2)

Good morning economists. If you recall a couple of days back I wrote an article about the bitcoin phenomenon. If you do not know what a bitcoin is or the story behind bitcoins you can access this information here.

The conclusion of my previous post was that bitcoin was a rather sluggish attempt to create an online currency that was plagued with security issues causing a lot of people to lose their hard earned cash. Yet still ever since I posted that entry, I have been receiving emails and messages from people arguing that the bitcoin was actually a success. One has even gone as far as to argue that I confused the purpose of the bitcoin. Some basic research can reveal that the bitcoin was the invention of a person who was never seen and who disappeared all of a sudden a few weeks before the system of the most important bitcoin broker was compromised resulting in huge amounts of bitcoins being lost.

This fixation of people on the idea of bitcoin, even after they might have fallen victims to hacker attacks or after they knew that other people were ripped off is puzzling. There are still people who believe that the bitcoin is or will be a success. But let me tell you. These are the people who are interested on making a profit so much so that they overlook important information that can save them a lot of money and heartache. They are blinded by they hype, so they cannot stop and think for themselves. Allow me to illustrate with a cartoon like representation.
 Remember when we were little kids and used to play the telephone game? Information was so distorted when passing from person to person that it did not make sense in the end. My personal opinion is avoid falling victim of the telephone game. Think for yourself, no matter the investment involved. And for all that is holy. Do stay away from bitcoins...for your own good.

Have a telephone free day!

Monday, November 12, 2012

The haunted toaster!

Good morning economists! Today I would like to discuss the notion of expected utility. Whenever we purchase an item or service, we expect to receive some degree of future enjoyment out of its consumption. But what happens when the item fails or requires technical support? It suffices to say that consumers are disappointed or become agitated from the fact that their enjoyment is not what they were expecting.

Back in 1984 on the "Today" show, a woman by the name of June O' Brien took it to another level, when on national TV she admitted that her toaster was possessed by the devil!
The toaster was spitting fire, burning the loafs of bread and apparently it also knew how to write (watch the video and you will understand). Today, this interview is deemed as the greatest interview in television history and this is all because of a toaster.

You know what they say..."you get what you paid for", meaning that a higher expected utility is positively related to a higher price that we pay for an item today. Do you agree with this statement?

Meanwhile, I wonder whether the toaster was "made in China". Not to make fun of Chinese products, but I had such a toaster which spontaneously combusted! Darn it, I should have called the television stations.

Oh well!

Have a nice day!  

Would you buy a $200 iPad?

Good morning economists! Of course you would buy it in a heartbeat. If you were buying a real iPad that is...A woman in Arlington, Texas, was approached in the parking lot of a gas station (!!!) by someone who offered her a deal on a brand new iPad. $200 instead of the $800 that it was retailing in the store. The woman was quick to accept the deal. When her sister opened the package, she discovered that she was actually sold a mirror dressed up as an iPad!
You know what they say, if the offer is too good to be true then it is usually not true at all!

The question that arises however, is why would anyone buy an $800 iPad for only $200? I mean, it does sound suspicious and the offer should make the scam alert go off. Of course the risk of being scammed is always there. However crooks need to decide on the price that they are selling the item, and this is no easy task!  The price needs to tempt the buyer into purchasing the item and at the same time it must not be too low so as to arise suspicion.

"Some of (the victims) think they’re getting a good deal on an iPad and it kind of blocks their sensory perception of right and wrong,” a Grand Prairie detective said and he is absolutely right. Apparently, the woman in our story above was blinded by the $600 savings on an iPad. Does she have the right to be upset at the crook who sold her the fake iPad or should she be upset with herself for her false judgement?

How much is your sensory perception of right and wrong worth?

Have a nice day!

Thursday, November 8, 2012

Bitcoin: thank God it failed!

Good morning economists. I would like to finish this week's posts with a discussion on the failure of the bitcoin. Chances are, that you, like me, have not heard of the bitcoin before. Indeed it was not until yesterday that this concept came to my attention.

Apparently someone by the name of Satoshi Nakamoto came up with the idea of a universal electronic type of money, called bitcoin. This virtual money could be earned by solving online puzzles by people who were called "miners". The economic theory behind botcoin seemed sound. Bitcoins were to be released slowly so that the value was kept relatively constant and the problem of inflation could be handled. Bitcoin was introduced just when the global recession hit, when investors were losing confidence in all major currencies. At the same time bitcoin exchange with real currencies could be facilitated through bitcoin brokers. Here is a short video released in 2008:
Bitcoins were to be used for online payments and several retailers were accepting them as a means of payment. However, it never really became a popular currency for exchange. At one time the exchange rate of the bitcoin to the dollar was 1 bitcoin for $27. This meant that demand for bitcoins increased dramatically and a few thousands of bitcoins were worth millions of dollars.

Then all of a sudden the online system crashed. Satoshi Nakamoto disappeared. Sometime later, the online wallets where consumers kept their bitcoins were attacked by hackers who were emptying them in the blink of an eye. Sadly, the bitcoin was not allowed to die there. It still exists today but no one in their right mind would (according to my own opinion) try to buy bitcoins.

The bitcoin was a failure, but its short lived success (in 2009) raises the topic of the need for an international currency. It seems that people are desperate for a unified currency, maybe as a reaction to the economic recession. Pity that this need was taken advantage of by a common thief.

Have a real currency date. 

Wednesday, November 7, 2012

Is anticipation part of the consumption process?

Good morning everyone. today I would like to discuss the topic of anticipation. Think about just placed an order online for an item that you really want. Delivery through the post is about 5-6 working days. Because this is an item of desire, the anticipation to receive the item is building up during the wait period. In fact the anticipation is part of the whole enjoyment process (total utility). One can argue that this is what makes sites like Ebay so successful. Because they add to the total experience of purchasing and enjoying the item.
Of course the problem with such websites is that anticipation may rise to such a level, that it shadows any budget constraints so a lot of times people are overspending. I remember a friend of mine some years ago, bought an iguana cage off Ebay. Problem was, he never actually owned an iguana.

Consumer nowadays purchase more items online than ever before. This is not just because of the lower prices that can be found online, but also because anticipation has an overall positive utility.

Have a postal day!

Sex for gas (petrol)

Good morning economists. Today I would like to discuss the idea of barter. Barter is the exchange of goods and services with other goods (or services) without the need of money to act as a medium of exchange. While you may have performed such an exchange in the past, people that live in New Jersey and New York have made this their daily routine.

After the disaster from hurricane Sandy and the subsequent loss of public utilities such as electricity, people found themselves faced with food and gas (petrol) shortages.
The screen capture above is from Craigslist and presents the severity of the problem. People are prepared to exchange sexual acts for gas! Now the law says that solicitation and prostitution is illegal, however, is this only limited to money?

The rise of the black market of gas is the result of shortages or excess demand in the area. The police has so far confiscated 30 five-gallon buckets of gas from people who drove all the way to Connecticut to buy gas at $4 per gallon in order to sell them at $20 per gallon in New York. I am wondering how gas much the person with the "phat ass" (seen above) is prepared to "pay"!!!

Have a full tank day!

Monday, November 5, 2012

Delivery man urinates on customer's front door

Good morning economists. Today I would like to discuss the issue of tipping. I remember the times when everyone would tip their waiter, delivery guy, hairdresser and pretty much any service provider without thinking twice. But those times have come and gone. Nowadays, people find it harder to leave tips because of the financial situation they find themselves in.

In the US, a tip based wage can be as low as 2.13 dollars an hour in some states. This means that a lot of people working in the restaurant business are dependent on customer tips. When a tip is not provided, it is only natural that waiters or delivery guys become agitated. A delivery guy in Iowa, took it to the extreme, when after delivering a pizza (and received no tip) he got his revenge by urinating on the customer's front door.
If you watched the video you probably heard that the customer knew that she could not afford to leave a tip before she placed the order. I condemn the action of the delivery man, but I also question the customer's decision to use the delivery service when she knew she could not leave a tip. She could have easily picked the pizza up herself or have a friend pick it up on her behalf.

The moral of the story is this. Do not use services that you know you cannot pay for especially when you are dealing with someone who handles your food. The opportunity cost, as you have watched above, may be greater than you originally considered.

Have a tipping day!

Sunday, November 4, 2012

How much money would save you from getting stabbed?

Good morning economists. I thought I could kick start your day with a rather weird fact about money. Money can act as a medium of exchange for your transactions, it is a measurement of value and a unit of account. But what other functions can money have?

I was watching an episode of Mythbusters a couple of days ago where they were testing how many dollar bills it would take to repel a stabbing knife. In other words, if someone came at your with a knife and tried stabbing you in the heart, how many dollar bills would you need to have in your pocket to prevent the knife from penetrating your skin? The answer apparently is 53 single dollar bills are enough to keep your heart safe. But this weird myth, is only applicable if the attacker chose the particular spot as the stabbing point. How many dollar bills would it take to totally safeguard you against an attack anywhere on your body?
Well, the average human skin has an area of 18000cm. The area of a dollar bill comes out to 103.39cm approximately. You need 53 single dollar bills to cover each point on your body. So to cover your entire body with 53 layers of dollar bills you will need 9228 dollars. Of course this result is based on the average human measurements. So if you have been complaining about those extra kilos or pounds that you want to loose, now is the time to do it. Strangely the human dollar shield will cost you less money if you weigh less.

By the way, you do realize of course that the information given above is to be used as a conversation starter. Please refrain from sticking dollars to your body. Someone can come at you with a gun and I do not have the answer of how much you will need to repel such an attack.

Have a nice week!

Friday, November 2, 2012

Husband sues wife because she used to be ugly!

Good morning economists. Well this next piece of news is rather shocking. A couple in China was happily married and decided to have a baby. Once their baby daughter was born, the husband, Zian Feng, was shocked at how "freakishly ugly" the baby was. Further, the baby daughter did not look anything like himself or his wife.

At first, he accused his wife of having an affair and refused that the baby was his own. Since she came under pressure, the wife admitted that before meeting Zian Feng she had spent 100000 dollars on plastic surgeries. Here are the before and after mugshots.
The court decided to award 120000 dollars to the husband who felt cheated by his former ugly wife.

An interesting case we have here. Is marriage a commercial contract where people are judged according to the services they offer (including looking beautiful)? If so, apparently the price of beauty was estimated at 120000 dollars.

Have a "beautiful" day!

Thursday, November 1, 2012

How much is a good service worth?

Good morning economists. I want to share with you something that happened to me yesterday. In the morning I used my blackberry messenger service to send two very important text messages. It seems that there was a momentary lapse (or problem) in the internet service and the messages were sent but were not delivered to their recipient. The failure in the delivery, caused me a great deal of distress for the rest of the day as it was the source of a huge misunderstanding.

Later in the afternoon, I called customer service (of my mobile phone service provider) to pay my account balance. As I was reading my credit card number, I wondered how much I should have been compensated for the distress their service, or to be accurate the failure of their service, caused me. I do not think that the company would really pay much attention to a momentary lapse of service, but for me at least, it was a big deal.
 Think about it. You are getting ready to watch the big game (or show) on TV and suddenly the cable service goes out. How much is this inconvenience worth to you, and should it be deducted from your bill? Afterall, the price you are paying is based on the assumption that the service provided should be flawless.

Have a great service day!

Importing garbage...the new trend!

Good morning economists. In conventional balance of payments entries, we usually observe exports as cash inflows (hence positive transactions) and imports as cash outflows (negative transactions). Sweden is probably the first country in the globe that has managed to convert an import into a cash inflows.

Apparently Sweden is importing junk and it is paid from other countries to do so. Sweden's incinerators are burning garbage in order to provide energy to more than 100.000 households. Sweden is running out of garbage fast and it will need to import 1,76 million tons of garbage from other countries to continue its energy production.
 Ingenious! Isn't this the reason that Sweden is one of the most successful economies during recession periods? Could it be that this is the only example of an "opportunity benefit" instead of cost?

Have a nice day!

Tuesday, October 30, 2012

Speeding tickets and the end of the world!

Good morning economists. I am inclined to discuss today the whole idea of speeding tickets. I have mentioned in a previous post that the probability of someone performing a crime is largely based on the perceived chance of getting caught. In the case of speeding tickets, this is the opportunity cost of rushing to get to your destination.

There was a debate lately, that the police is entrapping drivers by hiding on bridges with radar guns and then communicating the license plates of speeding cars to colleagues who stop the driver 2-3 miles further down. While the police argues that this is not really entrapment as drivers should always uphold the speed limit, it is well within the rights of the driver to ask to be shown the radar gun with the speed that the car was traveling at. Obviously this is not possible in this case.

If your excuse for speeding does not work, you can always try writing a 10 page paper about the end of the world! That's right! A man from Kemerovo region in Russia, was caught speeding. According to Moscow times instead of paying his fine of $32 he wrote a 10 page paper about the Mayan calendar and the end of the world which is supposed to occur in December of this year. It would thus be redundant, he argues, to pay the speeding ticket.

In this case, a speeding ticket IS the end of the world!

Drive safely!

Monday, October 29, 2012

First date recession index

Good morning economists. Did you notice lately that your single friends are going on dates more often? This is not because your friend has suddenly become a hit with the ladies/men (depending on gender) but because of the economic recession., a dating website reports that during economic downturns, people tend to date more as a way of compensating their economic misfortunes with a more successful social life. If I was to make a prediction, I foresee many new couples coming together during the upcoming Christmas period. Problem is, with wages and Christmas bonuses being cut, where will people go for a first date?

Have a nice day!

Sunday, October 28, 2012

Drug lord arrested for raising money to support anti-abortion!

Good morning economists. It is safe to say that most of us average people, have set goals at one point in our lives. Each day we strive to achieve those goals. But does the end justify the means? If you were given a choice, would you achieve your goals in an ethical or unethical manner. Of course we all want to be ethical, but what if your goals would be easily achieved if you behaved unethically while ethical behavior would almost guarantee failure? What would you do then?

Back in March of 2012, Michael Bennet Gardner, 58, from Australia, was sentenced to 13 years in prison because he was growing $68 million worth of marijuana. Last Friday, Gardner appeared in front of the judge appealing his sentence. He argued that he deserved a more SEVERE sentence of 20 years instead of 13!!!! During his appearance he was wearing a t-shirt which read "Abortion is killing". He argued that the prosecutor did not emphasize the severity of the actions of the accused and that he was growing marijuana to raise money for an anti-abortion campaign. His appeal was denied.

The case of Gardner raises this whole question of ethical vs unethical behavior. If you own a business and you uphold an ethical code, how would you react if your main competitor behaved unethically? In other words, what is the price of ethics?

Have an ethical day.

Friday, October 26, 2012

Careful where you invest you hard earned money!

I have recently come across a lot of weird investments that promise ridiculously high returns and offer to make people millionaires overnight. My advise to everyone is to be extremely careful where you invest your hard earned money.

The other day I noticed a web advertisement on forestry investment. I will not reveal the website as I do not want to hurt anyone's feelings, but here is the main idea behind forestry investment.

In a few words, you invest some money on a tree. The tree grows in size thus more timber can be sold once the tree is cut and more money is returned on your investment. Even though the investment promises an 8%-14% return per year, the so called entrepreneurs seem to ignore demand for timber. If demand is low, price of timber and trees will be low no matter whether a tree is growing in size or not. Return is not only based on supply but on demand as well.

Have a green night. 

Thursday, October 25, 2012

How much does a slap on the face worth?

Good morning everyone. Apparently these days a slap on the face is worth $350. Mawan Sombuntham, who co-owns Tata Massage in San Fransisco argues that a slap session will cause blood flow in the cheeks to increase thus making the face slimmer and the pores smaller.
Now I am not going to judge anyone for using this service. I do have a couple of observations though. How did the owner come up with the $350 price tag? I mean if price is the result of the interaction of the forces of demand and supply and the equilibrium price is indeed $350 then why not slap yourself silly when you wake up in the morning? You will save a whole bunch of money that way!

I can just imagine the following scenario. You have an argument with your friend, slap him on the cheek and then ask for $350. I just hope Mike Tyson doesn't get into face slapping!

Have a slap free day!

Wednesday, October 24, 2012

Meet the millionaire that refuses to spend money!

Good morning economists. A lot of people nowadays are looking for investments that will give them a high return and thus make them rich. A woman named Victoria, who lives in the US was recently featured in an episode of "Extreme Cheapskates" and has found the answer to becoming a millionaire. Victoria simply does not spend money.

How can this be done you may ask. It seems that the aforementioned millionaire, uses such techniques as showering in the local YMCA (free gym) even though her shower at home is working fine. Also she pees in bottles so that she does not have to flush the toilet.

Her family does not really approve of her lifestyle, especially when she goes scavenging for food in the woods. Anything that is edible, makes its way on the family's table.

Victoria is a millionaire in that she has millions of dollars in the bank, but in the end, would YOU live this way on your way to becoming rich? Talk about opportunity cost of money!

Have a toilet flushing day!

Tuesday, October 23, 2012

Real fire caused by imaginary cigarette

Good evening everyone. In the world of economic theory we often talk about simplifying assumptions. The problem with these assumptions is that sometimes they simply do not represent reality. For example not all people are selfish utility maximizers who only think about themselves. What happens when an assumption goes wrong?

I was reading the news today when I came across a story which depicts the impact of assumption failure. Apparently, a patient in the University of Michigan at Ann Arbor Hospital attempted to light a cigarette, causing a fire to break out which resulted to a nurse sustaining minor injuries. Now I know what you are thinking...Why in the world would he light up a cigarette in a hospital room? Why not step outside?
It turns out that THERE WAS NO CIGARETTE to begin with. The patient was assuming that he had an imaginary cigarette which he attempted to light. His bedding was torched!

This is what happens in real life as well. When economic theories are based on false assumptions they end up torching the economy. Something like what we see today in the form of the recession.

Have an assumption free day!

Monday, October 22, 2012

Brothel sponsored football team!

Good morning economists. I think it is safe to say that we will witness strange financial decisions in the midst of the financial crisis. For the rest of this week, I will present the most weird of investment choices and comment on their potential for success.

Voukefalas football club is an amateur club in Larissa, Greece, that requires around $13.000 yearly in order to operate. As fund sources are becoming scarce (especially in Greece) the club chairman found it difficult to refuse a sponsorship offer from a local brothel!. Villa Erotica, owned by Soulla Alevridou, offered to pay the required amount if the team agreed to advertise its "services" on a newly designed pink shirt. Here was the result:
  (photo courtesy of New York Post)

The players, who are mostly bartenders, waiters,  students and delivery guys, did not believe at first the choice of sponsor but were quick to revise their opinions when they saw the pink football shirts. The local league reacted by banning the shirts from the field as they were considered inappropriate for under aged fans.

Ms. Alevridou, is confident that the decision will be overturned and in fact attended a football match together with some of her....employees. As an aside, it is vital to remind that prostitution is legal in Greece but brothels must follow strict guidelines.

From an economic standpoint, that investment will undoubtedly pay off as news of this have traveled all over the globe and plus a football match is mostly attended by men who are potential customers. So hat off to the businesswoman who thought of the idea.

On the other side, the scandal of prostitutes that were found to operate without a license and were infected with HIV is still fresh in the minds of the people of Greece. Financially, it may look like a good investment. But should a good investment also be ethical?

Have a sporty day!

Sunday, October 21, 2012

The way of the samurai

Good morning economists and have a nice week! Continuing our discussion of satisfying the excess demand for law enforcement another incident which included a vigilante samurai warrior(!!!) took place this time on a Phoenix light rail train. Apparently the fight broke out at around 2 a.m. on Oct. 6th near Central Avenue and Camelback Road. A couple of younger men attacked another passenger when this happened:
I have sooo many questions about this one. Where did the man find the sword? Why was he carrying it with him? How was he able to hide a full length katana sword? What did the police do once they found out?

The "samurai" also seems to possess some skills with the sword as he takes the normal samurai attack stance when faced with his opponents.

Although the incident is rather funny for the video clip viewers, it enforces the fact that crime on rail trains  has increased from 350 incidents in 2006 to 1200 incidents in 2011 according to Washington Metropolitan Police data. Maybe we need some more public service providers that will raise rail security such as...samurais.

よい一日を (translation: have a nice day)!

Thursday, October 18, 2012

Batman arrested!

Good morning economists. I was surprised this morning to read in the news that a person who was dressed up as Batman was arrested in Michigan for obstructing police work. Apparently the 33 year old was walking around in a cape trying to keep the world safe. He was trying to help the police to find a driver who was involved in an accident but fled the scene. The police did not appreciate his willingness to assist.

Sometime ago, Batman was also pulled over while driving his Lamborghini because he had a batman sign instead of a license plate!!Here is the raw police video. Funny thing is that the policemen are asked to be photographed with the superhero.

The world needs more superheroes nowadays since crime is at an all time high. Which actually brings up an interesting question. Do we need more volunteers to provide this public service (citizen protection)? And if the only thing these volunteers require is to wear superhero costumes, should they be allowed?

Have a superhero day!

Wednesday, October 17, 2012

Beer stealing...nun

Good morning economists. Usually when we go grocery shopping we make a list of the items we need and we try to buy according to our budget. The problem is one of utility maximization subject to a budget constraint. But what happens when your budget is not enough to cover your basic needs...say beer drinking? Apparently this nun in Oklahoma found the solution:
The nun stole a couple of cans of beer and water. Even though we do not know whether the nun was actually charged of a crime, I can imagine her reaction to a possible interrogation. "Jesus turned the water into beer!"

On a more serious note, should we be worried when nuns are forced to steal?

Have a religious day!

Tuesday, October 16, 2012

Fake medical student upsets campus

Good morning all. We have all been asked at one point in our live what we aspire to become when we grow up. According to Otago Daily Times an unnamed individual at the at the University of Auckland Medical School in New Zealand aspired to become a doctor so badly that he was not disheartened when the University turned down his application. Instead, he started attending classes at the University without being registered and was doing so for TWO YEARS before Professors found out. He discovered the secret to free education without the burden of doing homework or taking tests.
The unnamed student was apparently very popular with his classmates and was attending classes regularly. He was cheating the system by not taking exams or submitting assignments mainly because the classes were so large. The student was also practicing at the local hospital by using a fake doctor's ID.

Talk about expectations and the self fulfilling prophecy actually not applying in this situation.Given the current recession, could there be more fake university students or professionals out there?

Have a nice day!

Solo geeky speed dating

I just had to comment on the results of the Sci Fi speed dating event during the New York Comic con this year. Just to give you an idea of what is going on during speed dating, people, who are not familiar with each other, have the chance to talk to each other for a limited amount of time. After the time is over, they rotate partners and at the end of the event they pick out the ones that they really liked with the hope that the reverse is also the case. Of course a Sci Fi speed dating is not just another event as one can see some really strange stuff such as this one:
But no matter the dress code, a scandal occurred during the event as a person who was dressed up as Baine and was really popular with the speed dating ladies turned out to be married! Talk about disappointment! In such cases, the result is not Pareto optimum (the best you can get) because one of the players is not eligible to play the game of speed dating. How would we solve the problem in this case? Pareto optimality is when it is not possible to make someone better off without making someone else worse off. In this case though we could remove Baine from the event and we would immediately have Pareto optimality. Why? Look at the following photo:
Turns out that there was one extra guy who did not have a partner. Although funny, seeing the guy sitting there alone while the rest are doing their thing, he is really the answer to the scandal.

Have a geeky afternoon!

Monday, October 15, 2012

What do baby diapers and suit ties have in common?

Good morning economists. The answer is that they are both types of economic indicators. Allow me to explain.

In 2008, because of the recession, diaper sales decreased by 9% since parents were changing the child's diaper fewer times a day. This of course led to an increase in diaper rash cream by 2.8% according to Symphony IRI.
 On the contrary, the demand for ties actually increased dramatically when new layoffs were announced in 2008 in the UK. This is because employees wanted to look their best in order to impress their employers and send signals as to the seriousness of their work. In a past post we have already discussed the positive impacts of how looking good can actually help your career.

Have you bought a tie lately? (scarf applies for ladies)

Have a nice day!

Sunday, October 14, 2012

Popcorn and zombies!

Good morning economists. Did you know that the popcorn industry is one of the few markets where demand is increasing during times of recession? As soon as the recession hit the US in 2009, cinema theaters were filled with eager viewers who were trying to avoid the problems of everyday life even for an hour or two. Consumers filled movie theaters irrespective of the movie quality (from Harry Potter to Jason Bourne) and since popcorn is a complement (is usually consumed while watching a film), its demand also increased dramatically.
The second strange story of the day comes from Detroit where in 2009 the number of unclaimed dead bodies in state morgues was doubled in a period of two months. It seems that the relatives did not claim their dead because they wanted the state to pay for the burial cost. Suddenly, the John and Jane Does of the world increased. Talk about macabre! Maybe this story was the inspiration for a prank sign that made its appearance roadside in Arizona.
What will we see next? Visit the Everyday Economist tomorrow to find out!

Have a nice day!

The story of the $1 robbers

Good morning economists. When you hear about bank robberies you usually think about large sums of money right? Well in the Jeffrey McMullen case, this did not apply. Apparently the 50 year old entered a well known bank in Pennsylvania and demanded $1. In fact, he let the bank teller know that this was a federal robbery.

Even though the bank employees thought that it was a joke, the man was insisting that he was robbing the bank. In the end he was arrested and is now waiting a preliminary hearing. His bail is set at $50.000. For some reason, his motive from robbing the bank was to get caught in order to be sentenced in the federal jail in central Pennsylvania.

Is it worth it, one may ask to risk imprisonment for a buck? At first glance the answer is no, however, I would not be surprised if the man's financial situation was so bad that he wanted to go to jail where he would have free accommodation and free food. Think about it. How long do you think he will be sentenced for?

A similar robbery took place in the Carolinas  a year ago when a man who was so desperate for medical attention, robbed a bank for a $1 and then waited for police to arrive. It will be interesting to see whether the dollar robbery streak continues. 

Have a nice Sunday!