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!