Hamburgers and sampling bias

I ate lunch at Harvey's yesterday. The last time I ate there was about three years ago, when their chocolate milkshake made me quite sick. But I got hungry while shopping at the Home Depot, and since there was a Harvey's right in the store, I figured I'd give them another chance. Thankfully, I did not get sick this time (I avoided the chocolate milkshake), but the meal was still pretty disappointing and the service was slow.

While I was eating, I noticed a request for feedback on the receipt. You can complete a survey by going online or calling a 1-800 number. There was an incentive for completing the survey: I'd be entered in a bi-weekly draw for a $500 Harvey's gift certificate.

Supplier-induced demand in Quebec City

I was in Quebec City over the weekend for a reading break vacation with my girlfriend and noticed an interesting phenomenon. I'm not sure if this is common in other cities, but in Quebec City there are women who walk from table to table in restaurants trying to sell flowers to diners. This is a perfect real-world example of supplier-induced demand.

In economics, we generally think of demand as being generated by consumers. People demand products because the good can help them fulfill a want or desire. Supplier-induced demand is the opposite — it occurs when the producer causes us to desire their product. It often comes up in health care, since we often only decide to "consume" different medical services at the advice of our doctor; if our doctor doesn't recommend the procedure, we don't have any demand for it.

Married people can get along (sometimes)

Economics isn't usually very romantic (just ask my girlfriend), but in the spirit of Valentine's Day I thought I'd share an experimental economics working paper probing how married couples interact with each other. It was released in December by three French economists.

The researchers recruited 100 married couples from the Toulouse area and pulled them into their lab to play a prisoner's dilemma game with both their partner and with other people.

The prisoner's dilemma is a game where you choose to either cooperate or "defect" with a partner. If both people cooperate, you get the best possible payout from the game, but if your partner defects while you try to cooperate, you do really badly. Thus, if you don't trust your partner to cooperate, it makes sense for both people to defect, even though you'll be worse off than if you both cooperated.

The Invention of Lying and discount rates

I recently rented The Invention of Lying. I was pleasantly surprised: the scriptwriter must have been an economist at heart because the comedy was loaded with undertones of incentives and game theory.

Spoiler alert: I'm going to give away details of the movie now, so stop reading if you don't want to know the plot.

Do car mechanics try to sell repairs you don't need?

In experimental economics, an easy study to do is run a simple economic game and see if different groups of people behave differently.

For example, I blogged in November about a study that looked at whether government employees are more selfish than the average worker when asked to donate to a charity. Another example: some health economists I know are interested in whether doctors behave differently than other businesspeople because of their Hippocratic Oath.

Where's the logic behind green power?

There was an interesting article on the front page of Wednesday's Hamilton Spectator. It seems the Ontario Power Authority, which is responsible for ensuring Ontario's electricity needs are met, is offering 20-year contracts to homeowners for wind or solar power generated on their properties.

In other words, if you have a solar panel on your roof, Ontario wants to buy your power. What made my jaw drop about the article, however, is the price they're offering: 80.2 cents per kilowatt hour for solar power, according to the article. Apparently, most consumers currently pay between six and 11 cents per kilowatt hour on their electric bill.

More moral hazard

Since I'm on the topic of moral hazard, here's an interesting study from 2009 about the moral hazard of holding health insurance: it'll make you more unhealthy.

In the aptly-titled working paper Does Health Insurance Make You Fat?, Stanford's Jay Bhattacharya and three co-authors looked at results of an experiment where Americans were randomly given different levels of health insurance (or no health insurance at all). They found that people with health insurance tended to gain weight. Private insurance policies increase the average person's body mass index by 1.3 points, while public insurance increases it by 2.1 points.

Hockey visors and moral hazard

In its Feb. 1 issue, The Hockey News makes the case for mandatory visors in the NHL. Currently, visors are optional, but the magazine argues that making them mandatory would cut down on eye injuries.

"The players would benefit from improved safety in the workplace. Mandatory visors wouldn't guarantee the elimination of catastrophic eye injuries, but the evidence suggests it'd be pretty darn close," writes Editor-in-Chief Jason Kay.

Writer John Grigg brings up the very scary eye injury suffered by then-Leafs defenseman Bryan Berard in 2000. In analyzing the current trend of more players wearing visors, Grigg argues: "[I]f current trends continue, the NHL will have fewer and fewer reminders of [Berard's injury]."