Friday, October 29

Halloween game theory on The Office

You know you think too much like an economist when…

I was watching The Office last night, and I knew Oscar was going to win the Halloween contest as soon as he threw in the towel and traded in his disco dude outfit for a "rational consumer" costume. For those who didn't see the episode, a bunch of employees were competing for the highly coveted Wilkes-Barre/Scranton coupon book in a Halloween costume contest, and some employees were taking things a little too seriously in hopes of snagging the big prize. Oscar decided everyone was getting too carried away, so to show how ridiculous he thought the whole thing was, he took off his costume and put on his normal clothes, claiming to be dressed as a rational consumer.

Wednesday, October 27

Freakonomics takes on the Bible

Those of you who have looked at my links to favourite blogs will know I am an avid reader of the Freakonomics blog. They produce a large quantity of posts, many of which I never read (I have yet to understand what the Yale Book of Quotations has to do with "the hidden side of everything"), but they have some very well-respected bloggers and their posts are usually non-technical and high quality.

But I have been puzzling for a few days now over a curious post by Daniel Hamermesh about game theory in the Bible. Maybe someone who is more knowledgeable about religion can help me out with this.

Monday, October 25

Can a pay cut be pareto improving?

Although I greatly enjoy the competitive balance that the NHL salary cap has created in hockey, it seems to me there is one glaring inefficiency. By limiting the amount of money teams can spend, mediocre players with high salaries who would have a job in the NHL based on merit are instead sent to the minor leagues because given the cap, their salary allocation can best be spent elsewhere.

Several overpaid players have been shipped to the American Hockey League this season so their massive salaries don't count against the salary cap: Wade Redden ($6.5 million), Sheldon Souray ($5.4 million), Michael Nylander ($5.0 million) and Jeff Finger ($3.5 million). The NHL club still has to pay their salary, but it doesn't count against the salary cap.

Friday, October 22

The case for subsidizing hip-hop

A recent working paper by Swedish economist Per Engström, Bling Bling Taxation and the Fiscal Virtues of Hip Hop, makes the bizarre argument that we should subsidize hip-hop music in the interests of efficiency.

Engström starts with a model of taxing what he calls "diamond goods" —goods that have no value except for their costliness. Taxing these goods ad nauseam is an efficient method of taxation, according to this model, because people value the good more as its after-tax price increases.

Engström focuses his analysis on a specific type of diamond good, "bling bling," which he defines as the following:
…the very extreme kind of ornamentation that hip hop artists often display. It could consist of very heavy gold chains with massive dollar signs (euro signs have lately come in fashion since the late fall in dollar price), diamond encrusted ipods, or surgically removing all your teeth and replacing them with asymmetric chunks of diamond adorned gold.

Wednesday, October 20

Behavioural economics in industry

I was delighted to find a hidden gem at the back of the Living section of Saturday's Toronto Star, a story about a behavioural economics book co-written by Hewlett-Packard behavioural economist Kay-Yut Chen (the article does not appear to be available online).

The article itself was not earth-shattering, but I was surprised to see that Hewlett-Packard employs a behavioural economist to conduct experiments that could help improve their business. The workplace is a logical place to run economics experiments, but because it's a fairly new field one doesn't hear about companies running their own experiments very often. Charities are one area that has seen the benefit of experimental economics, with several running experiments in recent years in an attempt to learn how to fundraise more efficiently. But for the most part, economics experiments still take place in academic labs (CIRANO in Quebec is probably Canada's most prominent) rather than in the workplace.

Industry seems like it's slowly starting to see the benefits it can reap from economic research. Google poached respected economist Hal Varian from Berkley in 2007 to help them take better advantage of all the data that Google searchers generate, but he's the only example of a prominent economist in a private-sector research position that I can think of. So I was pleased to see that Hewlett-Packard also has an economist. I'll have to pick up a copy of his book.

Monday, October 18

A conflict between externalities and libertarianism

At the University of Victoria, my alma mater, there are no fraternities or sororities. Last week, students voted to keep things that way.

I like to think of myself as a libertarian. I have no interest in joining a frat myself, but if someone else wants to join one, I wouldn't want to stop him or her. One of my friends was in a fraternity at another university, and the beer-drinking, crazy party stereotypes are a little overblown; they do some good charity work.

So when one of my left-leaning Facebook friends, Shamus Reid, posted on Facebook in support of the ban ("Today, 64.5% of UVic students voted at their students' union's AGM to oppose frats and sororities on campus. I'm proud to own 42.5% of a degree from that fine institution."), I set out writing a snide retort on his wall accusing him of paternalism. It irked me that Shamus sees it as a good thing that UVic is preventing people who want to join a frat or sorority from doing so, just because some students don't like the idea. If you don't like frats, don't join one, I thought, but don't stop someone else from signing up if they want to.

Sunday, October 10

Parking at Scotiabank Place

On Tuesday, I attended Jason Mraz's concert at Scotiabank Place. It was awesome.

What was less awesome was the $9 I paid for a package of M&Ms and a bottled water and the $17 I paid for parking. I anticipate gouging on food and drink at hockey rinks since they have a monopoly and prohibit the bringing in of outside food, but I was surprised to find that the parking lot near the arena charged $17, considering that it was only about five per cent full (the concert was not very well attended).