Friday, November 26

Black Friday doesn't make sense

Black Friday, which occurs today, is an annual event where U.S. retailers have big sales to kick off the Christmas shopping season. But it doesn't make any sense to me from an economics perspective.

The question bugging me (which I don't have an answer to, but perhaps a reader does) is why, if the deals are so good on Black Friday, do stores not offer them on other days? Presumably, retail sales must be dismal leading up to Black Friday — why buy something the preceding Thursday when you know you can get a much better deal the next day? Stores, realizing this fact, should presumably offer their Black Friday bargains before Black Friday in order to get customers into their store. Yet this doesn't seem to happen.

Wednesday, November 24

Paying students for good grades

This article in the National Post last week caught my attention. It examines whether it makes sense to pay elementary and high school students for attendance and/or academic performance.

This is a fascinating issue and potentially a very good idea. From an economic theory perspective, this looks like a brilliant concept — people respond to incentives, so dangling a carrot in front of students should motivate them to learn more. Moreover, it's likely very affordable; for kids, money generally goes further than for adults. Paying a potential $50 bonus for good performance over a school year could be a significant incentive for most kids, but wouldn't cost a school board that much. For a class of 30 students, it's a potential liability of $1,500, which is roughly equivalent to a 2.5% wage increase for teachers (and that's assuming every student earns a bonus, which seems unlikely).

Monday, November 22

Our taxi industry is way too socialist

In Canada, we generally have free markets. But when it comes to taxis, the industry seems to as centrally planned as Soviet Russia, and I don't understand why.

In my hometown of Vancouver, city councillor Geoff Meggs blogged about the shortage of taxis in the downtown core on weekends. It's tough for drunken revellers to find a cab home, apparently. And some taxi drivers are unwilling to take people home to the suburbs. It's definitely a problem, but Meggs' musings about possible solutions are misguided.

Friday, November 19

A negative externality

When I went to get my suit altered recently, I discovered an unfortunate negative externality.

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Wednesday, November 17

The problem with Movember

At the risk of sounding like a jerk, I haven't donated to anyone's Movember campaign this year, and I'm not sure that I will. I'm blaming it on the paradox of choice.

Movember, for anyone out of the loop, is a charitable campaign where men grow a moustache in November to raise money to fight prostate cancer. It's a worthy cause, though I fear that Movember might fall victim to its own success.

Monday, November 15

New books shouldn't be rare

On Tuesday, Johanna Skibsrud won the Giller Prize, one of the top literary awards in Canada, for her book The Sentimentalists. But if you try to find a copy of her book at your local bookstore, you'll likely have failed.

It turns out that the book is published by a small boutique outfit in Kentville, Nova Scotia, and they are unable to meet the new-found demand for Skibsrud's book in a timely manner. At first, I became angry when I read about this in the Toronto Star. It appeared that the publisher was attributing his slow production to being a small business, "weaving themselves into the life of a community, unlike the Wal-Marts of the world, merely in search of a profit." That spin irked me, because not being able to come anywhere close to meeting demand is a sign of incompetence, rather than a necessary outcome of running a small business. Lots of small businesses are competent enough to meet customer demand.

Friday, November 12

Can microcredit work in the first world?

Microcredit is extremely helpful in poor, third-world environments, but can it work in the first world?

Microcredit is the practice of giving small loans to entrepreneurs who wouldn't otherwise have access to credit. Usually, people apply for loans in groups, where some group members don't receive their funding until others have paid theirs back. This lessens the risk of default because people experience peer pressure to repay their loans, and because applicants will tend to be more responsible since people won't want to form a group with someone who is unlikely to repay their loan.

Wednesday, November 10

Future of journalism: interviewing by proxy?

When I started this blog, I intended it to be about both economics and journalism. However, the journalism focus slipped through the cracks, and this blog has evolved into, more or less, a behavioural economics blog. That being said, this post is solely about journalism.

When journalists hold meetings and bring in guest speakers, one of the most popular topics is "the future of journalism." I hate this topic. To me, it implies that journalism as it is can't survive without a major change, that newspapers will be extinct by the end of the year if they don't completely change what they're doing. The death of print journalism, I think, is over-hyped. Surely the Globe and Mail wouldn't make an 18-year, $1.7 billion commitment to their newly-redesigned product if they thought print journalism was on its way out.

But that doesn't stop all the prognosticating by media types about what they think the future of journalism will look like. So here's my stab at it: interviewing by proxy.

Monday, November 8

I (happily) let Rogers manipulate my incentives

I received an unsolicited call from Rogers on Saturday. I already have TV, phone and internet service from them, and they were offering me an additional 10% off each service. The only catch was that if I cancelled any of these services within two years, I would be charged a cancellation fee equal to the discount I received on that service, up to a maximum of $100.

At first, I was skeptical. Rogers already had me as a customer. I wasn't threatening to switch to a competitor. Why would they offer me a discount when I was presumably happy and willing to pay the price they were already charging me? I asked the salesman this question, and he gave me some textbook line that the discount is because I subscribe to multiple services.

Monday, November 1

Harry Potternomics

I like movies based on reality (an aside: I wonder if this is typical of economists?). I never liked Star Wars, am not into the whole vampire trend that seems to have captivated Hollywood, and can't be bothered to read any of the Lord of the Rings or Harry Potter books. I did see one of the Harry Potter movies, but only because a girl I was interested in wanted to see it.

Although I didn't appreciate the movie at the time, I'm now wondering if the Harry Potter series might be worth a read. Eric Gouvin, a law prof in New England, has published what sounds like a fascinating article about the parallels and differences between the banking system in Harry Potter and the banking system in the real world. According to a description of Gouvin's report, "[W]izards do not manage their money supply the way Muggles do by using the slight of hand of fractional reserve banking to create money out of thin air. Instead, the money supply in the wizard world seems stagnant, creating social problems that emphasize disparities in wealth."

I never knew that Harry Potter was so deep. The article is published as a chapter in The Law and Harry Potter — too bad it's not available at my local library.