T-Shirts and consumer choice
Firstly, I hope the first AS exam went well, whether that was macro (OCR), micro, and whether for the first time or a retake. I also hope that in amongst the revision you’re in the market for a more random blogpost…
This one’s a topic on which Paul Ormerod would have something to say. On NPR’s Planet Money radio show/podcast, they’re launching a T-shirt, and using this as a stimulus for a whole set of reporting on its genesis, from cotton subsidies to its design. The latest podcast investigated the colour of their T-shirts. “What’s the economics in that?”, I hear you cry…
Paul Ormerod: The Market for Speeding Points
What is it worth to take someone else’s speeding points? The Huhne-Pryce case has brought this into sharp focus. Setting aside the moral issues, the question raises interesting topics in economics.
It turns out that there is a market in these points. The Daily Telegraph discovered that prisoners are willing to take points. By the time they get out, the points will often have expired. For around £200, someone will take your three points. But mingling with a group of England supporters after the Wales debacle on Saturday, their tongues loosened by alcohol, I discovered that one respectable woman claimed to have done it for £500.
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Paul Ormerod: Hip Hop and Why Some Things Succeed
Just over a month ago, a group of young men from a fairly
yokel part of Australia posted a video on YouTube. Nothing remarkable about that. Except that the video now has over 21 million viewings. More than 170,000 variants of the original
theme have been posted on YouTube.
A few have received even more viewings than the original, with one
notching up over 63 million.
The wider repercussions have been even more dramatic. Australian miners have been sacked for
recording their on version underground.
People have been arrested in Russia for copying it on a World War Two
tank. In Israel, two soldiers have
been jailed. A flight from San
Diego is the subject of a major investigation when the passengers attempted to
redefine the Mile High Club and create a version in mid-flight.
This phenomenon of popular culture is called the Harlem
Shake. Its essence is that a group
of people perform a comedy sketch, accompanied by excerpts from the 1980s
hip-hop song of the same name. King Lear it is not.
Paul Ormerod: Today Singapore and Japan, Tomorrow China
It has suddenly become fashionable to be concerned about China’s growth rate slowing down. This is not a matter of a short-run cyclical downturn, with normal service being resumed shortly as the economy roars ahead once more. It is a worry that there will be a permanent slowdown by the end of this decade. Instead of annual growth rates around 10 per cent and even more, the Chinese economy will settle down to the much more sedate rates seen in the West in the 1950s and 1960s in the range 3 to 5 per cent.
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Should we invest to avoid snow days?
Although it's not been too bad in my area, the recent cold snap is another example of the extreme weather we've seen a number of times in recent years. But what does extreme mean in this case? This isn’t a hurricane. It’s extreme in the sense that it’s unusual. This weather would not faze the Finns or Swedes. They are equipped for this weather, so surely we too could avoid the loss of a work/school day by some investment.
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Paul Ormerod: Meat and potato pies and the Nobel Prize in economics
Tragedy struck at a mid-week game played during the holiday
season in Football League Division Two. The pies ran out in the home supporters’ bar. The incident may seem trivial to
those not involved. Yet it
illustrates some important themes in economics, which have even gained their
inventors the Nobel Prize.
Unit 3 Micro: DropBox - Network Economics and Market Contestability
Here is a superb blog from the Economist magazine into a digital business built around the Freemium pricing model and where network effects are strong. Also good for understanding market contestability and the impact of new entrants on profit margins. Dropbox is my preferred file sharing system, I am pretty much locked in and wouldn't change!
Freemium is a business model in which some basic services are provided for free, with the aim of enticing users to pay for additional, premium features or content
The complete guide to freemium business models
Paul Ormerod: Bankers, Greens and the Barking Mad: When Prophesy Fails
Forecasts of the end of the world have an even worse track record than predictions in economics. Some followers of the Mayan calendar believe the world will end next week.
But we have been here before. In 1956, an American group, led by a suburban housewife, believed that a catastrophic flood would destroy the world on a specific date. Concealing his true identity, a leading American social psychologist, Leon Festinger, had joined them several months previously. When the flood failed to happen, he noted that, far from abandoning their beliefs, the members became even fervent in their view that the world was about to end.
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Paul Ormerod: Prisons, incentives and how to save the planet
Criminals are refusing to leave Portugal’s prisons. According to the International Herald Tribune, prisoners are starting to want to serve the full amount of their sentences rather than be released on parole. This is despite the fact that there is record over-crowding and conditions inside are reported to be dire. Motoring offenders are increasingly failing to pay fines, opting instead to serve three or even six month sentences. This is a remarkable illustration of the effect of economic incentives.
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Paul Ormerod: A stitch in time: We need smarter government, but less of it
What is the connection between the content of Boris Johnson’s speech this week to the CBI, tax avoidance and evasion, executive pay, petty crime and plagiarism by students? This is yet another one where economics can help us with the solution. Economists have long used the example of a factory which imposes costs on other people in the neighbourhood through the pollution it generates. They refer to such costs as ‘externalities’. These are costs external to the factory itself.
Paul Ormerod: Corporation tax: fostering the illusions of the electorate that someone else will pay
Corporation tax is very much in the news. Starbucks is merely the latest to be in the spotlight, having paid no corporation tax on more than £1billion of sales in the past three years . This became noteworthy when the Prime Minister himself declared he was unhappy with the level of tax avoidance by big corporations working in Britain.
The plain fact is that if corporation tax did not exist, it would be madness to introduce it. The tax plays to the ignorance not only of the general public, but of almost all politicians. It encourages the fantasy that there is a free lunch, that someone else will pick up the bill for the welfare state and bloated state bureaucracy.
read more...»The Olympics and the wider struggle
The last three Summer Games have seen a titanic battle between the US and China to head the medals table. Combining the three, China is just ahead, having 121 golds to America’s 116. But America headed the table in both 2004 and 2012, and it is the massive haul in Beijing which just edges it for the Chinese.
Is this a portent of the wider struggle for global hegemony in the 21st century? Just 20 years ago in Barcelona, the US was well ahead with 37 golds to China’s 16. The Chinese have caught up – or so it seems.
read more...»The Olympics, traffic in Central London and a bar in Santa Fe
We all know now about the empty roads and deserted shops, all quite contrary to the official announcements before the Games began. No doubt Transport for London used their massively complicated, expensive models of the transport network to deduce that the system would be under massive strain.
But a deceptively simple game devised in the 1990s about a bar in Santa Fe sheds light on what has happened. Santa Fe is teeming with high powered researchers, who proliferate in the state of New Mexico.
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