Think Economically


Maximum understanding, minimum average total cost.

Price gouging is bad actually: an argument to use with economists

We are staring down a hurricane and people are evacuating. Those that are not evacuating are stockpiling and hunkering down. And those who are outside of the era are watching and commenting. Inevitably, the following exchange occurs:

[Photo of bottled water with exorbitant price tag]

Normal Human: Can you believe that people are taking advantage of people in need like this?

One of my fellow economists: [pushes glasses up nose] well, actually prices should go up to prevent shortages so that water and fuel can get to where they are needed most.

So the thing here is that the economist is wrong, but I don’t think they will believe you if you tell them they are wrong because the only counter-argument that ever gets made is “you are a heartless egghead sociopath”. The economist knows that their approach maximizes overall human welfare and so relegates you to the bin of moral intuitionists incapable of stepping out of emotion long enough to make a clear-eyed executive decision to help people.

But the economist is wrong! Read the rest of this entry »


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Marketing for a new industry

It has been a long time since I posted here, but I have been very busy. Over the intervening time I have been promoted to the rank of Associate Professor and have become an Assistant Dean for Student Services. Economics and econometrics still occupy a significant part of my time, but being an administrator within a school of business, I have spent a lot of time focused on human resource development and management as well as institution building. It is fascinating. Recently, I also started helping my wife develop a marketing plan for her Tucker-based counseling private practice, Bit by Bit Counseling, focused on perinatal and maternal mental health.

Academia is a very unique place, and Georgia Gwinnett College, where I work, is unique among academic institutions. As an access-mission school, we have a very academically diverse student body. As the most diverse regional college in the South, we have a lot of different students in every dimension. Many of them are already working, many are underprepared for collegiate work when they arrive, many have families, many are traditional students–there is no “typical” student. Addressing their needs represents a unique challenge that requires scaling up bespoke solutions through thorough student engagement. We are putting into place a lot of programs and processes to help us with this, and it is exciting to be a part of so much growth and success. It is just as rewarding to help a struggling student make it through to their goal as it is to help and excellent student push through barriers to reach their fullest potential–and both of those things happen any given Tuesday.

With all that free time I have, I have also started to help with Cheryl’s private practice in Tucker, GA. I like to tinker with websites, I like social media, and I like thinking about demand and clients and how to connect clients to a practice. Her focus is on perinatal mental health, working with expectant mothers, early families: “Stillbirth, ectopic pregnancy, miscarriage, depression, anxiety, secondary infertility, premature birth, time spent in the NICU, difficulty in relationships, profound problems with self-image”– a lot of the complex stuff that happens in those years between “I think I’d like to have a family” and “we have achieved something like a steady state with our family.”

I have spent a lot of time thinking about my experience with the early parenting years, which, with a 2.5-year-old, we’re really just coming out of, and working on the marketing has been interesting and very rewarding. I think it is genuinely very important, with massive potential positive social externalities. Helping people helps the world. It’s also interesting as a marketing puzzle, to think about monopolistic competition, the complexities of small markets where competitors can actually help with referrals, professional development, collaborations, etc. My economic training definitely leaves me thinking about these things differently than most people with counseling training, and I think it redounds to the benefit of all involved.

In any case, I may be posting more again as I start to wrap my head around these fundamentally economic problems and need a non-counseling-related site to puzzle them out. I am at least participating in brainstorming for her blog over there now, as well, so if you or anyone you know is in that phase of life, I highly recommend her writing: Bit by Bit Blog. Let me know if you have any questions, tips, etc!

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Good news or bad? Unemployment rate drops despite weak jobs numbers

So on first glance, these jobs numbers are nothing but bad. 96,000 new jobs with downward revisions on the two previous months. So as far as description is concerned, it looks like weak growth continues to carry the day. So “what does it mean?” Well, it means we aren’t suddenly in a booming economy; things continue to peter along.

“What does it mean” has another interpretation, though: what will happen as a result? The upshot as far as I can tell?

  • Undecided voters will mostly hear 8.1% unemployment and think these are good numbers.
  • QE3 is gonna happen.
  • The fire under the Republicans to ensure the “fiscal cliff” doesn’t occur will continue to burn hotter, meaning Obama might be able to make some headway on either stimulus or deficit reduction or both in a second term.

Certainly Nate Silver at fivethirtyeight has stressed that the jobs numbers will have significant consequences for the election: good numbers and Obama’s sure to win; bad enough numbers and he’s out. The Bernanke  is relying on these BLS numbers, among others, to try to decide what to do. So I was trying to think about what to think about the actual consequences of the numbers. I’m just freewheeling here, but I think there might be some interesting and counter-intuitive results.

Read the rest of this entry »

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News and analysis: Lego Friends sells well, Organic food is no healthier, Bulgaria nixes EU membership plans

Lego’s Friends line has been a huge success. I’m mostly pleased by this, but I have somewhat complicated feelings.

I have a daughter, and it’s a little frustrating that the opportunities provided for girls to play a career include a beautician, a veterinarian, a horse trainer, a baker, a fashion designer, and a rock star. I’m glad they included the inventor but it smacks of tokenism. It’s also frustrating that there’s a bunny house and a pet patrol and a horse trailer and a puppy house–it’s bunnies and puppies and kittens and pink and purple. I’m just as offended, I suppose, by the violence in a lot of the boys’ kits, but with the inclusion of molded figures that don’t match minifig scale, the City and Creator Lego sets don’t seem intended to integrate into the Friends’ world.

My hope is that the crazy success of Friends’ means that they’ll release new models annually–and you can’t build a beauty shop every year. Here’s hoping we get to see ambulance drivers and astronauts and architects this go-round (and that’s just the A’s).

Read the rest of this entry »

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News and analysis: Tampa has more than its share of poverty; Space elevator group LiftPort is back in business; Apple v. Samsung, ugh.

Republican political types are gathering in Tampa, Florida for the Republican Convention, and most people are talking about either the election, or about Hurricane Isaac. Not so many are talking about Florida’s still-depressed housing and job markets, or about the 25% poverty rate.

Part of being a society is deciding how we solve the economic problem–the problem of scarcity, and a big part of that is who gets what.

I don’t claim any particular insight into how we ought to do this: some people focus on fairness of process, and some people focus on fairness of outcome. In a broad sense, people seem to think both are important. Maybe a process is acceptable until it produces an outcome that is not, or outcomes are acceptable until it becomes clear how unfair the process is. Societies have to decide how to distribute goods; the consequences are ultimately borne by the societies as well.

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Video – Introduction to Statistics part 2 – Data

Today we talk about data–what we mean, where we find it, why you might want to get your hands on some, as well as data scales and cross-sectional v. time-series v. longitudinal. Enjoy!

Today’s video – Intro to Statistics part 2 – Data.

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News and analysis: Foxconn raises wages but keeps long hours, Nike sells $315 shoes, Herr’s makes 5-6 tons of chips/day

So FoxConn workers are making more than they used to. They’re still working 60-hour weeks in violation of government labor laws.

So the wages are going up, changing relative wages against both the U.S. and against other developing nations. What’s going to happen? Well, we should expect that some manufacturing jobs will move back to the U.S. We should also expect higher value items and higher value brands to be established as more important parts of China’s economy.

The downside: prices on consumer goods–which have been depressed for a long time due to the 2000s explosion of labor due to the expansion of western firms into China–are likely to rise.

The upside: China will start buying more stuff, particularly higher-value items, in which the U.S. has a comparative advantage, so U.S. wages–which have been depressed for a long time due to the same explosion–are also likely to rise.
Read the rest of this entry »

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Principles of Microeconomics – news video feed and some commentary

So the Fall semester has begun. I show YouTube clips in my class and discuss them. If you’re interested in following along, the playlist is here and will expand as the semester goes:

In the first class, I talked about texting campaign contributions, Rio drug gangs banning crack, and football players going on diets.

First, texting campaign contributions. The goal here, presumably, is to drive down the transaction cost of contributing–or at least the psychic transaction cost borne by the contributor.

A few things worth noting: this is probably aiming at people for whom texting is a regular activity–so read: younger.

Second, the contributions are for $10, which is not very much, so this is probably aiming at some kind of “warm-glow” giving, which when aggregated can really add up; the danger being that if people are substituting texting donations for $25 checks, then the campaigns are in trouble.

Finally, the transaction costs here are actually really high–the video said 40% if I recall. That means that even if these are substituting for $7 checks, the campaigns are in trouble. Unless there are some sort of external benefits of voter engagement or something, but yeah…I’m curious whether this is a flash in the pan or a new way of giving that pans out. Read the rest of this entry »

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David Brooks, Romney/Ryan, and the Faustian Shell Game

Do you have gay friends? Colleagues? Loved ones? First things first.

Do you think women should receive equal pay for equal work? First things first.

Do you have sympathy for those who are struggling to find work? First things first.

David Brooks makes an ass out of Uma Thurman and you can tell his heart’s not in it. It’s a shame, because it’d be really nice to read the other version of this column. He frames the column as a “Guide to the Perplexed”, and buries the lede way down in the third-to-last paragraph:

You’re still deeply uncomfortable with many other Romney-Ryan proposals. But first things first. The priority in this election is to get a leader who can get Medicare costs under control.

Oh, so first things first? Okay, so the evidence that Romney/Ryan will do that–get Medicare costs under control–is hard to come by, and the evidence that they will do it without destroying one of the most beloved social programs is even more scant. It’s actually really easy to get Medicare costs under control: just stop paying the bills. I’m guessing there’s some reason that that proposal hasn’t been floated, but the Ryan budget is as close as anyone has gotten. So that’s the Faustian bargain that’s–at least ostensibly–on the table: don’t you care about your grandchildren? Then old people have to take it on the chin.

Medicare spending per capita

Which, if I’m being honest, if I thought there was a chance they could actually do it, well, it might sound appealing. Clearly they can’t, but let’s just assume they can, to ride where Brooks is leading us. Read the rest of this entry »

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I really enjoyed the show Life. I watched the entire run the way I often do–while folding laundry–and the characters were believable, complicated, and surprising; the stories generally good; and the overall feel…well, it felt like a show that was made specifically for me. Also, it had the best series ending of any series I’ve ever seen. It wasn’t overstated; it wasn’t overambitious. It closed out the series. It didn’t feel contrived, like Life On Mars (which I loved, although I have yet to see the U.K. original version). It wasn’t telegraphed and terrible, like Lost. It was surprising and fitting and clean–most of all, it was just…graceful.

It’s a show about a police detective named Charlie Crews who was falsely convicted of a multiple murder, and spent a decade or so in a maximum security prison before getting out (with a sizeable settlement) and then rejoining the force. He comes out…changed. Part of what got him through, it is revealed early on, is Zen philosophy–and he irritates a lot of people in a delightful fashion.
I was discussing this weekend how much I liked Vonnegut’s tendency to reveal key aspects of the end of his stories before they even got rolling–the painting in the barn in Bluebeard, the Tralfamadorian shenanigans in The Sirens of Titan, the chronological complications of Slaughterhouse-Five. Read the rest of this entry »

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