Déjà Vu All Over Again
The same folks who stunned the world in 1972 with a prediction that economic growth would soon cease because of resource constraints are back again, predicting resource constraints will lead to global depression in 2030. Growth did not end by 1990, and it will not end in 2030. As before, prices will change to make economizing on increasingly scarce resources good business policy; and, as before, technology will change to lead businesses and consumers to substitute away from relatively scarce resources.
The interesting question is why this same nonsense continues to get so much attention. Is it that people forget the absurdities of the past arguments? Or do we have a substantial, never-satisfied demand for schadenfreude? Regardless, this stuff is just as bad economics as it was when The Limits of Growth first appeared.
Calorie Logic
In a recent column in the New York Times, Jane Brody quotes a nutrition professor lamenting the fact that “restaurants have resisted her suggestion to serve half the amount of food for about a third the price.” The professor might have thought more about economic behavior. (Even if she had suggested cutting the price to half for one-third the food, it still would not have been good economic analysis. The labor costs of preparing and serving half the food are probably nearly identical to those of serving the full amount.) Read More »
The Deadweight Loss of David Foster Wallace’s Tax
In his posthumous novel The Pale King
More Demand, More Paintings
A sign on the wall at an exhibit of René Magritte paintings noted, “Magritte repeatedly painted variants of his subjects, mostly to satisfy demand in the art market.” Even artists are selling their products, just as businesses do. When the demand for their product increases, it calls forth a supply. We also see this in popular literature, where a highly successful mystery writer winds up in a rut writing minor variations of an earlier hit. Sadly for us economists, this doesn’t seem as easy to do—the premium is on originality and novelty; if today’s demand called forth minor repetitions in what we supply, we soon wouldn’t get the stuff published very well!
Are Fake Resumes Ethical for Academic Research?
“Audit studies” have been popular in labor economics research for 10 years. The researcher sends resumés of artificial job applicants in response to job openings. Typically there is a crucial difference in some characteristic of the person that indicates a particular racial/gender/ethnic or other group to which one person within a pair of resumés belongs while the other does not. The differential response of employers to the difference in the characteristic implied by the resumés is taken as a measure of discrimination in hiring.
Is this ethical? Read More »
Opera Toilet
Sometimes what might not seem like complements become such because of location. I came across a restroom in a Vienna underground station that had the sign “Opera Toilet” above the entrance. Clearly, the City must believe that natural bodily functions and listening to arias are complements, at least for customers in this most operatic of cities, the residence of Beethoven, Mozart and many Strausses. Presumably in Nashville now or soon, one will find the “Country Music Toilet.” What other such complements exist?
The Economics of the Vegetarian Option
Went to a one-star Michelin restaurant in Bonn last night. One of the best meals I’ve ever eaten. Three of the four of us ordered the five-course prix fixe all-vegetarian menu. As we left, I thanked the chef-owner — who responded “Despite it being vegetarian!”
He seemed slightly upset about serving this menu. Was it because his revenue from it was only €63 compared to €91 for a five-course regular menu (which had one meat and one fish course)? Maybe. But I don’t believe the vegetarian menu used less labor, nor was there a €28 difference in materials cost. Read More »
A German Haircut
Got a haircut at the beauty parlor down the street in Bonn, Germany. The young lady washed my hair first and dried it after very carefully — neither of which is done at home. The whole thing cost only €10, much less than I pay at the beauty parlor that my wife patronizes in Austin. On the price list, though, no price was as low as €10. I asked why, and was told they give a special price to those who are (as we might say in the U.S.) follically challenged. I observed a hirsute fellow in the next chair, whose haircut lasted much longer than mine. Clearly, the shop was engaging in cost-based price discrimination.
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