Shops Should be Opening Soon!

In February I went to the Eastern Economics Association's Annual Conference held in New York City. During the trip, I spent some time in Brooklyn exploring what's going on over in that borough. While walking through the Brooklyn Bridge Park we came across a little shop that was closed for the winter break. Even in a city as big as New York, demand for lemonade on the East River falls enough that it's better for shops to shut down.

The image on the right was from a trip to Niagra Falls at the beginning of November. It was a little chilly when we were there with a light snow, but I was definitely in no mood to purchase an ice cold soda while enjoying the falls. The owner of the Coke machine must have agreed because he unplugged the machine and stuck a sign on it. The candy store it was attached to was also closed for the season!

Revenge of the Nerds

Great new report out by The Economist about earnings for college graduates. It's a great piece to include for an economics program in every university because they break it down by degree area. If your university is heavily weighted to one area than narrow down the results to that degree.

In 1972 a university-educated man aged 25-34 could expect to earn 22% more than a peer without a degree, according to the Urban Institute, a think-tank. Today that premium has risen to 70%.

Here are the result for business/econ majors:

Economics in India

Over Spring Break, I was fortunate enough to travel to Bangalore and Mysore India after being part of Washington State University's Global Case Competition last year. The focus of the case competition was to advise a transnational corporation on doing business in Delhi, India. Unbeknownst to us at the time, our participation in the competition would earn us a sponsored trip to India!

While in India, we visited businesses (Infosys, Wipro, & NextDrop) as well as institutes (India Institute of Management and India Institute of Science). Overall, a thoroughly fantastic journey. If you have any questions, please feel free to comment below!

Now for the economics! While the obvious examples may jump out at you (poverty, income inequality, technology, etc), I love pricing strategies. This shouldn't be a surprise to people who flip through my other posts, but I wanted to share with you three different photos I was able to capture. I'll admit, most of my attention was focused on things other than economics.

On the fourth day of the trip, we ventured into Mysore, India, home of the Mysore Palace. Let's just say that the Royal Family recognizes that foreigners are willing to pay a premium to visit their residence and ride their elephants (see below).

While many of you may not know the Rupee/Dollar exchange rate by memory, I can tell you it's approximately 50 Rupees for 1 US dollar. While not exact, it was the ratio we used to make quick calculations. The shock at the front gate was pretty large because I'm not sure any of us expected to pay five times the price of Indians. While alarming at first, we all begrudgingly handed over our Rupees and realized that about $4 wasn't too shabby after all.

And then some of the people in our group decided to ride elephants, and the Royal Family was ready again, but this time the cost wasn't as drastic. I imagine if it was 200 Rupees, we still would have ridden them!

On the final night of our trip, Rossetti and I ventured to MG Road in Bangalore for some last minute shopping. After spotting a Krispy Kreme on a previous night, we knew a trip to India wouldn't be nearly as fun if we couldn't say we had a donut. Low and behold, Krispy Kreme in India offers rebates for bringing your own bags:

Every time I've seen these implemented, they always appeal to our "green" side, but really it's a cost saving tactic. If companies can convince you to bring your own bag, it lowers the cost of providing bags for you. My understanding is that 4-6 Rupees is a significant price in Bangalore, and equivalent to the 10 cents many US supermarkets offer. It was also a great excuse to share the photo with a former WSU SES grad student who does research in this area.

Don't Forget About Seinfeld!

Last week I was able to meet Linda Ghent at the National Economics Teaching Association Conference in Austin, Tx. Little did I know that Linda was the author of one of my favorite economics sources: YadaYadaYadaEcon.com, which covers Seinfeld if you didn't catch the reference.

If you like economics or you like Seinfeld, please check it out.

Twitter and Economics?

Yes! Of course Twitter is part of economics. Each day there are millions of users supplying content at essentially no cost (granted, some of it is more valuable than others). At the exact same time (unless your Kanye West), there are people you can follow and get updates from. Every fraction of a second, supply and demand factors are occurring right in front of our computer screens. What does this have to do with economics you ask? Who you decide to follow is a choice, and that choice is based on some characteristics of the individual. For the most part, we follow our friends, a few fast food restaurants, and some celebrities.

Using Regular Express, a colleague and I have captured demand characteristics for pundits. We evaluate whether a professional prognosticator, like Nate Silver, earns more followers (more demand) whenever they supply confidence or accuracy. We collected tweets from the 2012 MLB playoffs and World Series, the 2013 NFL Super Bowl, and currently combing through the 2013 NCAA March Madness tournament. Our samples are based on demand for professional pundits (verified Twitter accounts), self-proclaimed professionals (based on their Twitter bio), and the general public.

The results might surprise you!

Thank you to WSU News for covering our research. If you're interested in reading the more technical results, they can be found on my colleague's site.

Community Service and Economics

It's no surprised that there is an underwhelming level of community service in our society, even though there are dozens of organizations in need of volunteers. Washington State University even has a designated office on campus to help connect students with volunteer opportunities. Since I started teaching, I knew that integrating community service into my courses was a priority. I really started it last semester with a canned food drive:

For a mere 3 bonus points (0.3% of their final grade), I volunteered to take canned food or toiletries to the CAC Food Bank on their behalf. The results were overwhelming to say the least. The class of 200 students responded by bringing in over 500 cans of food, 68 paper products, and dozens of "other" goods.

The first response I received from fellow faculty members was, "what does this have to do with economics?" I quickly told them nothing, and that I wanted to give them the opportunity to give back to the community. So I took the challenge to implement economics and community service together. Using a GoFundMe All-Or-Nothing Campaign, I challenged my 100 person course to raise a little over $500 to donate to the local YMCA. If the class meets the goal by the deadline, the YMCA will receive $500 and every person in the class (regardless of whether they donate) will receive 15 bonus points, plus some incentives along the way.

Hopefully our well versed economists know what economic theory will suggest, but do you think that will be the actual result? Can the students overcome the theory and reach the socially optimal outcome? I guess we'll find out in 16 days!  Do you have any other ideas on how to link community service with economics? 

Diminishing Marginal Utility with Swiss Cake Rolls

This challenge would have definitely centered around Twinkies, had it not been for their bankruptcy and subsequent disappearance from shelves. Hopefully a deal can be reached to bring back the golden rolls of glory in time for this summer. Until then, Swiss Cake Rolls must suffice.

Early in every semester, I like to engage the class in a "real life" example of some type of economic phenomenon. Too often, instructors jump in with the dull routine of supply vs. demand, and efficiency vs. equity. Instead, I like to grab a few students, make them engulf 10 Swiss Cake Rolls (voluntarily of course), and then ask them how they feel. Luckily for the class, that concept won't be taught for a few weeks, but it at least gets them excited about economics.

For those unfamiliar with diminishing returns, as people employ additional units of inputs, their output increases at a decreasing rate. What does that have to do with Swiss Cake Rolls? Consider our hungry eaters as trying to maximize their utility (output) by consuming the delectable dessert (inputs). They were extremely happy with the first one, but the second one didn't bring them nearly as much satisfaction, nor did the subsequent desserts. On the consumer side, this is referred to as diminishing marginal utility. The video should help show the effects of diminishing returns. Thankfully no one had negative returns: