Saturday, March 13, 2010

Soccer "injuries"---Video of the BEST fake soccer injuries (is that redundant??)

More on Demand Elasticity of Cigarettes---the Story gets BETTER!!!!

Although it is commonly thought that goods that promote an addiction are relatively price inelastic, meaning consumers are not significantly responsive to changes in quantity demanded when price changes, we have to remember that the percentage of income allocated to the good is also a determinant of elasticity.  The higher the percentage of income allocated to a good the more elastic demand tends be when price changes.  The following study tests the price elasticity of demand in developing (read that "poor(er) ) countries and hypothesizes that a 10% increase in the price of cigarettes (through a tax, I assume) would result in an 18.3% decrease in quantity demanded of cigarettes (Price elasticity of demand is %change in Quatity Demanded divided by %change in price--if result is less than 1 the good is relatively demand inelastic, if greater than 1 the good is relatively demand elastic). This suggests that the quantity demanded for cigarettes in the developing world is price elastic, presumably because of lower overall incomes.  Because Americans have more income available (even the young AND the poor), hence cigarettes purchases are a smaller part of an individual budget to purchase cigarettes, I believe this would not be the case here.  Demand would be more price inelastic...Any thoughts??

From VOX: Do higher cigarette prices deter smoking? Evidence from developing nations

Do higher cigarette prices deter smoking? This column finds that policymakers in developing countries could reduce cigarette consumption by youths by raising taxes. A 10% increase in the price will reduce youth cigarette demand by 18.3%.

Reducing tobacco use has been an important issue for policymakers ever since the US Surgeon General’s 1964 report on the adverse health effects of tobacco. Tobacco is now established as a leading cause of preventable death worldwide and is expected to claim nearly a billion lives in the 21st century (WHO 2008).

Youth smoking in developing nations

The majority of the tobacco public health burden will be carried by developing countries, due to the unfortunate combination of increasing consumption and health system inadequacy. Of particular concern in developing countries is youth smoking, which can start at very young age and is the primary way of establishing adult smoking habits.

Although tobacco use is a major public health problem in lower-income countries, most of the evidence on what determines smoking comes from a few industrialised countries, primarily the US. There is a wealth of research on the impact of US cigarette prices or taxes, most of which agrees that taxes/prices can be used effectively to influence smoking decisions.

However, many studies have difficulty in claiming a causal price effect due to inability to control for variation in state characteristics. The most recent research on US youth smoking employs better identification techniques (DeCicca et al. 2008, Carpenter and Cook 2008, and Tauras et al. 2005), but the results have been mixed with regards to the impact of price. This hinders extrapolation of US-based results to other countries.

Even if uniform evidence on US price effects were available, US results may not be easily generalised to other countries due to differences in income, cultural environment, and individual behaviour.

New evidence from 20 developing nations

In recent work, co-authors and I claim that policymakers in lower-income countries would be able to reduce youth cigarette consumption through tax policies that increase the price of cigarettes (Kostova et al. 2010). Using individual-level data from 20 developing countries, we estimate that the price elasticity of cigarette demand among youth is -1.83.

We focus on youth (the average age in our sample is 14 years) since smoking habits are established primarily in adolescence, making this the optimal age for intervention. Our data come from the Global Youth Tobacco Survey (GYTS), combined with cigarette price data from the Economist Intelligence Unit Cost of Living Survey.

Our total price elasticity estimate can be decomposed into two parts:

•the price elasticity of smoking participation (-0.63), and

•the price elasticity of consumption intensity (-1.2).

The first represents the effect of price on smoking prevalence while the second represents the effect of price on the number of cigarettes consumed by smokers. We estimate that a 10% increase in price would reduce youth smoking rates by 6.3%. We also estimate that a 10% increase in price would reduce the average number of cigarettes consumed by young smokers by 12%. Overall, a 10% increase in cigarette price would reduce youth cigarette demand by 18.3%.

The causal effect of cigarette prices on smoking in our analysis is identified by:

•using country fixed effects, and

•including a measure of local anti-smoking sentiment.

These measures control for unobserved country characteristics which could affect both price and demand, and could potentially bias the price estimate. We further reduce unobserved country heterogeneity by controlling for confounding environmental factors such as the prevalence of cigarette advertising, anti-tobacco media outreach, and compliance with youth access restrictions.

Conclusion: Higher prices reduce youth smoking in developing nations

Our results suggest that price is a significant determinant of cigarette demand among youth in lower-income countries, and the price may be used as a policy tool to curb smoking in the developing world.

I am Transferring schools...There is a MORE interesting school waiting for me...

By way of HERE, I also wonder why the Department of EDUCATION(!) would need to buy 27 shotguns...Man, THOSE kids must be HARD to teach!!
The U.S. Department of Education (ED) intends to purchase twenty-seven (27) REMINGTON BRAND MODEL 870 POLICE 12/14P MOD GRWC XS4 KXCS SF. RAMAC #24587 GAUGE: 12 BARREL: 14" - PARKERIZED CHOKE: MODIFIED SIGHTS: GHOST RING REAR WILSON COMBAT; FRONT - XS CONTOUR BEAD SIGHT STOCK: KNOXX REDUCE RECOIL ADJUSTABLE STOCK FORE-END: SPEEDFEED SPORT-SOLID - 14" LOP are designated as the only shotguns authorized for ED based on compatibility with ED existing shotgun inventory, certified armor and combat training and protocol, maintenance, and parts.

The required date of delivery is March 22, 2010.

Friday, March 12, 2010

If at first you don't succeed...well, you are in good company...

It at first you don't succeed...well, you would be in good company...For full list go HERE...

6.Bill Gates: Gates didn't seem like a shoe-in for success after dropping out of Harvard and starting a failed first business with Microsoft co-founder Paul Allen called Traf-O-Data. While this early idea didn't work, Gates' later work did, creating the global empire that is Microsoft.

7.Harland David Sanders: Perhaps better known as Colonel Sanders of Kentucky Fried Chicken fame, Sanders had a hard time selling his chicken at first. In fact, his famous secret chicken recipe was rejected 1,009 times before a restaurant accepted it.

8.Walt Disney: Today Disney rakes in billions from merchandise, movies and theme parks around the world, but Walt Disney himself had a bit of a rough start. He was fired by a newspaper editor because, "he lacked imagination and had no good ideas." After that, Disney started a number of businesses that didn't last too long and ended with bankruptcy and failure. He kept plugging along, however, and eventually found a recipe for success that worked.
9.Albert Einstein: Most of us take Einstein's name as synonymous with genius, but he didn't always show such promise. Einstein did not speak until he was four and did not read until he was seven, causing his teachers and parents to think he was mentally handicapped, slow and anti-social. Eventually, he was expelled from school and was refused admittance to the Zurich Polytechnic School. It might have taken him a bit longer, but most people would agree that he caught on pretty well in the end, winning the Nobel Prize and changing the face of modern physics.

10.Charles Darwin: In his early years, Darwin gave up on having a medical career and was often chastised by his father for being lazy and too dreamy. Darwin himself wrote, "I was considered by all my masters and my father, a very ordinary boy, rather below the common standard of intellect." Perhaps they judged too soon, as Darwin today is well-known for his scientific studies.
share of rejection and failure before they made it big.

22.Jerry Seinfeld: Just about everybody knows who Seinfeld is, but the first time the young comedian walked on stage at a comedy club, he looked out at the audience, froze and was eventually jeered and booed off of the stage. Seinfeld knew he could do it, so he went back the next night, completed his set to laughter and applause, and the rest is history.

23.Fred Astaire: In his first screen test, the testing director of MGM noted that Astaire, "Can't act. Can't sing. Slightly bald. Can dance a little." Astaire went on to become an incredibly successful actor, singer and dancer and kept that note in his Beverly Hills home to remind him of where he came from.

24.Sidney Poitier: After his first audition, Poitier was told by the casting director, "Why don't you stop wasting people's time and go out and become a dishwasher or something?" Poitier vowed to show him that he could make it, going on to win an Oscar and become one of the most well-regarded actors in the business.

47.Michael Jordan: Most people wouldn't believe that a man often lauded as the best basketball player of all time was actually cut from his high school basketball team. Luckily, Jordan didn't let this setback stop him from playing the game and he has stated, "I have missed more than 9,000 shots in my career. I have lost almost 300 games. On 26 occasions I have been entrusted to take the game winning shot, and I missed. I have failed over and over and over again in my life. And that is why I succeed."

48.Stan Smith: This tennis player was rejected from even being a lowly ball boy for a Davis Cup tennis match because event organizers felt he was too clumsy and uncoordinated. Smith went on to prove them wrong, showcasing his not-so-clumsy skills by winning Wimbledon, U. S. Open and eight Davis Cups.

49.Babe Ruth: You probably know Babe Ruth because of his home run record (714 during his career), but along with all those home runs came a pretty hefty amount of strikeouts as well (1,330 in all). In fact, for decades he held the record for strikeouts. When asked about this he simply said, "Every strike brings me closer to the next home run."

50.Tom Landry: As the coach of the Dallas Cowboys, Landry brought the team two Super Bowl victories, five NFC Championship victories and holds the records for the record for the most career wins. He also has the distinction of having one of the worst first seasons on record (winning no games) and winning five or fewer over the next four seasons.

These students have a REAL Econ teacher...I am a poser...

These AP Microeconomics students have a REAL AP Econ teacher....From HERE

Fan of "The Hurt Locker"? Here are photos of the REAL EOD's teams at work...

Click HERE to go to a photo-essay of the soldiers who are the REAL EOD technicians....WOW!

It is not economics, but it is interesting...Nice visual showing temperature extremes in nature...

It is not economics, but it is interesting...Nice visual showing temperature extremes in nature...

A Visual Tour of What’s Hot or Not in the Universe (By way of HERE)

Mr Harrison (Calculus teacher) made my Camry accelerate unexpectedly....

Apparently I am not old enough to have a Toyota acceleration problem with the BRAND NEW Camry I bought, oh, two weeks BEFORE the recall....guessin' that is why I got such a good deal on it. Note the ages of identified owners who experienced an acceleration....I am  not quite there yet, but as Chris Rock says, "I dont agree, but I understand"...

From Marginal Revolution: Here is Ted Frank on the Toyota sudden acceleration problem.
The Los Angeles Times recently did a story detailing all of the NHTSA reports of Toyota “sudden acceleration” fatalities, and, though the Times did not mention it, the ages of the drivers involved were striking.

In the 24 cases where driver age was reported or readily inferred, the drivers included those of the ages 60, 61, 63, 66, 68, 71, 72, 72, 77, 79, 83, 85, 89—and I’m leaving out the son whose age wasn’t identified, but whose 94-year-old father died as a passenger.

These “electronic defects” apparently discriminate against the elderly, just as the sudden acceleration of Audis and GM autos did before them.

Thursday, March 11, 2010

Lifting people out of poverty through social enterprising and entrepreneurship..I wish I was this ambitious..

BBC: "Social enterprise helps Malawi's poor"
Lifting people out of extreme poverty though social enterprising and entrepreneurship...An organization that helps women with AID's/HIV improve their lives by giving them medical care and support in finding jobs and creating small businesses...Blessed are those who serve people in this manner. I wish I had the courage to do this!
People here are obviously very poor. It is the recipe for a major health crisis, one that is far beyond the resources of the government to cope with. But in the last three years, they have joined forces with Partners In Health (PIH), a social enterprise dedicated to providing quality health care to the world's poorest people. PIH believes that social factors are as important as medical ones. They do not just offer medical care, but practical help as well. They argue that the poor need food, homes, work and education in order to stay healthy, not just tablets and surgery. This means that a lot of their work does not take place in hospitals, but out in the community...PIH also helps patients get jobs. In a nearby town, a group of 15 women recently set up their own restaurant with the support of PIH. They are former prostitutes, and all are HIV positive. The women, all on anti-retroviral medication, wanted a business, not only to provide money to live on, but to give them a sense of pride in themselves.

The umemplyoment rate is INCREASING----That is GOOD NEWS(???)!!!!

From Washington Post (by way of HERE): "Rise in Washington area unemployment seen as good sign for economy's recovery"
Unemployment rates rose in the District, Maryland and Virginia in January, a shift that economists said could be a positive sign for the economy because it suggests that discouraged job-seekers are feeling more optimistic about their prospects and have resumed looking for work.
This is a peculiar and often confusing signal to the unintiatated in the subtleties of economics.  If you are unemployed for  6 months and 1 day the Bureau of Labor Statistics stops counting  you in the official, published unemployment statistic (BLS considers you a "discouraged worker").  Fair or unfair, this is the methodology they use.  "Discouraged workers" have given up looking of work because they believe there are no jobs available for them (or others).  When the incidence of discouraged workers increases it makes the unemployment rate seem BETTER than it really is (the labor force in now smaller).  When the economy starts to recover and these workers see help wanted signs appearing and increased hiring, then they re-enter the job searching market.  Once they have signaled their intent to look for work again the BLS counts them again in the ranks of the unemployed actively looking for work.  This INCREASES the unemployment rate even though the economy is recovering.  When these workers are absorbed into the labor force then the actual unemployment rate will start to decrease to relfect actual economic conditions.  So, dont be surprised if you hear mixed signals  coming from the media, such as "GDP is on the increase and so is hiring BUT the unemployment rate is increasing---what is up with that?"---now you know why!! Isn't it nice to be informed?? :)

My seat to the game cost 5.00 more and I am GRATEFUL!!!

From The Miami Herald: "For $5 more, Miami Dolphins fans can have it made in the shade"...
This is an example of a firm capturing consumer surplus.  They can identify a quantity of fans who are willing and able to purchase a seat at a price higher than the equilibrium price based on an advantage  (location)---shade! This is an example of  third degree price discrimination...
In third degree price discrimination, price varies by attributes such as location or by customer segment, or in the most extreme case, by the individual customer's identity; where the attribute in question is used as a proxy for ability/willingness to pay.
There are different degress of price discrimination (see HERE) and it seems the selling of the shaded seat falls into this category (arguements could be made for 1st degree discriminaton, i suppose)...
A Harvard business professor has confirmed for the Miami Dolphins something fans have known for years: Midday in the September sun at Sun Life Stadium, it gets excruciatingly hot. So as part of the first increase in Dolphins ticket prices in three years, there will be a higher cost for shade. Fans sitting on the shady side of Sun Life will pay about $5 more per ticket per game than fans roasting in the sun on the opposite side. The south side seats also have the advantage of being behind the Dolphins' bench.  The increase, part of a 2010 season pricing scheme that will see higher ticket costs for 56 percent of seats, was announced Thursday. The Dolphins decided to overhaul their pricing structure after hiring Harvard business professor Robert Stavins and specialists at MIT to do an analysis.
This is good economics, but is it "good business" in terms of publicity and the perceptions that prices are already too high for venues like this.

Wednesday, March 10, 2010

It has been an tough stretch for Billionaires....

BBC: Rich list hit by economic crisis...
""The financial crisis is taking its toll on the world's richest people, wiping 332 names off Forbes magazine's "rich list" of world billionaires. Just 793 people can now lay claim to a place on the list, but on average they have lost 23% of their wealth. The stock market collapse helped Microsoft founder Bill Gates regain the top spot, despite his wealth declining $18bn (£13.06bn) to $40bn. He ousted investor Warren Buffet, whose fortune declined by $25bn to $37bn. In 2008, Mr Buffet had managed to end Bill Gates' 13-year reign at the top as shares in his firm Berkshire Hathaway surged to a record of $150,000 per share just before Forbes formulated its 2008 ultra-rich list.""

Q&A on Somalia, if you are interested in more information...

If you are interested in the situation in Somalia, the BBC has a Q&A that explains some of the basics of the numerous problems there...

Taxing Soft Drinks...Good idea or not? The Delivery Drivers HAVE to know what you are going to do!!

NYTimes Editorial:  Healthy Solution: Taxing Sodas

Seldom does one idea help fix two important problems, but a proposal to tax sugary soft drinks in New York State is just that sort of 2-for-1 solution. The penny-per-ounce tax on sodas and other sweetened drinks is a way to raise desperately needed money for the city and state in a bad economy. It also could help lower obesity rates, which have soared in recent years.  
It is assumed by the editorial that soft drinks produce "negative externalities"--costs imposed on others that are NOT paid for by the producers and consumers of soft drinks, i.e. healthcare costs borne by the state of N.Y and its taxpayers (who may or may not consume soft drinks).
It is time for Albany’s lawmakers to stand firm against the soft-drink lobby. Their claim to be standing up for New York’s poorest residents obscures the fact that those same people are their customers of choice. Poorer people, who lack healthy food choices, too often overload on sugar-laden soft drinks. Even though soft drinks are not the only cause of obesity, people in lower-income areas tend to suffer more from obesity, diabetes and other obesity-related illnesses...The costs of health care for these illnesses are rising steadily. State budget analysts estimate that obesity-related problems cost the state an estimated $7.6 billion annually. This tax could bring in about $1 billion a year to help with those costs
This excise tax on either demanders or suppliers certainly will decrease the private market quantity supplied and demanded and produce a more "socially optimun" market quantity.  Less sugar consumed, fewer healthcare problems, hence less healthcare costs incurred, true.  But in economics we look for the unseen effects of this policy...The one that came to mind for me was the lost jobs due to the smaller, socially optimal quantity.  Few drinks to make and deliver.  Producers will need "at the margin" fewer production workers and delivery truck drivers, fewer trucks, get the point...Why no mention of the lost jobs due to decreased production?  Is this a legitimate point to raise?  Perhaps it is not fair to even suggest there is a trade-off like this when public health policy is made, but, hey, that is what "The Economic Way of Thinking" does to you...:)

Terrorism Funded with US Food Aid...Yes, it is true...

NYTimes: Somalia Food Aid Bypasses Needy, U.N. Study Says...So shameful, but predictable...Is it an acceptable price to pay for HALF of food aid sent to Somalia is siphoned off to crooks, thieves, terrroists, politicians (interesting grouping)? 
"As much as half the food aid sent to Somalia is diverted from needy people to a web of corrupt contractors, radical Islamist militants and local United Nations staff members, according to a new Security Council report."
Much of this is courtesy of US taxpayers who fund the agricultural sudsidies that produce a surplus of food commodities that in turn is sent as food aid.  Is it a stretch to say we indirectly fund terrorism against the very people we are trying to help?
“Some humanitarian resources, notably food aid, have been diverted to military uses,” the report said. “A handful of Somali contractors for aid agencies have formed a cartel and become important power brokers — some of whom channel their profits, or the aid itself, directly to armed opposition groups.”

US vs Canada Gold Medal Toilet Flushing Competition---the sewers lose!!

This graph shows water usage during normal times (green line) and water usage in the time frame of the US vs Canada Gold medal olympic game...Assumption is the peak water usage (blue line) is the result of flushing toilets during the intermissions and a lower than normal trough during the game...That is alot of holding in...:)

Monday, March 8, 2010

What does a Big Mac have in common with an IPOD???

Just found this.  See how much it costs to buy an IPOD in different countries.  It is somewhat similiar to The Economist magazines "Big Mac Index".  The price of  IPOD in the US is $149.00...As an example, look at Argentina.  The Peso price of an IPOD Nano (8G) is 1,299 Pesos (from Apple website HERE)...The PPP exchange rate would be 1,299 Pesos divided by $149 = 8.72 Pesos ($1.00 = 8.72 Pesos) The ACTUAL exchange rate is $1.00 exchanges for 3.90Pesos.  So if you divide 1,299 Pesos by 3.90 Pesos ($1.00 buys 3.90 Pesos) you get a dollar price of $333.07 for the IPOD (slightly different than the price rate change since Oct 2009). VERY expensive IPOD in Argentina!!

CommSec iPod nano index

8 gigabytes, October 2009

$US                                                $US

Argentina $336.43                   Malta $207.15

Brazil $333.56                         Spain $207.15

Iceland $320.95                      Portugal $207.15

South Africa $283.65              Italy $207.15

Hungary $278.42                    Belgium $207.15

Vietnam $275.56                    Ireland $207.15

Egypt $269.43                       Germany $207.15

Uruguay $265.00                   El salvador $199.00

Serbia $254.99                       Guatamela $198.11

Czech $253.29                       Costa Rica $197.45
Ukraine $248.00                     Luxembourg $196.89

Croatia $246.73                      Switzerland $195.37

Romania $236.65                    Taiwan $194.14

Bulgaria $234.34                     Greece $194.11

Lithuania $233.33                    Korea $194.05

Chile $231.68                          NZ $191.80

Finland $231.00                       India $191.75

Slovenia $231.00                     Peru $188.47

Estonia $230.63                       Philippines $188.06

Latvia $229.84                          UK $188.03

Norway $222.45                      Thailand $182.76

Austria $222.06                       Australia $182.28

France $222.06                       Pakistan $179.98

Slovakia $222.06                    Mexico $178.90

Denmark $219.80                   UAE $176.65

Russia $218.26                      Turkey $175.84

Sweden $214.41                    Malaysia $175.43

Indonesia $212.69                  China $175.22

Azerbaijan $210.46                Saudi Arabia $170.22

Cyprus $208.63                     Singapore $163.69

Israel $208.50                        Canada $162.88

Sri lanka $208.42                    Japan $162.76

Poland $208.22                      Hong Kong $150.68

Netherlands $207.15             US $149.00

Source: CommSec, Apple

"Olds" VS. "Youngs" Population Pyramid...What are YOU going to do with all Us Old People???

As luck would have it, today in class I used a population pyramid to illustrate the changes in demographics from the 1930's to today to show the effects of an aging US population and its impact on Social security/Medicare.  This graphic gives a more accurate portrayl than the one I wrote on the board...The premise is still valid...More "Olds" relative to "Youngs"...How are YOU going to pay for all the the "Me's"??? Source: HERE

Sunday, March 7, 2010

Spirited Defense of Job Creation by the Fed Govt---Worth a Read!!

Here is an excellent blog post from a respected economist on how and why government can and should create jobs...It is in parable form and easily read...Makes sense and offers an alternative viewpoint on whether government can "create" jobs (the word "create" in a the context of jobs is a very loaded word in economic circles)...

URGGHHH!! The Demand for Cigarettes is relatively INELASTIC!

From BBC: Ash calls for 5% increase in tobacco tax
A five per cent rise in tobacco tax would lead to a substantial drop in the number of smokers and save millions in health costs, a UK charity suggests....Ash's report says that raising tobacco prices would reduce the number of smokers by 190,000 and save the NHS more than £20m a year by cutting the cost of treating smoking-related diseases.
According to Cancer Reseach UK, approximately 9.5 million Brits smoke.  Elasticity is determined by dividing the Percentage Change in Quantity Demanded by the Percentage Change in Price.  If the result is less than 1 then demand for cigarettes is inelastic (consumers NOT very responsive to changes in prices) and if it is more than 1 then demand is elastic (consumers are VERY responsive to changes in prices).  Using these numbers we have a change in quantity demanded of 2%.  If we divide 2% by 5% we get .40.  Smokers are relatively UNRESPONSIVE to the tax, assuming these numbers are correct.  I believe Mr Ash is WAY over-estimating the decrease in demand from a relatively small change in tax. A 2% change in response to a 5% increase in tax seems high for a good like cigarettes.  I have to think it would actually range from something less than 1% to maybe 1.5%.   Yes, fewer people will smoke, no question.  But the big winners will be the government in increased tax revenue AND the cigarette companies who will bear some burden of the tax, but not as much as consumers will bear.  My question: Why JUST 5%? Why not a much higher number if you really want to make a dent in the smoking population.  I dont know what that amount is, but if you want to "cross-over" to an elasticity of greater than one and REALLY reduce quantity demanded  by 50% or more, then how about 20%, 30%, 40%?...thinkin' that might do the trick...

Informative Graphics on the Trade in Tiger Parts---What is wrong with people!!!!

Things like this make me wonder about people/culture sometimes and the things they believe in...In today's NYTIMES there are a couple of informative graphics on the Tiger trade.  The first shows which body parts are coveted for medicinal and/or spiritual/"black magic" uses. The second shows hides confiscated and the third shows the areas of remaining habitats for wild tigers...I believe this species is doomed because there seems to be no unified consensus in the conservation movement and across international boundries as to what to do about it...Shameful...

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