Category Archives: Economics

How many people can you name that legally own all of their music? I can name two– my parents. Websites such as pirate bay and many other P2P (peer to peer) networks make it simple and fast to illegally acquire almost any song or other form of downloadable media for no cost at all. Even with the demise of LimeWire, a popular media sharing application in 2012, an increasing number of file sharing websites are emerging at a rate that is seemingly unstoppable. The average teenager claims to have around 8,000 songs in their music library, yet at the 99 Continue reading The Price Tag on Free Music→

Last week, I wrote on the perverse incentive structure of gyms that encourages them to discourage (actively or passively) attendance. This week, I’m writing on commitment devices. These are mechanisms that people use to engineer an incentive structure to set them up for success with a difficult task. A few years ago I heard a story from RadioLab told by a woman who was struggling to quit smoking. She decided to set up a small payment to a cause she found repulsive, the KKK I believe, that would go through if she lit up again. I suspect that it wasn’t Continue reading Commitment Devices→

Every day we use our brains to interact with other people, solve problems and make decisions. Every decision we make has a potential impact on our next decision. A certain decision, and the outcome that follows, could stick with you long after the decision was made and unconsciously determine your next. To make decision-making more efficient, your brain creates mental shortcuts to help you make the right decision faster. These mental shortcuts are called heuristics, and are a main theme of behavioral economics. Heuristics are deviations from rationality formed by previous experiences. Instead of relying on the information at hand Continue reading The Science of Decision-Making: Heuristics→

How much of our success is determined by randomness? I would bet that it is more than most people would like to think. In light of the hotly approaching Super Bowl, I want to start by looking at The Seattle Seahawks over the past few years to demonstrate how success can sometimes be so dependent on chance and randomness. Note: I am not trying to say their entire two-year run has been based on luck and chance, although, my Packer fandom might explain my motivation for this… I am simply trying to point out how their recent success has been influenced Continue reading The Randomness of Success→

Getting vaccinated is an uncomfortable experience, but it remains one of the most important medical processes to go through, not only for yourself but for those around you as well. For some time, an anti-vaccination faction has been gaining popularity in the US, leading to more cases of nearly eradicated diseases (such as measles.) In a freakonomics podcast earlier this month on the flu vaccine, they explore why people opt not to get vaccinated, and why this is a bigger problem than it seems. Even beyond the public health realm, an increasing population who are unvaccinated against diseases is actually Continue reading Getting Shots→

It’s been a solid 26 days since the beginning of the new year, and I would bet that most resolutions–especially fitness resolutions–have fallen flat by now. Well, it turns out that maybe fitness resolution-makers shouldn’t carry the full burden of blame for their failings. In some ways, the system is stacked against them. NPR’s Planet Money scrutinized the business model of typical gym in a recent podcast episode. A brief summary of their observations: It’s not in the interest of gyms’ financial interest to have frequently-attending members. More use means more cost (replacing machines, cleaning up, providing paper towels for de-sweatifying things), Continue reading New Year Resolutions?→

Japan is in its second recession in the past two years, as its economy has contracted for the second quarter in a row. GDP decreased 1.6% from July 2014 to September 2014, despite forecasts of an increase of 2.1%. In 2013, Japan printed out hundreds of billions of dollars in yen to buy government bonds. It was an attempt to balance the budget, and while it gave the appearance of economic growth, it lowered the value of the yen. Merchants sat on the wealth and didn’t distribute it to workers. Japanese incomes began to stagnate and/or decrease. Lower wages, compounded with increased Continue reading A Quick Overview of Japan’s Current Recession→

The impact of the holiday season on our consumer economy can hardly be overstated. In addition to elevated black Friday and other seasonal shopping, we might expect Santa Claus to be a major economic force. In that spirit, researchers have put together some interesting statistics on what Santa’s operations, were they structured as a multinational corporation, might look like. Based on his job’s description of pilot and industrial manager, insure.com estimates Santa would make a salary of $139,924. (If Santa were classified as CEO, that number would likely be much higher.) NPR’s Planet Money crunched the numbers to determine the elven workforce necessary if Santa operated Continue reading Santanomics→