Category Archives: Economics

Fitness Apartheid? A moral look at price discrimination

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Fitness Apartheid. That’s right, apartheid. That’s one way the housing market in New York City has been described recently by a tenant. An inflammatory word? Absolutely. Comparing exclusive fitness centers to an entire history of racially based and politically enforced segregation is entirely inappropriate and I don’t support it in the least. However, the housing market in New York is a battle ground and the actions that landlords are taking have become downright offensive. This episode of Freakonomics explores the idea of price discrimination through first class airplane seats, “the poor door”, and yes, an exclusive fitness center. To listen to the episode, Continue reading Fitness Apartheid? A moral look at price discrimination→

Theaters, Asymmetrical Information, and Star Wars 7 (Part I)

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These days, Star Wars rumors are plastered all over the Internet. It’s hard to go far without running into a new rumor about the plot of the upcoming trilogy, or JJ Abrams standing in front of a puppet-alien, claiming that he’ll use no CGI in order to bring Star Wars back to its roots. The question is: why does JJ Abrams bother with all of these strange ‘leaks’? It could be that entertainment news sites have nothing else to talk about, but that theory seems discredited by the astonishing proliferation of celebrities-eating-a-cupcake articles. However, this phenomenon is different, and that Continue reading Theaters, Asymmetrical Information, and Star Wars 7 (Part I)→

How an interest rate can become negative

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This post will summarize a unique historical situation when an interest rate on an asset became negative. The repo market is a market for short term, low rate, collateralized loans, often done between between large entities. The collateral on these loans are government securities, such as treasury notes, so someone will loan someone money, and in return, they will receive a t-note as collateral until the loan is repaid. Here is a quick visual representation of how the repo market works. To get to the story, in the summer of 2003, there was a rising interest rate on intermediate t-notes leading Continue reading How an interest rate can become negative→

Ebola: Why is it so bad? (Part 2)

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This post continues the discussion from my last post, which raised the question: why has the Ebola crisis become so severe? One contributing factor: It’s hard to fundraise to fight Ebola. NPR’s Planet Money discussed this dismal fact in a recent episode. The main points of their analysis: + A sudden crisis garners more attention. For example, the Haitian Earthquake in 2010 generated a lucrative media spectacle. However, gradual-onset crises, such as famine or Ebola, are not as well suited for the sensationalist news cycle. + People like to donate to things that they can make better right away; no Continue reading Ebola: Why is it so bad? (Part 2)→

The Economics of the ALS Ice Bucket Challenge

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In case you’ve lived under a rock over the summer, the ALS Ice Bucket Challenge has been a campaign to encourage donation to the ALS Association, an organization that provides support to those afflicted by amyotrophic lateral sclerosis (ALS) – also known as Lou Gehrig’s disease. The Ice Bucket Challenge has raised an enormous amount of money, and has many people talking about the economic principles behind donation – whether they realize it or not. First, Vox helped to dispel the notion that people shouldn’t participate in the Ice Bucket Challenge because it’s a waste of water. In fact, compared to productive activities which use water, the ice Continue reading The Economics of the ALS Ice Bucket Challenge→

New Faculty Interview: Lea Fortmann

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As promised, this week we have an interview with Lea Fortmann, new Assistant Professor for the Economics Department. (If you missed last week’s interview, here is a link to the interview with our department’s other newest member, Peter Sullivan.) Where did go you go to college? Most recently I graduated with my Ph D. from Ohio State university so there I was in the Department of Agricultural, Environmental, and Development Economics and prior to that I did a Master’s at the University of Washington in the Evans School of Public Affairs. So there I got my PMA and I did my undergrad Continue reading New Faculty Interview: Lea Fortmann→

Player Stock from Fantex

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A couple years ago, a company called Fantex announced that it would be having an IPO (initial public offering) of stock on Houston Texan’s running back Arian Foster. The goal was to offer about a million shares of stock in the earnings of Foster, the 28 year old star running back. Foster would receive $10 million up front, and the value of these shares purchased is linked to essentially 20% of the earnings associated with his professional brand (including endorsements and other business ventures). This would count any earnings from contracts for playing in the NFL, or any jobs later Continue reading Player Stock from Fantex→

Ebola: Why is it so bad? (Part 1)

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The symptoms of Ebola are terrifying. In its later stages it leads to internal and external hemorrhaging—this includes bleeding from the eyes and ears. It can have a death rate of up to 90% (although the current outbreak kills about half of its victims). In addition, there’s no vaccine against it and no particularly effective treatment. Scary, right? It even LOOKS sinister… but most viruses do. (Source: Wikipedia) Although the disease has certainly takes a terrible toll upon infection, in a transmission-sense the disease is rather mild. NPR’s Morning Edition interviewed Stephen Morse, a virologist at Columbia University, about his opinion on Ebola’s potential Continue reading Ebola: Why is it so bad? (Part 1)→

Adverse Effects of Climate Change will not be Spread Evenly

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We are probably all aware of the fact that the negative effects of climate change are escalating. One very important question is, which countries will reap the most consequences? A risk consultancy firm called Maplecroft released its 2014 Climate Change Vulnerability Index, which uncovers which countries will be likely to suffer the most by 2025. The analysis is based on three main factors: the ability of a nation to combat the effects through policy, exposure to extreme weather events, and the sensitivity of a country’s citizens to these extreme conditions (ie. health, agricultural/industrial dependence, etc.). The risk levels range from low to extreme, Continue reading Adverse Effects of Climate Change will not be Spread Evenly→

New Faculty Interview: Peter Sullivan

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The Economics department this year welcomes two new members to the faculty. This week we have an exclusive interview with one of the two new Assistant Professors. Hired for his background in Macroeconomics, here is Peter Sullivan. So where did you go to college? “University of New Hampshire. I did all my degrees there.” And how many degrees was that? “The Bachelor of Arts in Economics, the Master of Scienc- or Arts in Economics, so the B.A., M.A., and Ph D. The program I did for the Ph D. gets you a Master’s degree after ten months.” What brought you to the Continue reading New Faculty Interview: Peter Sullivan→