Saturday, December 22, 2007

Holiday Wishes


Have a Merry Christmas, and a Happy New Year. See you in 2008.

Sunday, December 09, 2007

A Quick Quiz

Demand, Supply Hip Hop Style


All right you hip hop wannabes, check out this rap. It actually makes some good points about the principles of economics. It is the last song on the index.

Push Presents; Are you kidding me?



Apparently this is a new phenomenon, giving new mothers gifts of jewelery particularly diamonds just after they give birth. Is this an example of materialism run amok? Or does it show that men are more compassionate these days after seeing their spouses go through the pain of pregnancy and childbirth. Perhaps its a creation of the jewelry industry in order to sell more products. What do you think?

Sunday, December 02, 2007

Death of the U.S. sock industry


Check out this story from NPR about the Invisible Hand at work. You can also listen to the story if you prefer. It is an excellent article about the pros and cons of globalization in the once thriving U.S. sock industry.

Goalies, Stop Jumping.


Staying with our sports theme this week, check out this bit of economic research on goalies and penalty shots. It might surprise you. Isn't it funny how economics can be used to explain almost anything?

Should College Athletes Share in the Revenues


Check out this local story from the Chronicle. It is an old argument, that college athletes (especially football players) are bringing millions of dollars into their schools, and that they should be getting some of that money. Would that be the end of college fooball as we know it, if we started paying players? What about the free education these players are getting? What do you think?

Sunday, November 11, 2007

Debunking some myths regarding healthcare


Many of the current presidential candidates are railing about the failure of the U.S. healthcare system and calling for major reform. In this editorial, economist Greg Mankiw looks deeper at some of the claims being made.

Thinking about your future


Still trying to decide what to major in in college, how about oil. Read this article about the looming shortage of petroleum engineers, geologists, and oil industry workers in general.

Sunday, November 04, 2007

Devices Enforce Cellular Silence, Sweet but Illegal


I want one of these. Check out this NY Times article on cell phone jammers. May we never have to listen to someone's personal details in an elevator, checkout line, or waiting room again.

Saturday, November 03, 2007

Maybe its not as bad as we think


Today is Jobs Day. Here’s what you need to know about the October employment report:
+166,000 net new jobs were added in October. This is almost twice what the markets expected.

The unemployment rate is unchanged at 4.7%.

The US economy has created 1.68 M net new jobs over the past year, and 8.3 M since the labor market turnaround in August 2003.
We’ve had 50 months (4 years and 2 months) of continuous employment growth, a new record.

Wages are up 1.2% over the past year, adjusting for inflation.
In other economic news, on Wednesday we got GDP data:

GDP grew 3.9% in the 3rd quarter, well above market expectations of about 3%. This is the strongest quarterly GDP growth in 1½ years. Extra happy.

We can see the effects of a strong labor market in the consumption numbers – people are working and their real incomes are climbing, so they’re buying more stuff. Since consumption is about 70% of the economy, strong consumption growth is critical to continued GDP growth.

Housing is still a drag – it knocked 1.1% off the third quarter growth number. This is bad but unsurprising. The silver lining is that there’s no evidence the housing decline is spilling over into consumption.

Business investment was solid. Investment in “equipment and software” grew at a 6% rate, the best in 1½ years.

Exports continue to be strong, and they now make up 1 in 8 dollars of our GDP (12%). The rest of the world is growing, and they’re buying our stuff.

This last point is a useful reminder – world economic growth is not a zero sum game. When other countries’ economies grow, they buy more US goods. That’s good for us.

It’s no fun unless you have a picture. The yellow bar shows the total of 3.9% GDP growth. The other bars show where the growth is coming from.

This is my favorite way to show what’s actually going on – you can see that most of our growth is coming from consumption, that business investment and exports are important, and that housing is still a big drag.

We also had some happy news that productivity grew 2.6% in the 2nd quarter of this year. Higher productivity means each worker makes more stuff. Over time, productivity growth leads to wage growth.

Wednesday the Federal Open Market Committee cut the fed funds rate by a quarter point, to 4.5%. They also cut the discount rate by the same amount, to 5%. The FOMC also put out a statement. Since we don’t comment on the Fed’s monetary policy actions, I’ll leave it at that.

There are, however, some clouds going forward.

It’s probably going to take a while to work out of the housing downturn. We expect housing will continue to be a drag on GDP growth.
Oil prices are nearing an all-time inflation-adjusted high (depending on how you measure inflation).

The credit markets are still working through problems that first appeared in August.
One of our favorite words when talking about the US economy is “flexible” – we have extremely flexible labor and capital markets. When bad things happen (e.g., a factory closing, wildfires, housing and credit market troubles), a flexible economy can adjust and recover quickly and with the smallest amount of pain. We’re seeing the benefits of a flexible economy now.

Halloween Spending


Check out this slide show about the money that Americans spend on Halloween. It is very interesting and eye opening. Remember consumer spending is the key to keeping the economy going. Maybe we should create a few more holidays in order to fend off recession.

Friday, October 19, 2007

Womenomics; The New Defining Force in the Economy


"It found that over the past decade or so increased female participation in the paid labour force has contributed more to the growth of the world economy than either booming China or new technology"
Let the battle begin.

Cupcake Ban


Say it ain't so. A ban on cupcakes, could anything be more un-American? What are the economic implications?

Saturday, October 13, 2007

Public school or Private; Does it really matter?


According to this report, its not the type of school you went to, but those chats around the dinner table that really make the difference.

Is this a case of Capitalism run amok?


Read this interesting but somewhat frightening article about the global market for human organs.
". . . If you lose your job, you can sell your home. If you lose your home, you can sell your possessions. If you lose your possessions, you can prostitute yourself. And if you lose everything else, you can sell one more thing: your organs."
What is your reaction?

Saturday, October 06, 2007

Global Perspectives Survey


Check out this interesting article about attitudes on a variety of topics from countries around the world. Of particular interest are the attitudes about trade.

Protectionism in sports


What a timely article. Since we are currently studying protectionism, what are your thoughts on this article. The head of the European Soccer Association wants to limit the number of foreign players on European teams. What will be the consequences of such actions?

Consumers fight back against scalpers


Ever try to buy tickets to a concert only to find out that they are already sold out. Read about what consumers in Australia are doing to fight back against scalpers.

Sunday, September 30, 2007

Myths about the rich


The 2007 edition of the Forbes 400 wealthiest Americans was released last week. As in years past, it's one of the more useful economic annuals when it comes to laying bare the folly of antitrust, worries over the wealth gap, and perhaps silliest of all, the assumption that the rich became that way for exploiting the non-rich

A lesson in supply and demand


The ethanol boom of recent years — which spurred a frenzy of distillery construction, record corn prices, rising food prices and hopes of a new future for rural America — may be fading.

Only last year, farmers here spoke of a biofuel gold rush, and they rejoiced as prices for ethanol and the corn used to produce it set records.

But companies and farm cooperatives have built so many distilleries so quickly that the ethanol market is suddenly plagued by a glut, in part because the means to distribute it have not kept pace. The average national ethanol price on the spot market has plunged 30 percent since May, with the decline escalating sharply in the last few weeks.

Shift your demand curve to the right and watch equilibrium price and quantity rise. Then, push your supply curve to the right far enough so that price falls (by 30%).

Outsourcing; Is it really a problem?


When the politicians begin complaining about outsourcing in the American economy, have them read this article.

Saturday, September 22, 2007

Every Breath You Take



Columbia Business School's Dean Glenn Hubbard sings about wanting Alan Greenspan's job that went instead to New Fed Chair Ben Bernanke. Parody created by Columbia Business School students.

Is a new tax the answer to Global warming?


Check out Greg Mankiw's article about the use of a carbon tax to limit pollution and the spread of global warming. Does this idea make sense to you?

U.S. Farmers Rediscover The Allure of Tobacco


In economics its called the law of unintended consequences. The government tries to pass a law that is beneficial and the law has the totally opposite effect. The U.S. Government ended subsidies to U.S. tobacco farmers hoping that they would start growing some other crop. Now they are growing more tobacco than ever. What do you think other nations are saying about U.S. tobacco growers exporting the evil weed to their countries?

Saturday, September 15, 2007

Determinants of Supply and the Market for Pork in China


Thanks to Jason Welker for this timely article and idea. Since we just studied Supply Determinants, remember:
S - Subsidies and Taxes
T - Technology
O - Other goods
N - Number of sellers
E - Expectations
R - Resources, raw materials
Using your knowledge of the determinants of supply, analyze what is happening to the market for pork in China. Several of these determinants are at work here. Which way is the supply curve for pork shifting, and why? Also since the price of pork is going up, what effect will it have on the demand for other items? Remember substitutes and complements.

Is the U.S. ready for Universal Healthcare?


Read this article from the NY Times, then do your own research and decide, "Is the average American voter ready for a government run system of Universal Health Coverage?"

Monday, September 10, 2007

Cash for Grades


New York City is considering giving its students money for good grades. What do you think?

Sunday, September 09, 2007

U.S. Food Aid for Africa: Helping or Hurting


Read this article about how U.S. aid for Africa may actually be hurting local African farmers . . .

First the Oil companies and now Baby names, What will Venezuela and President Chavez regulate next


The prolifically inventive world of Venezuelan baby names may be coming to an end. A bill introduced last week in Venezuela would limit parents of newborns to a list of 100 names established by the government.

Wednesday, September 05, 2007

Week 2 assignment

Go to Reffonomics website. Read through powerpoints over Unit 2 (Production Possibilities Curve/Frontier). Take multiple choice quiz. Print out score and bring to class on Friday Sep 7.

Monday, September 03, 2007

American Productivity


In honor of Labor Day, let's hear it for the American worker. Fox News reports:

"The average U.S. worker produces $63,885 of wealth per year, more than their counterparts in all other countries, the International Labor Organization said in its report. Ireland comes in second at $55,986, followed by Luxembourg at $55,641, Belgium at $55,235 and France at $54,609."

Something to ponder, What is it about our society and culture that makes us want to work so hard?

Saturday, September 01, 2007

Will trips to the mall become a thing of the past?


Check out this story as online clothing sales have surpassed the online sales of computers and software for the first time in history. What are the implications for so called "brick and mortar" stores like Dillards, J.C. Penneys, etc. . .

Friday, August 31, 2007

Best High School Commencement speech ever


Check out Conan O'brien's speech to the graduating seniors from Stuyvesant High School in New York.

Predictions

Check out these predicting tools from Ian Ayres, a professor at Yale Law School who also has a Phd in Economics. As Economists one of the things we do is try to anticipate and predict future events.

Saturday, August 25, 2007

World Clock


Check out this fascinating website. This world clock is keeping up with numerous events. Can you see the trends? Did any of these trends surprise you? Check out the numbers for the year, month, week, current day, or just how fast they go up from the moment you start the clock.

Saturday, August 18, 2007

iQueue


iQueue
by Ryan Knapp


The Apple iPhone is this summer's must-have gadget, and lines began forming across the country four days early for the chance to grab one of the first available. iPhones sell for about $500, and if you hope to get one early, you may have to queue up for days just for the privilege.

Paradoxically, the type of people who are willing and able to spend $500 on the iPhone are also likely to have high-paying jobs that make it difficult to take an entire week off to wait in line. Fortunately for gainfully employed iPhone seekers, summer has brought with it a surplus of young people looking to earn a bit of extra money.

Ads are popping up all over Craigslist for so-called "professional waiters" who, for a fee, will line up to buy you an iPhone. The going wait rate is currently around $250 in New York and $200 in San Francisco. Lines are now full of people donning "iWait" shirts to show off their newfound occupation.

While the iPhone scene is replete with interesting economics, perhaps the most interesting phenomenon is the group of people who choose to bear the cold nights themselves rather than pay an iWaiter. With an ample supply of "low-skilled" workers fit for the job, many still choose to do the waiting themselves. Why would someone prefer to spend his or her own valuable time waiting in line when they could pay someone else who, by virtue of their offer, almost certainly has a lower opportunity cost?

Discussion Questions

1. What factors determine a person’s opportunity cost of waiting in line to buy an iPhone?

2. What benefits might people reap from waiting in line? (Maybe they enjoy the camaraderie? Perhaps they are "purchasing" a good story to tell at parties?)

3. All transactions involve an element of risk. Contracts, social norms, property rights, insurance, and consumer protection laws can help to mitigate transaction risks and facilitate trade, but waiting in line to buy an iPhone is a fairly informal transaction. What risks do line waiters assume? What risks do the people paying line waiters assume? Search for some iPhone line waiting listings on the Craigslist site for the San Francisco area. In what ways do iWaiters attempt to mitigate transactions risks?

4. If people are willing to pay upwards of $700 ($500 cash, $200 for a waiter) for an iPhone, why doesn't Apple raise the price?

Financial Times economics reporter Tim Harford addressed a similar question about the Xbox 360 shortage of 2005 here and here.
Labels: Opportunity Cost

Sunday, August 12, 2007

Monkey Business


Most of my students know of my aversion to anything having to do with monkeys. This story just goes to show that they are smarter and more cunning than we think...

The Benefits of a College Degree

Opportunity Cost

Two roads diverged in a wood, and I– I took the one less traveled by, And that has made all the difference—Robert Frost

The Economist.com has a nice definition of opportunity cost:
The true cost of something is what you give up to get it. This includes not only the money spent in buying (or doing) the something, but also the economic benefits (UTILITY) that you did without because you bought (or did) that particular something and thus can no longer buy (or do) something else.

The NFL draft is a popular example where opportunity costs are important. The draft is set up where draft picks are chosen sequentially, with each team having a set time to make a decision. Teams not only consider basic things like holes in the roster and which players are remaining, but they also consider possible alternatives—like choosing another player OR considering trades from other teams. Teams make mistakes when they pick a player too early–if they could have gotten the same player in a later round–or when they do not accurately gauge the value of their high pick to another team. Teams that fail to consider opportunity cost end up with some bad choices, and fans quickly voice their disagreement to management.