Blogs about economics from Pew Pew Laser Blog

The Invisible Hook.

I finished The Invisible Hook: The Hidden Economics of Pirates by Peter T. Leeson. I would probably have enjoyed reading about the hidden economics of anything, and pirates proved to be no exception. If you would like a little introduction to economics, or you just can't get enough history about pirates, you should give it a read.

In explaining the apparent race equality on many pirate ships, the author provided the following scenario, excerpted from page 159. (I've added the emphasis.)

Consider a bigoted employer who loves brunettes but loathes redheads. Our bigoted employer owns a shoe factory and needs employees. Redheads and brunettes are equally productive; a redhead with 60 hours of training and a brunette with 60 hours of training produce the same number of shoes per hour. But redheads are willing to work at the shoe factory for $10 per hour, whereas brunettes demand $20 per hour for the same labor.

The author then goes on to explain that it costs the factory owner $10 per hour (per worker) to indulge his preference for brunettes over redheads, and that this profit motive can lead the factory owner to operate the business in a non-discriminatory manner, even though the factory owner retains his personal prejudices.

I found it interesting that (in the scenario) redheads and brunettes were willing to work for different wages. To me this suggests that the factory shoe owner is not alone in this bigotry; that there exists a culture of discrimination which drives the different acceptable wages.

Comparative Advantage.

An electronics teacher once told my high school class that he only buys parallel wired Christmas lights (which are more expensive), because it wasn't worth his time to find and replace the single failed bulb in a string of serial lights. There's another half to this equation of comparative advantage. People are not always earning income with their free time. Often, the choice is between spending money and not spending it.

I earn a good salary as a technologist. But it's a fixed salary; working 16 hours in a day doesn't get me twice as much money for that day. It's still worthwhile for me to spend an hour taking bottles and cans back for their Oregon deposit ($10, on a good day).

I have a friend who has very little free time. She attends to school for a graduate degree, works in her chosen industry, and also has her own small business. The small business is so successful that she could fill up all her extra hours earning extra money. She does not take bottles and cans back to for their deposits, since she earns more for an hour of work.

Opportunity Cost.

The husband was clever enough to buy Seattle Sounders season tickets, and I've very much enjoyed attending the games this season and last. The Sounders are so gosh darn popular that many of the games sell out. Season ticket holders are easily able to sell their seats on the open market for higher than face value.

In the early part of the season, our neighbors (also season ticket holders) to the right were a man, a woman, and a girl about 5 or 6 years old. Midway through the season, the woman started showing a pregnancy, and then then the whole family ceased coming to games.

I wonder if the skyrocketing ticket prices make it so that the family chose to sell their tickets at a profit rather than come to the game themselves. Re-selling the tickets to just 4 or 5 games would probably pay for the whole season.

Freaky Topics.

Here are a couple of unusual topics that remind me of the stuff that those Freakonomics guys often talk about.

• The Zillow Trick-or-Treat Index: Zillow, Seattle-based real estate website, rated local neighborhoods on a combination of house value, walk-ability, density and crime data to identify the prime neighborhoods for the best candy haul on Halloween.
• A non-intuitive idea for why health care costs continue to rise: Health insurance companies have rather little motivation to keep overall health care costs down; they will just increase the premiums. The insurance companies profit as a percentage of overall costs. Patients, on the other hand, demand that that the insurance companies cover more new drugs and more procedures. (You don't think that pharmaceutical companies show all those expensive commercials out of the goodness of their hearts, do you?)

Americans Love Stuff.

Americans pay the storage unit industry bajillions of dollars a year to hold on to the stuff that they've run out of room for at home. When these folks stop paying the storage unit bills, the storage companies hold auctions where new people compete to buy the contents of delinquent units. Why such madness?

The human brain hates to admit that it was wrong. Getting rid of the stuff makes it seem like it was a mistake to acquire that stuff in the first place.

Over the past couple years, I've been on a personal crusade to get rid of stuff. The trick is to see the value inherent in jettisoning said stuff. I've considered the hours I save in not having to pack, move and unpack the stuff when I move. I've envisioned having a little space in my closet, and thinking of what else I could use that space for! I've changed lots of stuff into cold hard cash by selling it on Craigslist.

How about you? Just think how much simpler your life could be if you had less stuff. What could you use a little extra cash for?