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BadEconomics Discussion Thread, 11 October 2015 (self.badeconomics)

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トップ新着論争中古い順Q&A

[–]UltSomnia 7ポイント8ポイント  (1子コメント)

Did you guys see that the entire field of eCONomics was shown to be a fraud by the reproduceability study that I only read the title of? You guys are all frauds. And probably horses too.

[–]PopularWarfareSalamancan Economist 0ポイント1ポイント  (0子コメント)

Economics has gone the way of psychology.

[–]shunt31 5ポイント6ポイント  (0子コメント)

Remember to sort by new, folks.

I have a person arguing that the cutting of tax credits (pretty much the EITC) and increasing minimum wage to $15.33 in the UK is a good idea.

The reduction in tax credits and increase in MW is forecast to make 13 million people (42% of the UK labour force) lose £250 a year, 8.4 million households lose £550, the 2nd, 3rd and 4th deciles of the household income distribution lose £1340, £980 and £680 a year, respectively, and cost tens of thousands of jobs in the meantime. Tax credits in the UK and the minimum wage target different groups. The change, like you might have guessed, is quite regressive (sorry if I used the word wrong, and I mean it in the sense that the poorest are hit more than the richest) - the poorest vingtile will lose over 7% of their income, and they've already lost 3% from 2010.

The UK tax and benefits redistribution system as it currently stands reduces household poverty by an absolute 30%, and child poverty by 25%.

He thinks this is due to a combination of

  • "people's behaviour will change" - I didn't think people will be enthused about working an extra 100 hours a year and getting no benefit from it

  • in-work benefits create "uneconomic work", increasing demand (which is government funded, and concentrated, whatever that means) as the money for the benefits doesn't come from increased productivity and is necessarily more inflationary, thus ending them will reduce living costs

Rather than call this deflation, he calls it a "price correction" that leads to more "organic pricing", and he says the change doesn't matter on a macro level, because, again, people's behaviour will change. I thought that would make it matter on a macro level.

How right/wrong is he? It''s certainly unconventional, and I know people here like to say the EITC is a better method of targeting low wages than the minimum wage.

[–]EsoteriCola"I have some serious economics training" 4ポイント5ポイント  (1子コメント)

Will humans go the way of horse labour? and "Don’t let the Nobel prize fool you. Economics is not a science"

[–]UltSomnia 5ポイント6ポイント  (0子コメント)

There's also a literature prize.

#LITERATUREISNOTSCIENCE

[–]CatFortuneにゃんぱす! 3ポイント4ポイント  (7子コメント)

Okay so don't yell at me for sounding stupid, but my dim sense of how prices work is that they eventually reach a point low enough to balance profit with getting people to even buy your stuff. They can't be too low because there needs to be a profit, but they can't be too high because other sellers will undersell them. So why are some things so overpriced, like soda and movie theater popcorn? I'm primarily interested in soda because it is my lifeblood.

[–]besttrousers 1ポイント2ポイント  (2子コメント)

Movie theaters have mini monopolies on food.

[–]wumbotarianKeynesian-on-a-cob 1ポイント2ポイント  (1子コメント)

Not if you violate the fashion police, fill up kahki cargo shorts with candy and soda, and sweat bullets while you sneak in that sugary goodness past some pimply 15 year old dude making minimum wage.

[–]Shiloh86I didn't choose the Krug life, the Krug life chose me 0ポイント1ポイント  (0子コメント)

pimply 15 year old dude making minimum wage Robot which took the 15-year-old's job after the minimum wage was doubled.

[–]UltSomnia 1ポイント2ポイント  (0子コメント)

One reason might be a Cournot market, which is probably explained online in some way better than I could explain it. But, basically, firms will compete over quantity.

Now let's assume companies don't compete over quantity, then other thing is product differentiation. So if two companies sell the exact same product, the price will eventually be competed down to marginal cost. But, to many soda drinkers, coke and pepsi or 7 up and sprite or whatever else are not just two versions of the same product but actually different products. This means they don't necessarily compete with each other in the same way a motorcycle doesn't really compete with an SUV. So because coke and pepsi don't compete directly they have a profit-maximizing price above marginal cost.

There could also be collusion, but I really doubt that.

[–]Tiakoneo-mercantilist 1ポイント2ポイント  (0子コメント)

Movie theater popcorn is overpriced because there is a captive market: it is against the rules to bring in other foods, meaning there is no competition, and the movie theater needs to jack up prices to cover their costs.

On a broader level, the prices of consumer goods are often based, to put it in slightly strange terms, what people think they should be priced at. If I see a can of coke for $1.50 I don't think it is expensive because I am performing quick mental calculations of costs, profit margins, operational overheads, etc on that can of coke, but rather because I am used to coke costing $1.

Incidentally, if you want a nifty illustration of this, compare the price of Dubliner cheese at a Trader Joe's and a more general grocery store--it is a lot cheaper at the former.

[–]Homeboy_JesusCogito ergo sum equus 1ポイント2ポイント  (0子コメント)

Why popcorn costs so much at the movies

95% of ticket prices get remitted to movie studios. People are willing to spend a certain amount at a movie theater. Cinemas shift that amount from ticket sales over to concession sales.

[–]Shiloh86I didn't choose the Krug life, the Krug life chose me 0ポイント1ポイント  (0子コメント)

Ooh, I just took an online unit in micro, and I bet I can answer this!

Movie theater popcorn

I think that movie theater popcorn is overpriced because demand for it is somewhat inelastic; that is, a large price change will yield a small change in quantity demanded, meaning that theaters can charge high popcorn prices and many people will still buy the popcorn.

The reason popcorn prices are inelastic- I think- is because it's inconvenient for the moviegoer to buy popcorn anywhere but at the theater, so the theater doesn't face any competition. It has a regional monopoly.

Soda

Same reason, inelasticity. Demand for any given brand of soda is somewhat inelastic because of taste preference and brand loyalty- Dr. Pepper effectively has a monopoly over the Dr. Pepper-type soda because no other company can quite replicate what Dr. Pepper tastes like, and even if they could, consumers of Dr. Pepper would still feel loyal and comfortable with that brand. The soda industry would be called "monopolistically competitive".

Actual economics students, did I do well?

[–]shunt31 3ポイント4ポイント  (0子コメント)

How different is the EU's Common Agricultural Policy to Canadian supply management? The CAP is slowly being reformed - 2013 reform here, but I don't care enough to read the thousand of word directives - the production quotas for milk and sugar were ended this year, and that definitely didn't go down well. It seems very hypocritical for the EU to exist to remove barriers between its Member States, and then to put up the very same barriers to external trade, and to criticise Canada for their supply management while the CAP still exists.

There is a ridiculous about of information on http://europa.eu, and I'm writing yet more silly amounts with it.

Do we have any agricultural economists here (if not, I think we have a new username!)?