6
7

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

AutoModerator[M] が 投稿 - stickied post

Welcome to the consolidated automated discussion thread. New threads will be posted every XX hours! You praxxed and we answered!

Chat about any bad (or good) economic events. Ask questions of the unpaid members. Remember to use the NP posts and whatnot.

全 33 件のコメント
並べ替え:
ベスト
トップ新着論争中古い順Q&A

[–]UltSomnia 12ポイント13ポイント  (5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 1ポイント2ポイント  (4子コメント)

Economics has gone the way of psychology.

[–]say_wot_againThe one true Noah Smith 0ポイント1ポイント  (3子コメント)

And also physics, biology, and chemistry.

[–]UltSomnia 0ポイント1ポイント  (1子コメント)

Praxeology is the only science left!

[–]say_wot_againThe one true Noah Smith 0ポイント1ポイント  (0子コメント)

> Calling praxeology a science

> Appealing to the standards of empirICKS

Benned from /r/Praxacceptance

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

Hmm, i think we can start a new vertical. natural sciences/Economics consulting firm with attached therapists office.

Get all your psuedo-science in one place.

[–]EsoteriCola"I have some serious economics training" 7ポイント8ポイント  (2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 9ポイント10ポイント  (0子コメント)

There's also a literature prize.

#LITERATUREISNOTSCIENCE

[–]TophattingsonUndefined Neoliberal Object 3ポイント4ポイント  (0子コメント)

So how long until we need a /r/badguardian?

[–]shunt31 5ポイント6ポイント  (1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: "Jimmy, I would go to your football game on Saturday, but if you want bread on your sandwiches next week, I need to go to work for an extra 100 hours this year, since the benefits changes reduced our income by £1000 this year."

  • 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.

[–]say_wot_againThe one true Noah Smith 1ポイント2ポイント  (0子コメント)

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)

You used it right. The problem in that post was essentially confusing levels with flows; shifting to a flat tax from the current system is a regressive move, but a flat tax itself is not.

  • 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

Somebody doesn't understand why the EITC and other tax credits should lead to more work. These tax credits work as wage subsidies. This means that you can pay your employee £X per hour, and the employee will receive £(X + Y) per hour. So employees demand lower wages of you for the same level of utility. This is a labour supply shift, which increases total quantity and (from the employers' perspectives) decreases the cost of labour. There's no way that this should cause inflation as firm costs of labour have gone down; any inefficiencies are borne by the government via the subsidy.

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.

A higher minimum wage should cause an incremental increase in inflation. However, the effects of minimum wages or tax credits on the general price level are negligible.

[–]CatFortuneにゃんぱす! 3ポイント4ポイント  (14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.

[–]Homeboy_JesusCogito ergo sum equus 3ポイント4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.

[–]besttrousers 3ポイント4ポイント  (6子コメント)

Movie theaters have mini monopolies on food.

[–]wumbotarianKeynesian-on-a-cob 3ポイント4ポイント  (5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 2ポイント3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.

[–]CatFortuneにゃんぱす! 0ポイント1ポイント  (3子コメント)

I already don't get why people pay so much money to eat some garbage in the two hours they're at the movies, but I really can't understand why people go through the trouble of sneaking in food. Can't you just go a little while and not eat? My perspective might be skewed because I snack much less since I went on my diet.

[–]wumbotarianKeynesian-on-a-cob 2ポイント3ポイント  (1子コメント)

It's fun to eat M&Ms and watch movies. That's all I know.

I'd prefer rum and coke but that's not good form for public movie viewing.

[–]UpsideVII 1ポイント2ポイント  (0子コメント)

There is a theater near me that has a full bar (as well as full restaurant service), and it unsurprisingly sells to full capacity for almost every movie.

[–]UltSomnia 2ポイント3ポイント  (0子コメント)

I think the fact that it's a setting where other people eat increases the desire of people to eat.

[–]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 2ポイント3ポイント  (1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.

[–]CatFortuneにゃんぱす! 0ポイント1ポイント  (0子コメント)

So combining a few comments, movie theaters have a monopoly on concessions, and they use it to make up for the fact that they don't make a lot of money on tickets; all the money comes from concessions so they CAN'T be cheap. But I worked at an independent theater, and while I can't remember the prices of our concessions or those of the AMC theater about a half an hour away, I remember the concessions were pretty cheap, and people said they came to the theater because it was cheap. Tickets weren't expensive either. So it's possible to undersell candy and stuff on big theaters. Why do you think it's not more common?

[–]Shiloh86I didn't choose the Krug life, the Krug life chose me 1ポイント2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?

[–]ergonelsa 0ポイント1ポイント  (0子コメント)

The way that I see it is that by keeping prices lower on tickets and higher on food, cinemas keep a lower barrier to entry to try and entice more people to make purchases from the overpriced (and optional) candy bar.

Movie theaters jack up the price of food and drink because it's their best chance of making money and is less likely to lead to a loss in revenue than if they were to jack up the price of tickets. People come to the theater to see a movie, so the cost of a ticket is definite as opposed to the cost of food which is optional, that is to say that (generally) everybody who comes to the theater will buy a ticket but not food. If you raise the price of tickets, it becomes uneconomical for certain people to even come tot he theater and turns other people off. So by having (comparatively) lower ticket prices, the theater looks like an appealing choice to more people, which in turn increases the amount of people who may potentially make a purchase at the candy bar.

Food being optional means that theater apologists (like myself) can counter people who complain on facebook about the theater being expensive by saying that "you don't have to buy a friggen $4 choc top". Buying food at a cinema is a known rort, and many people avoid it, except for families. Ever wonder why the latest movie has its wallpaper over the jumbo sized cups, or why many cinemas these days you have to buy your tickets at the candy bar (sans online). It's to get kids to the counter to see all the sweets, kids see parents already have their wallet out to pay for tickets, "dad can we get popcorn please? It has Jar Jar on it!". That $10 jumbo tub of popcorn just made more profit than 5 ticket sales.

[–]zzzzz94"You dont need a source for logic" 0ポイント1ポイント  (0子コメント)

For all firms, they choose the quantity which to produce. In perfect competition, (and all market structures) they produce a quantity where the marginal revenue of the last unit produced is equal to it's marginal cost. So anymore production would not make sense as cost would be greater than revenue for an additional unit, and profit for that unit would be negative which wouldn't make sense. In perfect competition, the choice of the firm and their resulting profits look like this. They can't choose the price to sell, they have to take the market price, given by the horizontal marginal revenue curve.

For market structures that aren't perfect competition, the decisions they make are like this: produce where MC = MR, markup price to the maximum price people are willing to pay that will clear the market for that quantity. This is visualized here

Overpriced popcorn, pills, can be explained by the markup in the second linked model in a monopoly situation

[–]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!)?

[–]PopularWarfareSalamancan Economist 3ポイント4ポイント  (0子コメント)

I've been look at a lot of the wikipedia articles on mainstream economic concepts and it seems like heterodox schools (marxist and austrian in particular) are presented in way that makes their views or critiques are widely accepted in the field. I was thinking about making a BE thread about it, but i'm not sure that it directly qualifies. Thoughts?

[–]smoking_JayCutler6 0ポイント1ポイント  (3子コメント)

What are the actual results of infrastructure spending? In this post, somebody claims a 20:1 return on infrastructure spending. I find that hard to believe.

[–]grevemoeskrHumans are horses! 1ポイント2ポイント  (2子コメント)

Your link is broken. Delete the www. Otherwise everyones anti virus flips out ;)

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

I've found a political quiz called the 5 Dimensional Political Compass, and I've taken some questions from the quiz. I would like to hear your opinions on them.

  • The government always has the right to impose taxes on people
  • Private corporations would be better at delivering services than government agencies
  • Government interference does more harm than good
  • The smaller the government is, the better
  • Welfare and similar programs are not worth the money
  • The culture of dependancy on the government has created an entire class of useless people
  • A society is judged by how it treats it's most vulnerable citizens
  • Income inequality harms our society
  • Our nation should eliminate all foreign aid and spend that money on other things
  • Our country should never join a currency union like the Euro
  • There should be a single worldwide government
  • Immigration has a generally positive effect on my nation