Archives for Australia



Taxi Pricing: Hail or Call?

I called a taxi for a short trip in Melbourne, Australia.  When I paid the price on the meter, the driver added a $2 booking fee.  This is standard here, unlike in the U.S. where the price is the same whether you hail or call a taxi.  

The Australian system may be a sensible way to set price to cover marginal cost.  The booking service generates costs; and in many cases the booked driver “dead-heads” to pick up the passenger, using his valuable time without generating revenue.  On the other hand, having a booked fare saves the driver time waiting in a queue or cruising, so perhaps the impact on marginal cost isn’t so clear.  Is this monopoly pricing, or price reflecting cost?



Rabbits and Akubra Hats

The July issue of Qantas Magazine has an article on Akubra hats.  The company has a problem: the price of a crucial input into its hats, rabbit skins, has risen by 125 percent in the past three years due to a virus that killed many Aussie rabbits. The rabbit population has been increasing again, but its previous decline caused a much longer-run decrease in the supply of rabbit shooters, who permanently left this occupation for other jobs in this low-unemployment economy. 

These two factors—the short-run decrease in supply of rabbits and the long-run decrease in the supply of rabbit shooters—have caused a rise in Akubra’s costs and thus a decrease in supply in the related hat market. This is a nice example of a shock in one market causing a general equilibrium set of adjustments. Good for rabbits in the long run, not so good for bald guys who need hats to protect against the Australian sun!



From the Comments: Nudge Nudge, Herd Herd

A reader in Australia named Ian Lyons, in response to our “Herd Mentality” podcast, writes to say:

At the 2012 Sydney Festival, we created a sophisticated set of interactive dashboards showing which artists were buzzing (on Twitter and Facebook) in real time, where people were coming from, interesting facts and live photos.

To my astonishment the most popular tool simply allowed you to see which show other people from your postcode were going to see. Viewed through the lens of behavioral economics, this makes perfect sense but it’s the opposite of what I would have predicted instinctively. In fact it almost didn’t get deployed because it was too simple.



Nazis, Sunken Ships, and a 67 Year-Old Game of Telephone

This is a guest post by Jeff Mosenkis, a freelance producer with Freakonomics Radio who holds a Ph.D. in psychology and comparative human development.

Nazis, Sunken Ships, And a 60 Year-Old Game of Telephone
By Jeff Mosenkis

Did you hear the one about the two statisticians who go deer hunting? The first one misses his shot ten feet to the right of the deer; the second one misses ten feet to the left of the deer. They then high five each other and shout “Got him!”

While the quantitative method might not work for hunting, it apparently does for finding sunken warships. NPR’s Alix Spiegel reported this remarkable story about two Australian cognitive psychologists who used a statistical distribution to find two sunken World War II ships, 67 years after they were lost.

On the evening of November 19, 1941, the HMAS Sydney was off the coast of Western Australia when it exchanged fire with the German HSK Kormoran, and sunk with all 645 crewmen aboard. It was a national tragedy, particularly because nobody knew exactly what happened to the ship and why it sunk. The German crew scuttled their damaged ship, and 317 surviving German sailors were picked up in lifeboats at sea or on shore and interrogated. Read More »



Lottery Tickets for Safe Drivers?

Last month, Eric Morris wrote a post on red light cameras at traffic intersections in L.A. that sparked a robust debate in the comments section, something we always like. The debate centered around whether these devices are effective at reducing people’s willingness to run a red light, or whether they’re merely sources of revenue for the city. Perhaps you’ll feel similarly passionate about a new Australian study that examined the benefits of fixed speed cameras in New South Wales. From an ABC.net.au article:

On the whole [Auditor-General Peter Achterstraat] has found that speed cameras do change driver behavior and improve road safety but not in all cases. He has found 38 of the 141 fixed cameras across the state seem to have no significant benefit to road safety.

Read More »