We did a kayak/hike/swim tour with Kayak Wailua in Kauai, Hawaii, mainly because our guidebook said it was as good as other tours and less expensive. I think the book was correct, so I asked the guide: "How do you guys charge a lower price and still survive?"
He answered that they are larger (because they have more permits for river trips), enabling the owner to do his own booking directly, thus saving expenses. Fine, but implicitly the opportunity cost of his time must be less than the cost of contracting out, or he is not profit-maximizing. If he is profit-maximizing, then implicitly he has taken advantage of economies of scale in this “industry,” while his competitors haven’t. If that is so, I would expect some consolidation among his competitors as they understand the shape of long-run average costs. (HT: KY)
In an attempt to alleviate the shortfall in organs and bone marrow available for transplants, many U.S. states passed legislation providing leave to organ and bone marrow donors and/or tax benefits for live and deceased organ and bone marrow donations and to employers of donors. We exploit cross-state variation in the timing and passage of such legislation to analyze its impact on organ donations by living and deceased persons, on measures of the quality of the organs transplanted, and on the number of bone marrow donations. We find that these provisions did not have a significant impact on the quantity of organs donated. The leave legislation, however, did have a positive impact on bone marrow donations. We also find some evidence of a positive impact on the quality of organ transplants, measured by post-transplant survival rates. Our results suggest that these types of legislation work for moderately invasive procedures such as bone marrow donation, but may be too low for organ donation, which is riskier and more burdensome to the donor.
We watched some of the Diamond Jubilee celebration and loved it. The only disturbing part was to see media comments that the U.K. would have been better off if people hadn’t had the Monday holiday for the Jubilee (much less the Tuesday holiday that some workers also had). The argument was that GDP would have been higher without the holiday.
Perhaps, but workers often make up for lost output when they return from holiday. Much more important is that no nation’s purpose should be maximizing output (and income). Instead, maximizing utility is what societies should be about. While well-being is much less readily measurable than output, measurement difficulties should not seduce us into becoming market fetishists. Perhaps if the U.S. emulated the U.K. (and Europe generally), and we took longer vacations and had more public holidays, our country would be better off (even if output were slightly lower).
From a new working paper by David Yermack, an economist at NYU/Stern, called "Tailspotting: How Disclosure, Stock Prices and Volatility Change When CEOs Fly to Their Vacation Homes" (abstract; older version in PDF):
This paper shows close connections between CEOs' vacation schedules and corporate news disclosures. I identify vacations by merging corporate jet flight histories with real estate records of CEOs' property owned near leisure destinations. Companies disclose favorable news just before CEOs leave for vacation and delay subsequent announcements until CEOs return, releasing news at an unusually high rate on the CEO's first day back. When CEOs are away, companies announce less news than usual and stock prices exhibit sharply lower volatility. Volatility increases immediately when CEOs return to work.