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Why Do Retirees Buy Such Big Houses, and Other Riddles From The Economic Naturalist

The Cornell economics professor Robert Frank (not to be confused with the excellent Wall Street Journal writer Robert Frank, or the great photographer Robert Frank) begins a semester by asking his students to ask and answer a real-world economics question in 500 words or less. He has now compiled these essays in a book called The Economic Naturalist. It is a great deal of fun, and interesting. Below are some excerpts, including the illustrations by Mick Stevens. If you’re wondering what Frank’s students get out of the book — besides, presumably, a good grade — you should know that Frank credits each student and is donating half the book’s royalties to the John S. Knight Institute for Writing in the Disciplines at Cornell.

Why do people buy bigger houses when they retire and their children are gone?

A plausible conjecture is that a large house close to grown children’s homes may lure the grandchildren to visit more often. With divorce and remarriage more common than in decades past, many children today have six or more grandparents, if the parents of stepparents are included. The demand for visits with grandchildren has thus increased, but the supply of visits has not. So grandparents may hope to increase their share of available visits by building a spacious house that is conveniently located.

Why do fast food places promise a free meal if you aren’t given a receipt at the time of purchase?

To deter theft, owners of restaurants and other retail establishments require cashiers to reconcile the total amount of cash collected during their shift with the total volume of sales rung up at their register … One way cashiers can circumvent this control is by neglecting to ring up a proportion of their transactions … Thus if a cashier failed to ring up a customer’s $20 meal, he or she could pocket the $20 without creating an accounting discrepancy … By offering a complimentary meal to anyone who fails to receive a receipt, owners provide an economic incentive for customers to monitor cashiers for free.

Why does milk come in rectangular containers, while soft drinks come in round cans?

One possibility is that because soft drinks are often consumed directly from the container, the extra cost of storing cylindrical containers is justified because they fit more comfortably in the hand … But even if most people drank milk straight from the carton, the cost-benefit principle suggests that it would be unlikely to be sold in cylindrical containers … Most soft drinks in supermarkets are stored in open shelves, which are cheap to buy and have no operating costs. Milk is exclusively stored in refrigerated cabinets, which are both expensive to purchase and costly to operate.

Why does Apple charge $150 more for black laptops than for equally-configured white ones?

Apple’s pricing decision was no doubt influenced by its experience after introducing a black version of its popular iPod in the fall of 2005. Although it was priced the same as the company’s traditional white iPod and technically identical to it, demand for black units quickly depleted the company’s inventories, even as white ones remained in stock. Because the black version was new, it stood out, causing many more buyers to order it … By the time it introduced its new MacBook models in the spring of 2006…it charged more for the black machines simply because it could.

Why are gas tanks built into different sides of cars?

In the United States and other countries in which motorists drive on the right side of the road, it is easier to turn right than to turn left … A majority of drivers will thus buy gas at stations they can enter by turning right. Suppose gas tanks were always on the driver’s side … During crowded hours, all spots on the right sides of pumps would be filled even while most spots on the left…remained empty.

Why do female models earn so much more than male models?

To answer this question, we must first ask what fashion models accomplish for the clothing producers who hire them. Simply put, their job is to make the manufacturer’s apparel look as good as possible to prospective buyers … Female models receive premium pay because women’s fashion is a vastly bigger business than men’s fashion.