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Posts Tagged ‘Discounting’

Sure, "Saving Our Grandchildren From Climate Change" Sounds Nice…

You want to know what the biggest obstacle to dealing with climate change is? Simple: time. It will take decades before the carbon dioxide we emit now begins to have its full effect on the planet’s climate. And by the same token, it will take decades before we are able to enjoy the positive climate effects of reducing carbon-dioxide emissions now. (Even if we could stop emitting all CO? today, there’s already future warming that’s been baked into the system, thanks to past emission.)

That is the lead of Bryan Walsh‘s excellent Time article called “Why We Don’t Care About Saving Our Grandchildren From Climate Change.” It covers much of the ground we covered in SuperFreakonomics but probably does a better job in laying out the inherent conflicts of climate change — long-term problem vs. short-term incentives — without enraging people.

Healthier Seniors, Higher Ski Prices?

My son, who does downhill skiing, noticed that the resort he usually visits has changed its pricing policy. It used to offer free lift tickets to skiers ages 70+; now it only gives them a 20 percent discount off the regular rates. This change makes sense. My guess is that in times past, fewer older seniors even thought of skiing; and those few who did were somewhat marginal—had a fairly high demand elasticity. Today’s older seniors are healthier, have more skiing experience, and thus probably have a lower demand elasticity. It thus makes sense for the resort to reduce the extent of discrimination favoring old folks in its pricing scheme. (HT: MAH)

Trader Joe's Secrets

Regular readers of this blog will be familiar with Trader Joe’s unexpected owners: a German discount-grocery chain. A new article in Fortune aims to reveal a few more Trader Joe’s secrets.

Enjoy Senior Discounts While They Last

My guess is that many senior discounts are anachronisms from times when seniors were scarce and generally poorer than the average American. I don’t expect senior discounts to disappear during the recession, when firms are competing especially hard for customers; but I wouldn’t be surprised to see many disappear in the next boom, as I believe they should.

Complementary Condoms

Economists talk loosely about substitutes and complements as if each pair of goods can always be characterized as one or the other. That’s incorrect: their substitutability can depend on the situation, particularly the time and the individual’s circumstances, even for the same person. An acquaintance of mine reported the perhaps-apocryphal story that a major discount store is offering any customer . . .

Do You Know Who Owns Trader Joe's?

Do you shop at Trader Joe’s? From what I have seen, the world is divided into three sets of people. 1. Those who have never been to a Trader Joe’s, and perhaps have never heard of it. 2. Those who love Trader Joe’s more than they love their own families. 3. Those who love Trader Joe’s more than they love . . .

FREAK-Shots: Forget Hemlines and Lipstick

An article in The Economist reports that “the lipstick index,” the theory that women buy more lipstick in tough economic times, is probably not valid. A better index might instead be hairstyles. As The Independent reports, Japanese researchers found that women tend to have longer hairstyles when the economy is doing well, and shorter styles during harder times. Later on . . .

The Continuing Saga of the Suits

In facing the “Buy one, get one free” suit deal, my quick-thinking wife said, “Let’s take the second suit anyway.” She called our older son on her cell phone from the store, as we knew he was shopping for a suit, and he said he was interested.
The store has a branch where he lives, so we are taking the suit to him this week when we visit. He will take it in and exchange it at no cost to himself for the suit he wants. While I would have derived perhaps $50 of consumer surplus from the “free” second suit, a suit’s value to him is at least $300; and with the pick of the store, he’ll buy a fancier suit.

My "Buy One, Get One Free" Burden

My wife made me give my 12-year-old suit to charity, so I had to get a new one. Men’s Wearhouse had some nice outfits, and I was willing to pay a lot for a good suit.
Top-of-the-line models were available for $600, and they were on sale: “Buy one, get one free.” I was going to buy one even without the sale, and $600 was about what I wanted to spend. But I have almost no use for the “free” suit; I derive little consumer surplus even from a “free” second new suit.

What Do Books and Roses Say About Discounting?

There is a Catalan custom of men giving women and girls red roses on St. George’s Day (April 23), while women traditionally give men and boys a book on that day.

My guide mentioned that the books are always sold to the (female) buyer at a 10 percent discount below the regular price; when asked whether the roses are discounted, she said, “No way!” Typically most roses are imported for this peak load time from the Netherlands and are even sold at a premium.

The Upside of Procrastination

The free newspaper on the London tube has this front-page advertisement: “From 10 a.m. tomorrow, £10 ($15) hotel rooms, on the web site” For an economist this is a heartwarming advertisement. Clearly these are hotel rooms that would otherwise go unfilled. While $15 is not much, I would imagine that it is a bit more than the marginal cost . . .

$2.99 Gas

I love Chrysler’s new incentive program that guarantees consumers who buy one of their new cars or trucks won’t pay more than $2.99 a gallon at the pump for the first three years they own the vehicle. When you sign up, you get a special credit card that can only be used to buy gas. When you swipe it, $2.99 . . .