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Posts Tagged ‘markets’

Black-Market Study Notes in Korea

We recently got an e-mail from a reader we’ll call C.:

I’m a professor at an English-language liberal arts college in Seoul, South Korea, where I teach Greco-Roman classics in translation. Compared to most any American school, the academic climate here is hyper-competitive, and my Korean students are studying machines who will do whatever it takes to get good marks. If you’re familiar with the insanity of Korean education, those are my students, the ones who’ve spent years in private tutoring academies 6 days a week, doing nothing but preparing for our admissions exam.

I just learned through the grapevine that some students who took my freshman core course on Western Civ. are selling their notes, study guides, and reconstructed versions of the exam. The prices they charge current freshmen vary, depending upon the grade the seller received from me. Students who did very well (A or A+) can charge $200 for their notes; students who received Bs can ask $120 to $150. Students with a B- or lower can’t find buyers.


“Flappy Bird” Demand

“Flappy Bird,” a popular mobile game, was taken down by its creator over the weekend. From CNN.com:

“Flappy Bird” has flown the coop.

The addictive game that soared to the top of iPhone and Android app downloads disappeared from app stores on Sunday, though players who already have it apparently can keep on flying.

…Although new players can no longer download “Flappy Bird,” the game remains playable for those who had already added it to their devices.

A secondary market has emerged yesterday, with entrepreneurs willing to part with their “Flappy Bird” installed mobile devices — for some pretty high prices:


Try Your Hand at Economic Forecasting

Think you can do a better job at predicting the economic future than all those economists and pundits?  Here’s your chance to prove it:

Members of the public are being encouraged to take on the Bank of England by betting on the U.K.’s future inflation and unemployment rates.

Free-market think tank the Adam Smith Institute on Wednesday launched two betting markets in an attempt to use the “wisdom of crowds” to beat the Bank of England’s official forecasters. Punters can place bets on what the rate of both U.K. inflation and unemployment will be on June 1, 2015.

Sam Bowman, the research director of the Adam Smith Institute, believes the new markets will “out-predict” official Bank of England predictions.  “If these markets catch on, the government should consider outsourcing all of its forecasts to prediction markets instead of expert forecasters,” he said.


Is Our Content Too Depressing?

A Freakonomics Radio listener named Sudha Krishna writes with an e-mail titled “Praise and Concern.”

The praise is very nice — she finds the show “informative, entertaining, and lots of fun,” etc. — but it is the concern that most interests me. As she writes:

I confess I often find Freakonomics Radio depressing. While I am a believer in the power of “unintended consequences,” I find your story selection (and I am a consistent and attentive listener) depressing and discouraging. The stories tend to be focused on (and I am being a wee bit reductive) “good intentions leading to bad consequences (or at very least awry).” The consistent lesson of every episode — a nod to the supremacy of the market and the inexorable power of incentives (not sure about that lesson either). Rarely do you explore the opposite — bad intentions resulting in good consequences. Does such an example exist? One curious listener of Freakonomics Radio wants to know. 

I could probably quarrel a little bit with Sudha — at least some of our shows are about some interesting solution to a problem, or at least an explanation for why such a problem exists. And I tend to think that Levitt and I are borderline extreme optimists, at least on many dimensions. But I get her point. The pattern she identifies is definitely a pattern.

So,  in the interest of learning to think more broadly, I would love to identify some great ideas or stories about “bad intentions resulting in good consequences,” as Sudha puts it. Please leave your very best ideas (or even your mediocre ones) in the comments section below. Thanks to you and especially to Sudha.


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!


Markets in the Air

I stumbled on this nifty business idea, Nanny in the Clouds, to create a market in the air for nannies. Think match.com, but for wanna-be-nannies and parents on airplanes.

A clear market failure: people on flights with kids want some help; other people on flights want to make some money taking care of kids. Social norms don’t really allow for instantaneous markets to appear (“hey, for $10 I’ll watch your kid for the next two hours so that you can take a nap” is unlikely to get many takers, I suspect). But prearranged, where the norm adheres to our expectations in the babysitter market, and we have a market helping make trades otherwise not made.  

Here is how it works: Sign up on the website, put in the flight you’re going to take, and see if any parents (nannies) signed up and are looking for a nanny (parent who wants a nanny) on the same flight. Negotiate your rates directly, and pay Nanny in the Clouds $10 if the match is made.


In Defense of Two-Handed Economists

My latest Bloomberg View column with Betsey Stevenson is now online:

Here’s something you don’t often hear an economist admit: We have very little idea where the economy will be next year.

Truth be told, our best guesses just aren’t very good. Government forecasts regularly go awry. Private-sector economists and cutting-edge macroeconomic models do even worse.

Our objective isn’t to beat up economists. Rather, we want to make the point that when we recognize our shortcomings, we’re forced to confront the enormous uncertainty that lies ahead.  And appropriate humility about the economy changes how we think about policy.


More Demand, More Paintings

A sign on the wall at an exhibit of René Magritte paintings noted, “Magritte repeatedly painted variants of his subjects, mostly to satisfy demand in the art market.”  Even artists are selling their products, just as businesses do.  When the demand for their product increases, it calls forth a supply.  We also see this in popular literature, where a highly successful mystery writer winds up in a rut writing minor variations of an earlier hit.  Sadly for us economists, this doesn’t seem as easy to do—the premium is on originality and novelty; if today’s demand called forth minor repetitions in what we supply, we soon wouldn’t get the stuff published very well!


Who Wants to Sell a Soul?

In the comments section for a Q&A with professional skeptic Michael Shermer, a reader named Caleb B. writes:

Here’s my question: what is it about the idea of a soul that even people who confess to not have one are hesitant to sell it? I have been trying, for the better part of ten years, to buy a soul. I’ve offered a dollar amount, between $10 and $50, for someone to sign a sheet of paper that says that I own their soul. Despite multiple debates with confessed atheists, no one has signed the contract. I have been able to buy several people’s Sense of Humor and one guy’s Dignity, but no souls. Additionally, will any Freakonomics reader take me up on this? I’m willing to spend $50 on souls.

He has so far received at least one offer, from reader Jared Doom:

Caleb B., I will absolutely sell you my soul. To be fair, this won’t preclude me from selling it again to other suckers who (a) believe in souls and (b) believe they can be readily transferred on purchase. To be clear I’m offering because I don’t believe (a)

If nothing else, perhaps this blog has a future as a market for hard-to-purchase goods?


How the Internet Is Restoring the Market for Hitchhiking

In our latest Freakonomics Radio podcast, “Where Have All the Hitchhikers Gone,” we looked at how hitchhiking is essentially a market. Specifically, as Levitt puts it, it’s a “matching market” where supply (a person who’s willing to give a ride) matches up with demand (a person who needs a ride) in natural equilibrium. Over time, that equilibrium, as facilitated by people thumbing on the sides of roads, eventually vanished.

But the supply remained; actually it increased — as the average number of passengers in a car during the work commute went from 1.3 in 1977, to 1.1 today. (Click here for more data.) And as gas prices have steadily risen, and the economy flat-lined, the demand has seemingly come back. Enter the Internet as the new facilitator.

As many of you have pointed out in emails and comments, an entire online ecosystem of ride-sharing ventures has cropped up in the last few years. So here are the highlights:


FREAK-est Links

This week, why SpongeBob hurts kids’ willpower, a restaurant in Saudi Arabia fines you for unfinished plates, robots inventing their own language, Indonesia’s floating trash problem, jet packs are finally for real, and lie detectors that actually work.


Previewing Jackson Hole: Why Markets Are Setting Themselves Up for Disappointment

On Friday all econ-loving eyes will be focused on Jackson Hole, Wyoming. Think of it as Oscar night for macroeconomists. Except with sensible shoes rather than plunging necklines. But the anticipation and gossip is just as intense. Markets are convinced that Ben Bernanke’s going to make a major announcement. I disagree.  Here’s why:
1.       Central bankers generally try to be more boring than their audience wants them to be. That won’t change.
2.       The run of data since the last Fed meeting hasn’t really changed, so why would monetary policy?
3.       Given the slim governing coalition, Ben can’t get too far ahead of the rest of the committee. So look for all the action to come from official Fed statements, rather than cryptic hints at Jackson Hole.
4.       Sometimes Fed Chairmen are accidentally more interesting than they mean to be. At last year’s conference Big Ben shared some of his thinking about alternative monetary tools. This was news in 2010, and it excited the markets. But today, we’ve all thought long and hard about the alternatives, so it’s hard to see a surprise coming.


The Virtues of Free Markets?

In our books, Dubner and I have argued that economic analysis (at least the way we try to do it) is neither moral nor immoral. We try to start with a question, obtain a set of facts, and then understand where those facts lead, trying not to be prejudiced one way or the other by moral considerations when coming to a conclusion.
Similarly, I’ve never really thought of markets as being moral or immoral.
Mark Zupan, the dean of the University of Rochester’s William E. Simon School of Business, thinks differently. In a recent piece, Zupan makes an argument that most people will find counterintuitive: he claims that free markets foster integrity and cooperation. I’m not sure I fully agree with him, but the basic idea is sensible and straightforward. Markets lead to firms that survive for long periods of time. Reputations are important to firms, which leads them to behave in virtuous ways, not because they’re inherently moral, but because virtue is good for business in the long run.


A Secondary Market for Graduate Degrees?

I recently finished the Knight-Bagehot Fellowship at Columbia. It’s a one-year program that lets business journalists take classes across the university to “enhance their understanding and knowledge of business, economics and finance.” One of the program’s perks, and there are many (including dinners with the likes of Paul Volcker, Jamie Dimon, and Joseph Stiglitz), is that you can get an M.S. degree from Columbia’s journalism school by taking just six additional credits. Considering it usually takes 30 credits, and about $53,000, to get one of those, it’s a pretty good deal.
Back in 2006 I got my M.S. from the J-school, the old-fashioned way. So during my Bagehot tenure, I didn’t take a single additional class there. And yet, come graduation day, they gave me a second diploma. Expecting just the certificate in economics and business journalism that comes with the fellowship, I was too stunned to say anything as they handed it to me up on stage, and I certainly wasn’t going to give it back. But what the heck am I going to do with two degrees from the same school?