jamesz

Fat taxes revisited

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Matt’s previously advocated a fat tax, but really he was talking about a tax on unhealthy food. Now United Airlines has decided to tax people for just being big: if you’re too big to fit in one seat then you’ll have to buy two. There are two reasons why they get large people to pay more:

  • Large people cost more in fuel to fly.
  • Large people bother other passengers by encroaching on their space.

I’m totally fine with people paying their way, but this seems a bit extreme. I have to side with William Saletan at Slate here in suggesting that they could have gone about their pricing scheme a little better. Basically, they’re missing out on revenue from all those people who are too big for one seat but unwilling to pay for two. They’re also likely to enrage a lot of people through their stance. Read more

jamesz

Easter surcharge confusion

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When I had breakfast in town over Easter I was charged a 20% surcharge on everything, allegedly because their labour costs are higher over Easter. Now it’s true that they are statutorily required to pay more over the Easter break, so their labour costs are higher; however, the marginal cost of providing a meal is not. The average cost might be, but that could be defrayed over the course of a year if the firm planned to open on Easter. If the marginal cost of the meal is no different then why would you price the meal differently? Read more

Matt Nolan

Tim Hunter, which report do we believe

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The Sunday Star Times seems to like the issue of energy prices.  So far in March they have had:

  1. A report stating that energy companies are  setting prices too high,
  2. A report stating that energy companies are setting prices too low.

Both of these come from Sunday Star Times reporter – Tim Hunter.  So I wonder which report he believes?  I wonder what report I would believe if I actually got to see them.  I wonder what report you guys would believe!

Matt Nolan

Economist magazine says legalize drugs

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As said, the economist magazine says legalize drugs (ht Carpe Diem).

This isn’t a big issue to me personally – relative to what I see as “big issues” like the current recession.  However, I can definitely see some good in legalizing (and taxing) drugs (something we were discussing here).  For some reason though, it is an issue where I think emotion has moved ahead of good policy design.

Pure regulation is often not the best solution – how much are we hurting peoples welfare by keeping many drugs illegal.  I don’t know, my goal is to have a government introducing policies that maximise welfare – and I believe that legalizing (and taxing) the use of some drugs may well be welfare enhancing.  With the Economist saying the same sort of thing I feel like I’m starting to form an opinion 😛

Matt Nolan

Blegging again: On Singapore refined oil …

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Thank you for the excellent responses to my previous bleg on refined oil prices.

Sadly I am in need of a little more help 🙂

According to the data series kindly provided by John Macilree the price of refined fuel has jumped pretty sharply, even as crude prices have stayed low.  I am wondering if anyone knows why this has happened.

I have five potential theories:

  • A cost shock to refineries around the world,
  • World demand for oil has recovered increasing demand for the refined product – however, there has been stocks of crude oil (implying that it won’t show up in the crude price until later),
  • Recent price movements have given refiners a view of the elasticity of demand – and they have discovered that the profit maximising price is actually higher,
  • Refiners have fallen into a position where it is easier for them to tacitly collude,
  • Prices had fallen “too sharply” as crude fell, and the recent steep increase is a correction to equilibrium.
Matt Nolan

Query (or Bleg): Singapore refined petrol data

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So, where do I get figures on Singapore refined petrol prices?

Crude oil has been falling, the exchange rate has stayed stable, but rising refining costs have driven up the retail price of petrol.  If anyone knows where I can find the figures it would be much appreciated 😉