Matt Nolan

Women, relationships, and game theory

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When reading about that hunk Hugh Jackman and his new movie Wolverine I read this story in Stuff.  In that story he mentioned the following comment from his wife:

He said: “She gets very annoyed. She says, ‘A husband’s job is to be fat and flabby and make me look fabulous.’ She said I wasn’t living up to my end of the bargain.”

My first reaction was awesome – she is being a bit sarcastic and she is willing to let her guy relax and enjoy himself.  Then my inner economist came along and actually explained to me the game that Hugh Jackman’s wife might be playing here.

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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

jamesz

Smoking, preferences and internalities

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Eric Crampton reports a study on the reasons for smoking. It finds that smokers place a lower value on the cost of getting a major lung disease than non-smokers. I really like to see these sorts of studies because differences in preferences are almost impossible to show without them. It’s easy to SAY that smokers just don’t care as much about their health but, unless you have solid evidence, your argument will usually be dismissed. Economists just don’t really like putting things down to differences in preferences unless they’re really forced to.
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jamesz

Show us ya pimples!

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Brad Taylor doesn’t think that the government should be installing acne-revealing lighting to ward off teenage hoodlums. In the UK they’re installing special lights that highlight acne in areas where teenagers congregate to get drunk, intimidate people and write graffiti all over the walls. Apparently it’s been very successful at dispersing the crowds!

So crowds gather, litter, intimidate people and vandalise the area without actually paying for the cost of their actions. That’s an externality if ever I saw one! Read more

jamesz

On the proliferation of confusing labels

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Ezra Klein channels his econ-geek and laments that price signals don’t tell the whole story these days:

…we hope that prices include the relevant information. That’s been the goal of the environmental movement’s effort to build the cost of carbon emissions into the price of goods. Rather than asking each consumer to act as a climate scientist when wandering through Costco, the climate change community is trying to let them act as a consumer.

It’s a fair point. These days we can promote labelling and the dissemination of information, but all information processing takes time. What’s the difference between free-range, organic and eco-friendly eggs? Does the SPCA standard mean they’re free-range or just that they’re not battery hens? Is organic meat humanely slaughtered? Were the cattle raised on a farm that pollutes the local stream? Read more

jamesz

Nick Smith is the bag man

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It’s great to see the government taking economic incentives seriously. Their latest initiative considers imposing a 5c/bag tariff on plastic bags in supermarkets. The idea is that the market price for the bags doesn’t take into account the full environmental cost of non-biodegradable bags. By taxing the bags the government can adjust the market price of the bags to match their social cost.

What gets me so excited about it is that green regulations usually seem to take the form of rather arbitrary quotas and limits. Read more