Matt Nolan

Excellent example of price discrimination

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Via the Freakonomics blog comes the following picture:

Source.

At first glance this seems weird, they are charging different prices for the same thing!!!  However, as anyone with experience of vending machines and universities knows, these puppies provide a lot of service to students late at night.  In fact, it is typical for sections of the machine to sell out before nightfall.

As we know that the first people to the machine will pay the lower price, we can also say that once the cheap chips sell people will have to pay more.

Now, given that the local tuck shop will be closed by night time we know that the number of substitutes to the vending machine falls at night.  As a result, this pricing system ensures that the owner of the vending machine can charge more for the same chips at night time (assuming of course that the cheaper chips will sell out during the day time when substitutes are available) – when people value them more highly and are willing to pay more.

Excellent stuff.

Matt Nolan

Foreign investment explained?

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Well, it isn’t explained by this cartoon.

Source:  NZ Herald.

Lets assume, for the sake of argument, that New Zealanders aren’t racist.  In this case, I can’t see the problem with “foreign investment”.

Think of it this way.  There are private individuals that happen to be New Zealanders that own things.  There are private individuals that happen not to be New Zealanders that would like to buy these things, and guess what – they value them more highly than the New Zealanders do.  So they trade.

So what the cartoon misses is that this stuff wasn’t ours to start with, it is being sold by its owners to a buyer who values it at a higher level.  Applying a feeling of ownership on the basis of nationalist sentiment is weird.

Update:  So New Zealanders should be “economic patriots” aye.  Right …

Paul Walker agrees.

Matt Nolan

I’m sick of this …

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Serious, what in the hell.  I am sick of reports that talk about these massive benefits of government spending without actually looking at them in context with, you know, opportunity cost.

I was annoyed with the way a PWC report was used, and now this release on a Covec report is similarly dodgey.  The report is probably fine (although I have not had the good fortune of reading it), and probably defines exactly what they are looking at and why – I have faith in NZ economists.  But this:

Williams said the report showed that the Government’s contribution to a rescue package should be at least 25 per cent because the tax receipts would make it cost-neutral.

It makes me angry.  So angry I am going to avoid writing any more as I will end up viciously attacking politicians such as Mr Williams for obvious mis-information.

The only reason to get involved is real externalities, doing a partial eqm analysis and saying the tax take rises involves ignoring where the hell the tax comes from and the opportunity cost.  Treasury is right when they say this is neutral.

Update:  Paul Walker comes out in favour of this irritation.

Update 2:  Covec report is found here, and pdf here.

Matt Nolan

One perspective on mining conservation land

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It appears that a great debate is forming around the opening up of conservation land.  As always, I am neutral, I would have to look at it on a case by case basis.  I trust property rights to keep things rolling along effectively, unless there is a significant social benefit associated with the non-mining of some specific land.

Anyway, given my willingness to open up the forum to debate, I think that this image sums up the anti-mining case quite succinctly:

Nom nom nom

(Facebook source)

Discuss.

Matt Nolan

Robin Hood Tax redux?

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Here are two articles against a Robin Hood tax:

One from me (also here) and one from Patrick Nolan.

Feel free to comment about them here.

Matt Nolan

Productivity problems

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Over at Policy Progress, David Choat reminds us to be careful looking at productivity stats.  This is true.

I have heard arguments against looking at productivity (here and here) and for looking at productivity (here and here).  If you click the links you will see that each time it is actually the same person talking – me.

Now does this make me viciously inconsistent?  Hopefully not.  Ultimately, the idea of productivity is essential – and yet the statistics of it are not so useful.

Although getting productivity is good, as it means we can have more stuff for the same inputs, it doesn’t make sense as a target for policy.  When it comes to policies trying to actually sit down and quantify the ACTUAL costs and benefits of policies is the way to go, using productivity stats is a good way to cloud and ignore some costs.

Another post on technology should really come up on this blog.  And one day it will – but not today.

Update:  On that note it looks like we are making a waste of times comm… opps sorry, productivity commission in New Zealand now.  It would make more sense to just spend the funds on improving the quality of actual cost benefit analysis – but then we wouldn’t be able to make up a fancy new commission with new letterheads would we!   The Act party needs to show its relevance by increasing spending after all doesn’t it …