Monthly Archives: December 2007

Dear Economist,

This Christmas and new year, I expect to encounter a lot of drunks on the road. In fact, I may well be one of them. Should I feel guilty? And should I be worried?

Mr F Jones, London

Dear Mr Jones,

It has always been difficult to test the effect of alcohol on drivers let loose on the roads. The difficulty is this: if half of all crashes involve drunks, that may be because drinking impairs your driving or it may be because there are a lot of drunks on the road – and we can only guess at how many drunk drivers there are.

But the economists Steven Levitt and Jack Porter realised that it was possible to say more, by looking at how often drunk drivers crashed into each other. If 10 per cent of drivers drink, and if drunk drivers are as safe as any other kind of driver and randomly mixed among the sober drivers, then only 1 per cent of two-vehicle crashes should involve two drunks.

Drunk-on-drunk crashes are much more common than one would expect, given the number of drunk-on-sober crashes, allowing Levitt and Porter to reach firm conclusions about the risks of drink driving.

They find a very large effect. Drivers who have been drinking are seven times more likely to cause a fatal crash; those who have drunk over the legal limit (in the US) are 13 times more likely to cause a fatal crash. You might also bear in mind another finding from the paper: “The great majority of alcohol-related driving fatalities occur to the drinking drivers themselves and their passengers.” That should be sobering.

Questions to economist@ft.com

Merry Christmas, everyone. I’ll be back blogging in the New Year. Even an undercover economist has to take a break…

The column that I wrote that generated easily the most mail was on discrimination against women in coffee shops. (More here, and especially here.)

Your Christmas treat – for those who enjoy their economics via iPod – is this package the FT’s audio team have put together, in which I put the idea to the test with FT Interactive Editor Kate MacKenzie.

Let’s get one thing straight: I only bought Mint Chocolate Baileys as research for this column, and not because I like that sort of thing. I won’t be buying it again. The mint-choc aftertaste is so thoroughly sundered from the initial flavour of the Baileys that it is hard to imagine they once inhabited the same bottle.

But presumably somebody is buying the stuff this Yuletide, along with all the other mutations of everyday consumer goods.

Once there was only Coca-Cola; now we have Diet Coke Plus, which has added vitamins and minerals, and according to a press release from The Coca-Cola Company, joins the “Diet Coke family, which includes the flagship Diet Coke, Caffeine Free Diet Coke, Diet Coke with Lime, Diet Cherry Coke, and Diet Coke Sweetened with Splenda.”

The remainder of this column can be read here. Please post comments below.

Dear Economist,

My time waiting in a bank queue is vastly longer than standing in a supermarket one. How can I reduce my queuing time?

Ken

Dear Ken,

On a personal level, your options are obvious. You could take a collection from those behind you and use it to pay those in front of you to leave. Or you could simply bring a slim paperback and put your queuing time to good use.

But what really matters here is the cost to society. Queues are enormously costly. Imagine a bank queue in which one customer arrives per minute, and one customer per minute is dealt with by staff. All it takes is a cashier on a cigarette break, or a sudden rush of customers, and you could have 10 people in the queue. At that point, each person has to queue for 10 minutes, even though people are leaving as quickly as they are arriving. Somehow the queue must be disposed of.

The solution is elegant and unexpected: new arrivals should go directly to the front, to be served immediately after the current customer. Queues would then be very short, because once a customer was pushed back a couple of places he or she would give up and go home. The economist Refael Hassin has shown that this rule can be socially efficient, while the economics writer Steven Landsburg has advocated its introduction for telephone queues.

This makes sense. In both cases, the same number of people get to use the bank. But under the Hassin-Landsburg rule, queues are much shorter and we all spend less time waiting in line. All that remains is to encourage banks to enforce the system. Since it is perverse and counter-intuitive, they may find it very appealing.

Questions to economist@ft.com

31qcju5hifl_aa240_ The Poker Encyclopedia, by Hannah MacKay and the late Elkan Allan, has crossed my desk. It does what it says on the cover, but it’s nicely-written, seems comprehensive, and feels absolutely gorgeous with a green-baize cover.
Why did the publishers send a copy to an economist like me – that is, one who doesn’t gamble? (I do occasionally play poker with my friends – that doesn’t count as gambling because it’s a sure thing.) Possibly they saw my feature about Chris Ferguson and how the geeks are taking over poker. It’s one of the pieces of writing I’m proudest of and you can re-read it here.

Ukreuterscom Silly season has started at UBS, reports Reuters:

Property investors smarting from this year’s housing bust in the United States might do well to look farther afield — even out of this world. Internet searches for lunar land prices show the cost of buying an acre of the moon’s surface has risen 40 percent since the start of 2007, investment bank UBS told clients in a tongue-in-cheek analysis.

Lacing a year-end note with caveats, and not a little holiday cheer, UBS strategists said their "esoteric research" of archived news reports suggests lunar property trends may even be a leading indicator of U.S. house prices.

Rising sharply between 1997 and 2001, the cost of a slice of land on the moon suffered a mid-cycle retreat in 2002-03 after the dot.com bubble burst, the bank said. But prices defied gravity to hit record highs of $37 (18.35 pounds) per acre in December 2005 — nine months before U.S. housing peaked. Their fall to earth was a step ahead too, with lunar prices dropping 56 percent to $16 per acre between 2005 and January 2007, the report said.

Hm. Maybe it would be better to invest in Second Life land? Details here and here. It has to be a better bet than London property…

Evagreenpa170206_350x310 In response to this:

Economists have known for some time that better-looking people are paid more. This is probably due to a combination of discrimination against the ugly, the fact that some beautiful people have jobs where beauty is an obvious advantage, and the likelihood that better-looking people are more confident.
More recently, economists have discovered evidence that endogenous beauty (make-up, hair-styling) is as important as exogenous beauty (having Bond girl Eva Green’s eyes).

An irate reader writes:

Much as we all like exogenous and endogenous as exotic (cf. endotic) words, they do have to be used the right way round. You would have been better to use a nurture / nature comparison;  more sexy than external / internal which is what you really meant.

Not so. Exogenous does not mean "external"; it means "generated outside". And to an economist, it means determined by factors outside the system under consideration. In other words, you can put on make-up but you can’t improve your genes. So, make-up is "endogenous beauty" even though it is applied to the outside of the skin. Of course, all this is economic jargon. But when did "Dear Economist" not use economic jargon? It’s the whole point of the column.

Who could resist reading on when an article starts like this?

Would you like your penis enlarged? It is a question I get asked a lot.

Really?

Not by women, thankfully, but in the e-mails I receive every morning. For just $70, I could open up "new exciting horizons of sensual pleasure" and put an end to "being shy of [my] manhood in the showers".

It’s a great piece about a BBC investigation into spam. The eventual conclusion should be obvious but sadly isn’t widely-known enough: that when you click on a spam email you are not only opening yourself up to being scammed, but you’re also encouraging more spam to be inflicted on the rest of us. Don’t do it, bozo. (A sad case of a negative externality.)
Relatedly, Steven Landsburg calls for those who create computer viruses to be executed.

Jamie Thomson has been fined for taking too long to leave a McDonald’s car park because he was lingering over his meal. He tells his story here; the Guardian news story is here, a ludicrously solemn Guardian editorial is here. Obviously this is bad PR for McDonald’s, but when did McDonald’s ever get good PR in the pages of the Guardian?
Still, I hope the Guardian gets its way and McDonald’s allows customers to park indefinitely for the price of a donut. It would be a lot cheaper than parking at a regular place, as long as you didn’t have to prove that you ate the donut.

The Undercover Economist: a guide

Publishing schedule: Excerpts from "The Undercover Economist" and "Dear Economist", Tim's weekly columns for the FT Magazine, are published on this blog on Saturday mornings.
More about Tim: Tim also writes editorials for the FT, presents Radio 4's More or Less and is the author of "The Undercover Economist" and "The Logic of Life".
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