Monthly Archives: September 2010

From 19th May, 2006:

“There are simply too many notes, that’s all. Just cut a few and it will be perfect.” Joseph II’s friendly advice to Mozart – as presented in Peter Shaffer’s screenplay for the film Amadeus – provokes harsh laughter from any writer who has dealt with the editor’s pen. Mozart is said to have replied, “Which few did you have in mind, Majesty?”

Mozart’s urbane response made the emperor look absurd. But Tyler Cowen, an economics professor at George Mason University, seems to have a similar perspective in his new book about arts funding, Good and Plenty: “Mozart’s Don Giovanni has musical beauty, terror, comedy and a sense of the sublime, making it a favourite of opera connoisseurs. But what if consumers draw their comedy from one work, their terror from another, their beautiful music from yet another, and so on?” Cowen knows that the idea is outrageous for Don Giovanni, but not so for lesser works.

Continued at timharford.com.

When Venetia first tried to set up a café on Chatsworth Road in Hackney, east London, she encountered an unexpected obstacle: she couldn’t find a landlord who believed that she’d be good for her rent. The problem was that the kind of café Venetia imagined – one that served good pastries and excellent cappuccino – wasn’t the kind of café anyone had ever tried before on Chatsworth Road. The local property owners figured that if nobody had ever tried it, it probably wouldn’t work.

The remainder of the article can be read here. Please post comments below.

My old university tutor often complains when he has to write references – they take up a lot of his time, and he doesn’t get paid for them. Since he’s doing my prospective employer a service, he thinks they should pay him. However, that means he’s motivated to write me a bad reference, because then I won’t get the job, and I’ll ask him to write me another one – so he gets paid again. Of course, we could say that he only gets paid if I get the job – so he writes me an overly gushing reference. How can we motivate my tutor to write a fair and accurate reference, and compensate him for his time?

Phil C, Aylesbury

The answer to this question can be read here. Please post comment below.

From 13th May, 2006:

My wife and I have become hooked on the national addiction: pressing our noses against the windows of estate agents, visiting unaffordably nice parts of London and flicking through real-estate porn.

Sadly, my experience as an undercover economist offers few tips on judging what the housing market will do. I would guess that it will fall over the next few years, but you should pay no more attention to that claim than if it was made by a taxi driver or a waitress.

I don’t have enough confidence in my forecast to sell my house, rent while prices collapse, and then buy somewhere bigger for bargain prices. Nor should I. If house prices were obviously due for a fall next year we would all sell immediately and the fall would happen now instead. That is why the future of house prices will never be obvious.

Continued at timharford.com.

A “Dear Economist” correspondent once asked me why people post clips of classic comedies on YouTube, or go to the trouble of writing online reviews, given that there seems to be nothing in it for them. A textbook economics model would say that people would not, in fact, post online reviews or contribute to YouTube. And my answer, in brief, was that they don’t. Far more people read books than write reviews of them, and far more watch YouTube videos than post them. As a broad defence of rational economic man, my answer wasn’t too bad; but as a way of understanding online volunteering, it was useless.

The remainder of the article can be read here. Please post comments below.

Frequent-flyer programmes are very popular here in Australia, where people often travel long distances for work and can subsequently be rewarded with large perks by selecting their preferred airline ahead of cheaper offers from other carriers – and to the detriment of their employers.

I am sure the airlines must benefit from all of this, but what about the rest of the economy? Are we encouraging an inefficient market by signing up to loyalty programmes?

Oliver Jones, Perth, Western Australia

The answer to this question can be read here. Please post comment below.

From 5th May, 2006:

On a recent trip abroad, a reputable international car rental company tried to make me an offer I couldn’t refuse. For just 110 a day, I could protect myself from the frightening-sounding insurance deductible of 1900 – a sum I risked being charged if anything happened to the car. I bravely turned them down.

This was a strikingly overpriced offering. For each day’s rental I was being asked to pay 110 to protect me from the risk of paying 1900. The mathematics are hardly difficult: the insurance is fair only if I crash into something every 90 days. If I believed that, I wouldn’t get behind the wheel at all.

There is plenty of overpriced insurance around, always bundled with some other product. A popular mobile phone retailer will insure your £50 phone for 92 pence a week – nearly £50 a year. The fair price of the insurance is probably closer to £5 a year than £50.

Continued at timharford.com.

It’s my birthday soon. I won’t confess to my age, although I am relieved to discover that there are still more people in the country who are older than me than are younger.

I am certainly old enough to worry about whether I’m past my prime. But that all depends. David Beckham is certainly past his prime and he’s younger than I am. Footballers peak at 26, if the winners of Fifa’s World Player of the Year award are any guide. Heavyweight boxing champions tend to win the title in their late twenties, although with a spread from 20 (Mike Tyson) to 45 (George Foreman). Sprinting is even more of a young man’s game: Carl Lewis first won Olympic 100m gold at 23, Jesse Owens at 22, and Usain Bolt at 21. The average age at which a male sprinter wins the Olympic gold medal is just under 24.

The remainder of the article can be read here. Please post comments below.

As an economics graduate from Hong Kong, I wonder whether we are doing enough to protect Mother Nature. I have considered donating money to Greenpeace. Then I had a better idea. Why don’t we donate shares of polluting companies to Greenpeace? By doing so, at least some part of these companies’ profits could be directed to environmental organisations through dividends. In some extreme cases, Greenpeace could acquire enough shares to push the companies to transform into a more “environmentally friendly” corporation.

What do you think?

Cloud Yip

The answer to this question can be read here. Please post comment below.

From 28th April 28, 2006:

The news makes such depressing reading these days, as it always does when there’s a war on. But amid all the gloom, a small, curious part of me can’t help wondering whether our military escapades in Iraq and Afghanistan will produce any unexpected consequences for our daily economic life.

It wouldn’t be the first time that a war has transformed the economy. When Honore Blanc, a French gunsmith, produced 10,000 muskets a year for Napoleon, he made sure that any faulty pieces could be replaced by standardised components rather than the usual handmade parts. It was a simple idea but an engineering miracle – and without it, mass production would have been impossible.

The first world war provided a more indirect impetus to the process of technological change. More than 30 years after Thomas Edison lit the streets of New York City, the electric dynamo hadn’t produced the new efficient manufacturers that many had expected. Although huge steam engines had been replaced by huge electric motors, factories were still set up the old way: workers were clustered around the monstrous engines because the equipment they used was powered by drive belts, which meant it needed to be close to the source of power. The result was, the workers were arranged according to how much power their equipment needed, rather than what would lead to the most productive flow of work.

Continued at timharford.com.

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.
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