Economics in Music

Examine this conversation in Barenaked Ladies' "If I had $100000:

Singer 1: If I had a million dollars/We wouldn't have to eat Kraft Dinner
Singer 2: But we would eat Kraft Dinner
Singer 1: Of course we would, we’d just eat more
Singer 2: And buy really expensive ketchups with it
Singer 1:That's right, all the fanciest ketchup.

What type of good do these singers believe Kraft dinner to be (Normal/Inferior)? How do you know? What is Ketchup's relationship to Kraft Dinner? Explain.

Get Your Obama Check

That was the title of a banner ad that caught my eye. The link took me to mikesmoneymatters.com, where Mike Donahue demonstrates the ability to get a $12,000 check from the government. To prove his honesty, he displays pictures of his kids, and openly admits he hates "all those 'get rich quick' schemes you see on TV". He even has a picture of the check to prove it is real. Best of all, he claims that for $1.99 he'll gladly send anyone a kit teaching them the secret of how to get these grants.

The offer seemed too good to be true, so I didn't rush for my wallet, but how sure was I? Well, as a rational agent, I would only participate if

P(grant)*(grant value) > $2.00

or

P(grant) > ($2/$1200)

Therefore, I was 99.9 percent confident that the grants were not as easy as Donahue claimed.

Ask Economists

A friend of mine started a new website designed to be an Economics centered question and answer forum. I should stress that it is very new and still in the development stages, but if any of you would like to check it out and say what you think, he would greatly appreciate the input. The website is called ask-economists.com.

My Calculus of Voting

Public choice economists have developed a model to explain why people vote. The model is called the calculus of voting, and can be written as such:

R = p(B) − C + D

where

R = the reward gained from voting in a given election (R, then, is a proxy for the probability that the voter will turn out)
p = probability of vote being instrumental
B = “utility” benefit of voting--differential benefit of one candidate winning over the other
C = costs of voting (time/effort spent)
D = citizen duty, goodwill feeling, psychological and civic benefit of voting

Costs are always present, and the probability of the vote being instrumental is so small that public choice claims decisions to vote are largely a component of civic pride. Waking up today, I realized that my own calculus of voting was slightly more complicated:

R = pB − C + D + S + K + I - E

where

R = the reward gained from voting in a given election (R, then, is a proxy for the probability that the voter will turn out)
p = probability of vote “mattering”
B = “utility” benefit of voting--differential benefit of one candidate winning over the other
C = costs of voting (time/effort spent)
D = citizen duty, goodwill feeling, psychological and civic benefit of voting
S = Free Starbucks coffee
K = Free Krispy Kreme Doughnut
I = Free Ben & Jerry's Ice Cream
E = Distain from other Econ undergrads when I tell them I voted.

The Ethos of the Economist

Something to think about:

When Walter Williams tells me that raising the minimum wage harms unskilled workers, particularly African American teens who become unemployed because they are priced out of a job, I agree with him.

When a certain other professor tells me raising the minimum wage will raise unemployment and hurt the economy and we shouldn't do it, I start to wonder about things that could keep wages below the equilibrium price, and that raising the minimum wage creates winners as well as losers because many people maintain their job and receive the additional wage.

They prove their points with the same graphs, they draw price floors across the same supply and demand curves and point to the surplus of labor (unemployment). However, I know Walter Williams sincerely cares about poverty in the world and sees the free market as the best solution to it. I am convinced my other professor only advocates the free market because it justifies his greed, but he packages it as humanitarian because it sells better that way.

I'm not sure if Economics has a good explanation for why I am willing to buy one product from one seller, but not to buy the same product from another seller.

Economic Movie Quotes

I was looking at some quotes from Paul Newman characters to reflect on his life and work, when I came across these gems from Butch Cassidy and the Sundance Kid, I think I will work them into an Econ class one day.

Butch Cassidy: What happened to the old bank? It was beautiful.
Guard: People kept robbing it.
Butch Cassidy: Small price to pay for beauty.
-------
Butch Cassidy: If he'd just pay me what he's spending to make me stop robbing him, I'd stop robbing him.
-------
Butch Cassidy: You know, it could be worse. You get a lot more for your money in Bolivia, I checked on it.
Sundance Kid: What could they have here that you could possibly want to buy?

...Questions to follow.

How should history remember FDR?

I've been wondering about this question on-and-off for a while now. I know most economists are unfriendly to him because of the widespread belief that his New Deal policies actually lengthened the Great Depression, but nonetheless he is consistently held in high regard in American Presidential rankings. 

Now, if the only criticisms against him were his economic policies, I would understand why he was held in high regard. Very few average citizens have any understanding of economics, and without any criticism it's easy to believe he was the man who brought us out of the Depression. But what about...

• Japanese internment camps during World War II? These were absolutely atrocious and it's embarrassing to me that anyone could sign them into law. 
• The switch in time that saved nine? This was a blatant attempt by FDR to take over the Judicial branch of the government.  It was disrespectful of the Constitution, as well, and I find it appalling. Combine this with his subsequent breaking of the two-term limit, and you have a man who made regular attempts at dictatorial power. 
• Yalta? This was one of the worst treaties ever negotiated, from an American perspective, and FDR's ailing health is often cited as the reason he made so many concessions to Josef Stalin. I don't want to speculate on how this would've changed the world, but I do think there are a lot of ways America and the world would've been better off.

Maybe, when Social Security collapses completely from bankruptcy, people will begin to view FDR differently. Personally, I just don't understand how he gets so much love from Americans.