• everyday economics and baseball gender gap

    Why Major League Baseball Has a C+ Gender Grade

    Jul 30 • Behavioral Economics, Demand, Supply, and Markets, Entertainment, Gender Issues, Labor, Lifestyle, Sports, Thinking Economically • 61 Views

    A year ago, the San Diego Padres interviewed Kim Ng. A University of Chicago graduate, she started her baseball career as a White Sox intern and then worked for the Yankees from 1998 to 2001. Her baseball background includes 13 seasons as an assistant general manager during which her teams made it to the playoffs, League championships and the World Series. Since 2005 she has sought to be the General Manager of the Dodgers, Seattle Mariners, Padres and the Angels. While the media said that she was highly qualified, each team said, “No.”

    Where are we going? To see where baseball limits its human capital.

    A Baseball Report Card

    The University of Central Florida has a Gender Institute that publishes a report card on race and gender for major league sports. While women fared rather poorly everywhere, Major League Baseball was particularly dismal. With a C/C+ grade, MLB’s teams employed relatively few women in management. (All tables are from “The 2015 Racial and Gender Report Card: Major League Baseball.”)

    There are no female General Managers/ Directors of Player Personnel in MLB.

    General Managers/ Directors of Player Personnel

    Human capital and MLB


    For coaches also, the number was zero.


    Female human capital in MLB


    In the top slot, still no woman who is a CEO/President of a team. However, the New York Yankees, Washington Nationals, Colorado Rockies and the Chicago Cubs each have women at the top. Three female Steinbrenners are Yankee Vice Chairpersons, among the the Washington Nationals Principal Owners are women in the Lerner family, Laura Ricketts is a co-owner of the Chicago Cubs, and Linda Alvarado is one of the Rockies owners.




    To find higher numbers, we need to look at vice presidents. And yet, with 65 female VPs out of 376 among 30 teams, the female presence is relatively small.

    Vice Presidents

    Human capital in MLB


    Our Bottom Line: Human Capital

    When you eliminate women from your supply of human capital, you are diminishing your team’s potential talent.


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  • everyday economics of gas taxes

    Paying More at the Gas Pump

    Jul 29 • Behavioral Economics, Demand, Supply, and Markets, Economic Debates, Economic History, Environment, fiscal policy, Government, Lifestyle, Regulation, Thinking Economically • 54 Views

    Trying to imagine the plight of the Federal Highway Trust fund, we can start with the roads. The yellow lights show the roads that are in the Federal Highway Trust Program.

    Transportation infrastructure and fiscal policy

    From: Mapbox

    Funding and Spending Problems


    With drivers paying the most, the Highway Trust fund has gotten its spending power from the gasoline tax. The problem though is the gas tax has been 18.4 cents per gallon since 1993. Just to have maintained the spending power of the tax, it would have to be 30 cents per gallon today. In addition, our cars are more fuel efficient and we are driving less.

    In the following map, you can see who drove less:

    State-by-State Change in Gasoline Consumption, 2007-2012

    (the redder the state, the bigger the drop; the darker the blue, the bigger the increase)

    Declining gas consumption

    From: Washington Post


    I thought a labeled map could come in handy:

    Map of US


    The fund’s dollars are primarily targeted for highways and mass transit. With 75 percent coming from the highways budget and the rest focusing on mass transit, trust fund money also preserves scenic views, constructs bike paths and maintains vegetation. The problem here could be too many projects.


    With funding far less than gas tax revenue, the trust fund has needed extra help from the general fund of the federal budget.

    Transportation infrastructure and the federal budget

    The Congressional Solution

    You can see above that the projected end-of-the-year balance of the Highway Trust Fund  (dotted green line) for this year is zero. That means Congress has got to do something. So far, they have just agreed not to raise the gasoline tax.

    Consequently, other revenue streams will be diverted. Current proposals include selling oil from the Strategic Petroleum Reserve, cutting Federal Reserve expenses and increasing Transportation Security Administration fees.

    Our Bottom Line: Types of Taxation

    Philosophically, it made sense to use the gasoline tax for the Highway Trust fund. Representing a “benefits received” philosophy, the tax embodied the idea that drivers should pay for their roads. The downside though takes us to another tax philosophy. If you believe that taxes should come from the affluent rather than those with smaller paychecks, that means a higher gas tax is not the answer. Called a regressive tax, every penny at the pump takes a higher percent of the income of those who earn less than those with more.

    So, is a higher gasoline tax the solution to the Highway Trust Fund’s Insolvency?

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  • everyday economics and the cost of sleep

    How Much Your Sleep Costs You

    Jul 28 • Behavioral Economics, Economic History, Economic Thinkers, Labor, Lifestyle, Thinking Economically • 72 Views

    Our story starts with a tale of two cities.

    Located at opposite ends of the U.S. Central Time Zone, the people in Amarillo, Texas and Huntsville, Alabama see the sun setting at different times. Because 864 miles separate them, the sun could set at 8:00 in Huntsville and close to 9:00 in Amarillo. Consequently, shown by the American Time Use Survey, people go to bed later in Amarillo.

    Where are we going? To the connection between sleep and wages.

    Earning More When You Sleep More

    Because our bodies respond more to the sun than the clock, the people in Amarillo tend to go to bed later than a typical Huntsville resident.

    Worker productivity, personal income and sleep

    From: “Time Use and Productivity: The Wage Returns to Sleep”

    But the next morning, everyone arises at approximately the same time to go to work. Since Amarillo’s population went to bed later. it is more likely that they were tired during the day. Being tired can make a difference at work. Studies have shown that tired doctors make more mistakes and tired students fare worse on tests.

    Correspondingly, the authors of a sleep and wages study hypothesize that more sleep leads to greater productivity. Specifically, their data indicate that when workers experience an hour a week more sleep in the short run, their wages increase an average of 1.5 percent while in the long run they are up by 4.9 percent. Amazingly, an hour more a night could even mean a wage spike of 16 percent.

    Earning Less When You Sleep More

    However, as typical economists saying “On the one hand…but on the other,” we can find a rather different conclusion. With a co-author, economist Dan Hamermesh concluded that high income workers choose to sleep less in order to earn more. Explaining their results, one headline said, “Sleep, Why Bother? It Costs Too Much.” There is though one qualification. High income workers will sleep less but only to the point that it starts to hurt their productivity.

    Our Bottom Line: Personal Income

    So as always we have tradeoffs. Here though, the considerations are multiple. We decide between sleep and productivity and also sleep and work time. (And I am sure we could add lots of other choices if we continued.).

    However, whether looking at productivity or time allocation, both affect our personal income.

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  • everyday economics and the cost of bubble wrap

    Why Bubble Wrap is Disappearing

    Jul 27 • Businesses, Demand, Supply, and Markets, Economic History, Innovation, Labor • 91 Views

    Sadly, many of us will never be able to pop Bubble Wrap again.

    Where are we going? To the cost of free shipping.

    Bubble Wrap History

    Bubble wrap was not always in a mailing box. First it was textured wallpaper but the idea did not not quite catch on. Then its inventors sold it as insulation but, no success. The third try worked. In 1960, Bubble Wrap’s manufacturer, Sealed Air, convinced IBM that it was ideal packaging material for the computers they were starting to ship. The rest is history.

    The Bubble Wrap Demise

    A $20 billion business in 2013, for almost 50 years, Bubble Wrap was the ideal protective packaging. But then with the advent of free shipping, Bubble Wrap’s volume, always a positive, suddenly became a problem. Because it occupies too much space in delivery trucks and retailers’ warehouses, Bubble Wrap needed a more cost effective compact alternative. Sealed Air’s solution was iBubble Wrap. Shipped in flat rolls to retailers, unlike Bubble Wrap, it can be inflated in the warehouse. Meanwhile, research continues with mushroom roots and other agricultural byproducts that can conform to the shape of a package.

    The following image from WSJ.com says it all. That 47 to 1 ratio will mean a lot of extra space that other items can occupy.

    Bubble Wrap's externalities

    Out Bottom Line: Externalities

    Like a free lunch, there is no such thing as free shipping. For some of us, the cost is the POP we will sacrifice when Bubble Wrap disappears. As economists we could say free shipping’s impact on Bubble Wrap is an externality–a cost experienced by third parties who neither manufacture nor purchase Bubble Wrap.

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  • everyday economics and automation at McDonald's

    Why Ronald McRobot Will Soon Serve Us

    Jul 26 • Businesses, Demand, Supply, and Markets, Economic Debates, Economic Growth, Economic History, Economic Thinkers, Government, Labor, Macroeconomic Measurement, Regulation, Tech, Thinking Economically • 84 Views

    This bogus headline from a satirical news site might soon be true:

    New McDonald’s In Phoenix Run Entirely By Robots

    “Visitors to the restaurant will see these new robots working in harmony at a speed of 50 times faster than the average human employee, with no chance of error. If the test launch for the store is a success, people can expect to see robots located in every store all over the country and at restaurants around the world…”

    “…36-year-old Paul Horner, a spokesman for McDonald’s told reporters that because of the demand for a $15/hr minimum wage, the company has been playing with the idea of a restaurant run entirely by robots for years and believes their “McRobots” are the answer.”

    Where are we going? To why minimum wage hikes will speed mechanization.

    Minimum Wage Increases

    Last week, New York State said that it would be following the advice of an investigatory panel and raise fast food workers’ minimum wage to $15 during the next several years.

    Elsewhere also, the minimum wage has been rising:

    Minimum wage and mechanization

    From: Bloomberg


    The Impact

    Until now economists have disagreed about the impact of a minimum wage hike. Some say it will barely affect the number of jobs while others have data that prove precisely the opposite. Now, a recent study concludes that both sides are right.

    Let’s start with a production recipe for a fast food restaurant. They have the land where the restaurant is located, capital that includes structures, machinery and inventory and labor that has high and low skill. When a minimum wage goes up, the cost of low skill workers rises. It takes awhile though for production recipes to change.

    The first two years:

    Initially, we have three phenomena at work: small labor intensive establishments leave; chains stay; chains enter. Because firm entry and exit are both up, the number of jobs for low skill employees remains relatively stable. Existing chain stores retain their production recipes while entering chains bring more automation to the market.

    After the first two years:

    Changing the balance between labor and capital, the chain stores that enter the market have a different production recipe. Because they realize that low skill labor will be pricier, they replace people with technology. Over time, the market is increasingly dominated by larger chains with more automation.

    Our Bottom Line: Marginal Analysis

    Economists like to ask us to think at the margin. For the minimum wage, that means comparing the extra (marginal) cost per worker to extra (marginal) revenue generated by each worker. Of course firms want marginal cost to be less than marginal revenue.

    If firms do not raise prices, the new minimum wage will narrow the gap between marginal cost (MC) and marginal revenue (MR). Then, when MC is greater than MR, firms have the incentive to exit that market.

    Changing the relationship between MC and MR, the minimum wage hike (below) diminishes employment after two years as capital intensive chains enter the market and labor intensive restaurants leave.

    Impact of higher minimum wage

    From: “Industry Dynamics and the Minimum Wage: A Putty Clay Approach”

    In those capital intensive restaurants, McDonald”s will have Ronald McRobot serving us.


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