• economic news summary and blockbuster movies

    Everything You Need to Know About Blockbuster Movies

    Sep 29 • Businesses, Demand, Supply, and Markets, Economic History, Economic Humor, Entertainment, Lifestyle, Macroeconomic Measurement • 110 Views

    You probably would have guessed that Jurassic World was this summer’s biggest blockbuster. And yes, according to CNN, it “smashed” international and domestic box office records.

    There is only one problem. It didn’t.

    Where are we going? To how the film industry needs to understand inflation.

    But first, let’s see what makes a blockbuster film.

    Blockbuster Ingredients

    Looking back at blockbusters from 1975 to 2013, fivethirtyeight identified their “defining features.”

    First we have genre. Forty-six percent of all blockbusters were action movies. But because a film typically is assigned several genres, the numbers in the following graph do not add up to 100 percent:

    Remembering inflation when comparing blockbuster summers

    Next, action scenes are basic to the blockbuster formula. Below you can see that chase scenes, scary falls, and explosions are each in more than a third of all blockbusters.

    Blockbuster revenue and inflation

    Based on the trend, I guess we can expect to see more exploding bodies next summer:

    Characteristics of blockbusters


    Interestingly, we have more murder (below) and exploding bodies (from the previous graph) but, as fivethirtyeight points out, there is less blood and gore:

    Blockbuster revenue and inflation


    Our Bottom Line: Inflation

    Officially defined as May 1 through Labor Day, the summer blockbuster season was called a record setter–the second best ever. With ticket sales close to $4.48 billion, they were reported as close to the top. Those numbers though are nominal. They indicate current ticket prices.

    However, because ticket prices can rise from one year to the next, a bigger total does not necessarily mean more tickets were sold. And that is exactly what happened. According to Box Office Mojo, a website that takes account of inflation when it compares movie industry revenue numbers, this year was #17. Using 1982 through now as its data base, they put 2002 at the top:

    Inflation adjusted movie ticket sales

    From: Box Office Mojo

    As for how well individual films fared, Gone With the Wind is the all time top. Jurassic World was #28.

    Inflation adjusted ticket sales

    Ticket sales for 2015

    Box Office Mojo used an average $8.39 2015 ticket price to calculate Gone With the Wind’s adjusted gross.



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  • Economic news summary and nudge squad

    Government Nudge Squad Questions

    Sep 28 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Debates, Economic Thinkers, Education, Environment, fiscal policy, Government, Health Care, Lifestyle, Regulation, Thinking Economically • 104 Views

    The British government has a Nudge Squad (called the Behavioral Insights Team) and soon we will too.

    Where are we going? To whether behavioral economics can improve government.

    A Nudge Squad Primer

    A “Nudge Squad” can help us comply productively with government policies by using behavioral economics to influence our decisions. In the U.K., the Nudge Squad told tax procrastinators that “The great majority of people in your local area pay their tax on time…” and it worked. Emphasizing the social norm rather than the punishment they convinced more tax scofflaws to send in their checks.

    In a recent NY Times Op-Ed, Harvard Professor Cass Sunstein explained that U.S. government agencies have already begun to recognize that they need to consider how we think. To encourage participation in a loan program, administrators used an “outreach” letter. Similarly, text messages increased the number of college pre-matriculation tasks completed by lower-income students. Even the strategic placement of a signature box generated more revenue from a government form because its designers implemented behavioral techniques.

    Now with an executive order, President Obama has further legitimized government’s use of behavioral science. Through a Social and Behavioral Sciences Team, the President is supporting the idea that little behavioral tweaks can have a big impact on government employees and us.

    There is only one problem. Policy makers are also human.

    Our Bottom Line: The Tradeoff

    Blocking the benefits markets bring to our lives, sometimes people display irrational behavior. Behavioral economists tell us that we prefer to select a default rather than consider a host of desirable alternatives. We like a smaller short term benefit rather than waiting for a long term result that we know will be better. And, because losses have a disproportionate emotional impact when compared to gains, we respond more strongly to them.

    Called behavioral failures, our irrational responses have stimulated a group of economists to say government is the solution. However, as Professor Sunstein has pointed out, “For every bias identified for individuals, there is an accompanying bias in the public sphere.” Given the authority through a Nudge Squad, government can make the same irrational decisions as individuals.

    The result? We have a tradeoff. Do we want to risk market failure or government failure?

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  • Wacky Malady Billing Codes

    Wacky Maladies in Our New Medical Billing Codes

    Sep 27 • Behavioral Economics, Businesses, Economic History, Government, Health Care, Households, Lifestyle, Regulation, Tech, Thinking Economically • 119 Views

    ICD-10 is almost here.

    On October 1st, medical billing will become vastly more detailed. While ICD-9 has 14,000 diagnostic codes, ICD-10 includes more than 68,000. Meanwhile up from 4,000, hospital inpatient procedure codes will reach 87,000. To prepare, medical providers have been racing to hire coders, training personnel and creating billing protection systems just in case reimbursement is delayed or denied.

    Where are we going? To the cost of bureaucracy.

    But first, some history and wacky codes from ICD-10…

    Classification History

    In 17th century England, a statistical survey of childhood mortality rates was a beginning of using disease classification to grasp healthcare needs. Knowing they were coping with a 36 percent mortality rate of children younger than six years old from maladies that included convulsions, thrush, smallpox and measles, those researchers provided some of the earliest disease prevention data.

    For our own ICD system, we can look to the International Statistical Congress which compiled the first version of the International Classification of Diseases in 1853. What we have now is the 10th version with the Centers for Disease Control and Prevention and the Centers for Medicare and Medicaid Services deciding what should be included. What we also have is a history of data collection that has facilitated disease prevention initiatives.

    ICD-10 Humor

    However, with ICD-10, the code list could be excessive.

    The danger of knitting is covered by Code Y93.D1:

    Other codes include getting sucked into a jet engine, burns while water skiing, a bizarre personal appearance and in-law relationship problems. The macaw injuries list has a code for getting bitten, one for getting struck and a third for “other contact.” Then, each of those have a separate code for the initial encounter, a subsequent encounter, and “sequelae.” Four of the codes for crocodiles cover bitten, struck, crushed, other contact. Bumping into a lamp post includes similar detail.

    This is a hang gliding code list:

    transaction costs and ICD-10

    From: Newsworks.org

    Our Bottom Line: Transaction Costs

    The media has been having fun with odd examples. But the serious side is the transaction costs.

    When I call CVS to renew a prescription, my time spent listening to irrelevant information from their recorded message creates a transaction cost. With cost defined as sacrifice, a transaction cost is what I could not do because of standing in line, filling out forms, making lots of phone calls. Under communism the long lines for everyday goods and services were such an expensive transaction cost that they helped to expedite the former Soviet Union’s demise.

    Some people say that ICD-10’s 100,000 plus detailed codes create too high a transaction cost for medical billing.

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  • The econlife.com economics news summary

    Weekly Roundup: From Chicken Sandwiches to Budget Gridlock

    Sep 26 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Developing Economies, Economic Growth, Economic History, Entertainment, Financial Markets, fiscal policy, Government, Innovation, International Trade and Finance, Labor, Lifestyle, Money and Monetary Policy, Regulation, Tech, Thinking Economically • 94 Views

    Posts Roundup

    economic news summary, reefers and supply chain Sunday 9.20.15

    The importance of the reefer…more

    bank loand and mood from big events Monday 9.21.15

    The Super Bowl and your mortgage …more

    federal budget problems Tuesday 9.22.15

    More federal budget problems…more

    economic news summary, internet and growth Wednesday 9.23.15

    Where the internet makes a difference…more

    economic news summary and the rising price of eggs Thursday 9.24.15

    Why eggs are more expensive…more


    economic news summary and the chicken sandwich supply chain Friday 9.25.15

    Global insight from a chicken sandwich…more

    Ideas Roundup

    • supply chain
    • globalization
    • transportation infrastructure
    • behavioral economics
    • stock markets
    • behavioral finance
    • avoidance behavior
    • federal budget
    • information infrastructure
    • regulation
    • supply and demand
    • price system

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  • economic news summary and the chicken sandwich supply chain

    The Most Expensive Way to Make a Chicken Sandwich

    Sep 25 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Developing Economies, Economic Humor, Labor, Lifestyle, Thinking Economically • 125 Views

    Please think for a moment of a chicken sandwich. It could have two slices of wheat bread, tomato, lettuce, onions, cheese, pickles, mayonnaise…and chicken. Deciding to make his own sandwich from scratch, a man named Andy took six months and spent approximately $1500.

    Andy’s ingredients:

    why a sandwich depends on the price system

    From: “How to make a sandwich”

    Where are we going? To why prices help us make a chicken sandwich.

    How Andy Made the Sandwich

    Andy grew some of his ingredients in a community garden. The lettuce, tomatoes, wheat, peppers–anything he could grow himself, he planted.

    Because the pickles just needed cucumbers dill, garlic and salt, his garden had what he needed except for the salt. That took a trip to the Pacific coast where he got two gallons of ocean water that, after more than four hours of boiling, left him with two cups of salt. The next challenge was getting through airport security during the trip home. Assuming his salt was contraband, they arrested him.

    You can pretty much imagine what it took to get the other ingredients. For the mayo, Andy created his own oil from sunflower seeds and went to a farm for eggs, milk and to kill the chicken. The bread? You get the picture.

    Below is a YouTube trailer but I do recommend the 10 episodes. Only several minutes long, each segment shows how Andy created one ingredient.

    Our Bottom Line: Prices

    As economists, we should take Andy’s story a step further.

    The ingredients are all available at a local supermarket. But whyWhy are people from anywhere in the world willing to cooperate so we can make a chicken sandwich? The answer is price. During every step of the production process, someone, combining land, labor, and capital, decided that he or she would be willing to exchange a good or a service for a certain price. Those people did not need to know or even like each other. But they cooperated so that our local supermarket got the ingredients.

    So, we could say that a chicken sandwich exists because of the incentives that prices create. Economists call the interaction of prices and incentives the price system.


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