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    A Happiness Check

    Oct 9 • Behavioral Economics, Economic Debates, Government, Households, Labor, Macroeconomic Measurement, Thinking Economically • 442 Views

    The jobs, income and wealth scene is a bit bleak. Unemployment has soared, many workers are earning less, the government owes a ton of money, the stock market has been down, up, and down again, housing prices have plummeted and 25% of us have lost more than half of our wealth.

    And yet, we seem to feel okay.

    Looking at close to a million Gallup replies on SWB (Self-reported Well-Being) between January 2008 and December 2010, a Princeton economist concludes that our “life evaluation” has almost returned to pre-Lehman Brothers bankruptcy 2008 levels. Data about each day’s emotions, though, reflect more of our joys, stresses and worries.

    Should President Obama be happy about the Princeton study? Not necessarily. Here, an economist talks about the connection between election results and macroeconomic statistics.

    One footnote: Gallup had to eliminate political questions from its survey because the mere mention of politics made respondents unhappy.

    The Economic Lesson

    Economists disagree about what matters to people when they decide how well off they are. Some say macroeconomic data like unemployment and GDP statistics affect our outlook. Others cite the impact of stock market data, even from people who own no securities. Economists also study the difference between “living life” and “thinking about life.” They point out that you can feel dismal about parts of your daily life and still perceive a bright future.

    An Economic Question: Do you believe that well-being studies should affect economic policy? Explain.

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    The Supreme Court and Picasso

    Oct 8 • Businesses, Demand, Supply, and Markets, Economic Debates, Economic History, Innovation, International Trade and Finance, Labor, Regulation • 429 Views

    This Supreme Court case could affect the music you hear at a concert, the book you can access on Google and the Picasso you might see online. The case is all about copyright protection.

    The question: If a foreign movie, painting, song, or book is already in the public domain, then can it get copyright protection?

    The answer: Hoping to comply with international law, the Congress said foreign work that was unprotected and in the public domain could be copyrighted.

    The Response: Groups that depend on the public domain for their work believe that Congress’s decision is unconstitutional. Orchestra conductors, community theater groups, Google, video distributors, indeed a host of groups said the expense of using a copyrighted piece could prevent them from doing their jobs.

    The Supreme Court just heard the oral arguments.

    Here is a legal analysis of the case.

    The Economic Lesson

    2 parts of the Constitution directly relate:

    • Article 1 Section 8: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and discoveries.”
    • The First Amendment: Congress shall make no law …abridging the freedom of speech…

    An Economic Question: How might property rights help and hinder innovation?

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    Paying the Simpsons

    Oct 7 • Behavioral Economics, Demand, Supply, and Markets, Households, Labor, Thinking Economically • 474 Views

    Rather than accept a 45% salary cut, the voices of Bart, Homer, Marge and Lisa have said this might be their last season. Reportedly paying close to $8 million a season to each of the major voices, 20th Century Fox Television said the show had become too expensive. NPR also tells us that Fox might make more money by ending the show than continuing it. The syndication rights alone could be worth close to $1.5 million for each episode.

    In a counter offer that Fox rejected, the Simpsons’ actors said they would accept a 30% cut and a share of the profits. Meanwhile, producers for the series have agreed to pay cuts. A final decision might be announced today.

    The Economic Lesson

    The Price of Everything, a very good book, explains high salaries. One possibility is the huge audience that technology facilitates. More people mean more money. Here, a University of Chicago economist discusses the rationale and math behind superstar salaries. He even compares Luciano Pavarotti to Mrs. Billington, an 1801 superstar Italian opera diva.

    An Economic Question: Through a demand and supply graph for a superstar, how might you illustrate a high salary?

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    Steve Jobs Quotes

    Oct 6 • Businesses, Economic Thinkers, Government, Innovation, Labor, Macroeconomic Measurement, Thinking Economically • 646 Views

    • “I’m one of those people who think that Thomas Edison and the light bulb changed the world a lot more than Karl Marx ever did.” (From Insanely Great, p. 26)
    • “It’s not the consumers’ job to know what they want.” (NY Times)
    • “We want it to make toast. We’re toying with refrigeration too.” (Wired, about the iPod, during 2004)
    • “Real artists ship.” (Insanely Great, p.165. Referring to the newly developed Macintosh in 1983.)
    • “I didn’t see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me {at 30 years old}. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.” (Stanford commencement speech, 2005)
    • “Stay Hungry. Stay Foolish.” (Stanford commencement speech, 2005)

    The Economic Lesson

    More (Steve) Jobs, Jobs, Jobs, Jobs” sums it all up. In a 2010 NY Times Op-Ed, Thomas Friedman said that we can re-invigorate our economy by supporting our innovators. Let’s have a “Start-Up America.” Or as he concluded, “You want more good jobs, spawn more Steve Jobs.

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    Naming Matters

    Oct 5 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic History, Economic Thinkers, Households, Innovation, Labor • 467 Views

    Combine something enjoyable like a strawberry with a color that connects to high tech. Then add the one letter that has a “reliable” sound in most languages and what do you get?


    Actually, the Blackberry might have been called the MegaMail. However, its creators soon discovered that just thinking about an avalanche of emails made consumers cringe. Telling the story behind the name Blackberry, Intel’s Pentium chip, Apple’s Powerbook and beyond, this New Yorker article wonderfully describes the art and science of naming. 

    You also might look here to see why certain names and ideas “stick.”

    The Economic Lesson

    In his Wealth of Nations and Theory of Moral Sentiments, indeed, throughout thousands of pages, economic philosopher Adam Smith (1723-1790) was said to have referred to the “invisible hand” only 3 times. And yet, his description of how the market economy’s participants coordinate their behavior has “stuck” for hundreds of years.

    An Economic Question: In each of the 4 basic market structures–perfect competition, monopolistic competition, oligopoly and monopoly–is the impact of a good name different?

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