• A Bag Tax

    Jan 27 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Developing Economies, Economic Humor, Government, Regulation, Thinking Economically • 272 Views

    Washington, D.C. got a bag tax on January 1. Now, any store that sells food (even a book store that sells mints) has to charge its customers $.05 for every bag they use (not just for the food but everything!).

    The results…
    1. One Safeway reported using 6,000 fewer bags during the past week.
    2. Because Victoria’s Secret sells edible body icing, it falls within the jurisdiction of the act (not just for the icing but for all purchases).
    3. Countless people report dropping parts of lunches as they juggle sandwiches, Sushi, water bottles, fruit, fries.
    4. Someone carrying a container of milk and a can of Spam had an onlooker wonder, “What is he going to do with SPAM?” Will Spam purchases decline?
    5. One woman, pushing a cart of 19 items in her shopping cart as she walked to her car said, “Now it looks like I’m stealing them.”
    6. When it is raining, more people want bags.
    7. What about bag related jobs? How will the tax impact unemployment?
    Behavioral economist Dan Ariely, predicted the outrage over the tax would last because people are reminded at the register every time they make a purchase. “It creates a very small financial burden but a very big emotional reaction.”


    The bag tax is about a lot more than bags. Tomorrow, lessons that proponents of cap and trade and health insurance can learn from the bag tax.

    The Economic Life:
    Taxes affect supply and demand curves. When they increase a firm’s costs, the supply curve shifts leftward. Similarly, when the demand side is directly hit, the demand curve shifts leftward. Either way, taxes make price increase and quantity decrease.

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  • Hayek vs. Keynes

    Jan 26 • Economic Debates, Economic Thinkers, Government • 463 Views

    Good enough to watch, this youtube performance between Hayak and Keynes is similar to a recent Planet Money “boxing match” between the classical perspective and Keynes which I also recommend. Both are helpful when deciding whether you prefer government assistance or waiting for the market to come to the rescue.

    The Economic Lesson
    In the voting booth, we demonstrate a preference either for legislators who want to do less or those who want to do more. Representative of the Austrian school, Hayek’s ideas emphasize government doing less. By contrast, John Maynard Keynes believed government economic intervention could be beneficial.

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  • Ethical Man

    Jan 25 • Thinking Economically • 251 Views

    For the

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  • A Macro-difference With Micro-insurance

    Jan 24 • Thinking Economically • 216 Views

    Listening to a recent segment of Marketplace.org (1/15.2010), I heard about microinsurance. The concept sounds like win/win for everyone.

    With more resilient structures, Haitians can purchase microinsurance policies that cost $1 to $2 a day. Correspondingly, a Lloyd’s report cited Bolivian health insurance being sold for $5 a month.

    For low income individuals, microinsurance represents risk protection for structures, businesses, and health catastrophes.
    For insurance companies, it means new markets, new customers, new products, and billions of dollars of new revenue.

    It is a pleasure to see new markets and profits for large insurance firms potentially doing good.

    Comments? What am I missing?

    The Economic Life:
    Bangladesh Nobel prize winning (2005) economist Muhammad Yunus has been called a microfinance missionary. Through microfinance, very small loans are making a very big difference. Being able to borrow small sums has enabled poor entrepreneurs in developing nations to start and sustain businesses.

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  • Steel and Banks: President Kennedy and President Obama

    Jan 23 • Thinking Economically • 215 Views

    Commenting on yesterday

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