• economic news summary and long queues

    How To Stand in Line Less

    Sep 8 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Humor, Tech, Thinking Economically • 156 Views

    Having just left Nantucket, I already miss the Juice Bar’s incredible homemade vanilla ice cream that I like to mix with their triple chocolate mountain (cookie dough, chocolate chips and brownies in chocolate ice cream). However, I will not miss the long evening lines that can stretch for more than a block.

    A small section of a Juice Bar queue:

    Better incentives for shorter queues

    From: Yelp

    According to researchers at the University of Southern Denmark, there is an alternative.

    Where are we going? To why the incentives for queues are all wrong.

    A Shorter Line

    If you observe traditional queue etiquette, the people who arrive early should get served first. The problem though is that the traditional way encourages us to arrive early. And the sooner more people arrive, the longer the line and the longer the wait.

    On the other hand, if Apple, for example, told everyone interested in a new iPhone that the last people who showed up would be the first served, no one would show up twelve hours before opening time with a sleeping bag. And the line would be much shorter. Or, as an economist alluding to a Nash equilibrium would say, LIFO (last-in-first-out) is welfare optimal for all parties.

    Our Bottom Line: Incentives

    Whether signing up online for Obamacare, buying concert tickets or going to Shake Shack, most of us figure out an arrival strategy if we expect a long line. When the early birds are more likely to achieve success, we have the incentive to design a strategy that moves us in front of the crowd by getting there before everyone else. Ironically then, we create a self-fulfilling prophecy because our approach creates the bottlenecks we hope to avoid.

    The solution? Change the incentives. With LIFO instead of FIFO (first-in-first-out) or even SIRO (service in random order), everyone is better off. But then, our social norm that says FIFO is fair will have to change.

    As for the Juice Bar, until LIFO becomes their rule, I guess I will continue buying several quarts of ice cream and their fantastic homemade waffle cones at 11 a.m. when they open. Then, while blogging during the evening, I make my own vanilla/triple chocolate mountain waffle cone.


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  • economic news summary and migration

    The Most Popular States

    Sep 7 • Behavioral Economics, Businesses, Economic Debates, Economic Growth, Economic History, Economic Thinkers, Financial Markets, fiscal policy, Government, International Trade and Finance, Labor, Thinking Economically • 157 Views

    A life changing event like marrying, becoming jobless or changing employers could make us decide to move to another state.

    Where are we going? To the importance of being able to move.

    Where We Move

    Below, the Atlas Van Lines interstate migration map identifies the states with the highest percent of people entering and those with the highest proportion of leavers:

    Migration patterns in the U.S.

    And here are some facts from the map. Isn’t it interesting that North Dakota is #1? With the price of oil so much lower, I wonder if their inbound migration will reverse.

    Interstate migration leaders

    Why We Move


    As a “dollar zone,” the U.S. makes moving easy. So too does a single fiscal policy that provides the same Medicare and Social Security dollars, no matter where we live. The key is a shared monetary and fiscal environment.

    Looking at more specific reasons for interstate migration, researchers in a 2011 St. Louis Fed paper cited jobs most frequently. With only 28.2 percent of the jobless staying put, unemployment was important but changing employers and becoming employed also topped a reasons for moving list.

    The St. Louis Fed data below show the prevalence of jobs related reasons:

    interstate migration


    Scholars have debated whether taxes stimulate migration. One recent report says that taxes have little or no impact when compared to jobs, less expensive housing and weather (retirees). Disagreeing, a response says the contribution of taxes to a moving decision cannot be ignored when we look at the margin.

    In theTax Foundation map (below), you can see high and low income tax states.

    interstate migration

    Our Bottom Line: A National Market

    Easy interstate migration meant a national market could develop. Looking back to the 19th century, we had a transportation infrastructure of roads, canals and then railroads that moved people and goods. With midwestern farming, southern cotton and northeastern manufacturing, each of us could do what we did best and then trade. Because each section of the country was producing what it was most suited to, we enjoyed the benefits of comparative advantage.

    Now again we continue to enjoy the positive externalities of state-to-state migration. Being able to move freely across the vast expanse of the U.S.means households and businesses make production and distribution decisions that can allocate land, labor and capital most efficiently.

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  • labor markets and monetary policy

    Deciding if the Labor Market is Okay

    Sep 6 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Debates, Economic Growth, Economic History, Economic Thinkers, Financial Markets, Government, Labor, Macroeconomic Measurement, Money and Monetary Policy • 195 Views

    Determining how to steer monetary policy, Federal Reserve Chair Janet Yellen reportedly has a “dashboard.” With indicators that relate to inflation, jobs, growth and markets, the dashboard lets her know when to brake and accelerate the economy.

    So, on this Labor Day Weekend, let’s see what the jobs indicators on her dashboard are telling her.

    Monetary policy and Janet Yellen's labor dashboard


    The Labor Dashboard

    Although the Great Recession ended in June 2009, still we are not entirely back to where we started. Yes, the job openings and layoffs/discharges rates and non-farm payrolls are back to normal:

    Monetary policy and labor dashboard

    All labor market infographics are from Bloomberg.

    However, the unemployment rate, the hires rate and the U-6 underemployment rate are not back to where they were six years ago:

    Monetary policy and Yellen's labor dashboard


    And the quits rate, long-term unemployed share and participation rate have more of a ways to go:

    Monetary policy and Janet Yellen's labor dashboard

    Our Bottom Line: Monetary Policy

    During an April 2014 talk, Dr. Yellen spoke about labor market slack. Oversimplifying, we can say she means we are underutilizing our labor force. The big question is how much the nine labor indicators reflect remaining recessionary slack. And the bigger question involves whether the slack is sufficient to delay a rate hike.

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  • The econlife.com economics news summary

    Weekly Roundup: From Uber Drivers to Gasoline Prices

    Sep 5 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Debates, Economic Growth, Economic History, Government, Households, Innovation, International Trade and Finance, Labor, Lifestyle, Macroeconomic Measurement, Regulation, Thinking Economically • 166 Views

    Posts Roundup

    Economic news summary and the price of a life Sunday 8.30.15

    How to price a life…more

    Economic news summary and markets Monday 8.31.15

    When maple syrup is about more than pancakes…more

    Economic news summary and What Our Food Says About Us Tuesday 9.01.15

    What food says about a society…more

    Economic news summary and Rockets, Feathers and Gas Prices Wednesday 9.02.15

    Why gasoline prices fall slowly and rise quickly…more

    Economic news summary and uber drivers Thursday 9.03.15

    What to call Uber’s drivers…more


    economic news summary and  street messages Friday 9.04.15

    The economic messages sent from a street…more

    Ideas Roundup

    • production possibilities
    • tradeoffs,
    • regulation
    • cartel
    • supply and demand
    • markets
    • conspicuous consumption
    • consumption expenditures
    • Gini Index
    • inequality
    • framing
    • reference prices
    • monopolistic competition
    • monopoly
    • externalities
    • labor regulation
    • comparative advantage
    • creative destruction
    • GDP


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  • house

    On The Street Where You Live

    Sep 4 • Businesses, Demand, Supply, and Markets, Developing Economies, Economic Growth, Economic History, Economic Thinkers, Innovation, Labor, Lifestyle, Macroeconomic Measurement, Tech, Thinking Economically • 163 Views

    Like politics, I guess we can say that, “All economics is local.”

    Take Greene Street.

    Walking down Greene Street in NYC’s SoHo during the 1850s, you would have passed 14 brothels. Now, a similar Google Maps stroll would include Ralph Lauren, Tiffany, other luxury retailers and pricey residential co-ops.

    Street history and economic development


    Where are we going? To how economic development is about the street where you live.

    From Farms to Brothels to Ralph Lauren

    In a recent paper, along 486 feet on Greene Street, several scholars looked at 375 years of economic development. Calling the process creative destruction, they took us from “half-slaves” to today’s posh retailers:

    • Agriculture (pre-1800s): As part of the Dutch colony New Amsterdam, Greene Street was the home of “half-free” slaves (free for their lifetimes but then children reverted to bondage) who were given land to farm in return for grain and livestock taxes. Then, the British arrived, the land became more valuable and the laws more oppressive. While the half-free slaves were pushed out, the street remained agricultural.
    • Residential (1800-1850): Next, located near the heart of city life, the area attracted a residential population of doctors, lawyers, other professionals, craftsmen and merchants. Upper middle class, the block’s value rose.
    • Prostitution (1850-1880): All changed when the hotels and a theater that were built nearby attracted prostitution. As the brothels proliferated, the residents departed, leaving homes with lots of bedrooms. Run by women with names that included Miss Daily, Miss Williams, Miss Whalen and Mrs. Bars, the brothels were joined on Greene Street by some immigrants, African Americans and the first manufacturing establishments.
    • Manufacturing (1880-1920): Again we have a drastic change. The nightlife moves uptown and the city’s hat makers select Greene Street as a new home. Made possible by Jewish immigration, freight elevator technology and cheaper building construction, and the nearby piers, retailers, and a railroad terminus, the block regains value. By 1886 it was the home of 54 businesses. Then, as firms moved uptown after 1910, again the street declined.
    • Planning Battles (1920-1960): For the 40 years after 1920, city planners debated how to develop the area. Even considering the merits of a highway, they reached no consensus.
    • Artists (1960-1990): With the neighborhood deteriorating, values sinking and empty high ceilinged loft-like factories remaining, artists illegally moved in. They were followed by art galleries.
    • Posh (1990s-now): And you know what happened next.

    You can see how the value of real estate changed during Greene Street’s history.

    How local development affects the GDP

    From: “A Long History of a Short Block: Four Centuries of Development Surprises on a Single Stretch of a New York City Street”

    Our Bottom Line: Economic Development

    Looking from the top down, GDP is a pile of data displaying the value of goods and services a country produces in one year. Adding the value of consumption expenditures, government spending, gross investment (from business and residential housing) and exports minus imports, you can gauge economic development by monitoring quarterly GDP changes.

    However, when we flip our focus and look local, we can see what growth is really happening. We can encourage comparative advantage among local communities through which each one is focusing on what it does best and we can applaud Joseph Schumpeter’s creative destruction as economic activities are continually replaced by the next wave of development.

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