Subscribe to our RSS feed
EconLife.com connects economics to everyday life, current events and history.

Tag Archives: marginal utility

Scale for weight..2.16.12_000016156464XSmall

On Samoa Airlines, weight makes a big difference. With small planes and passengers that tend to be large, Samoa Air has begun to charge passengers by the kilogram (42 cents a pound). They say that knowing weight beforehand lets them appropriately configure seating and calculate capacity. It facilitates land, labor and capital efficiency.

One British journalist disagrees. Saying, “The policy is a dehumanising, degrading and mechanistic approach to customer service,” he believes the decision is discriminatory. Its source, he claims is the unhappy fliers who sit next to very large people.

The Samoa Air pricing policy reflects the spread of obesity in the Pacific Islands. Among the world’s most overweight nations, Samoa has close to a 50% obesity rate (note that the data appears to date back to 1995). Wondering why, I discovered a Foreign Policy article that suggests the main reason is globalization. When the world arrived during WW II, it brought industrialization, processed food and a sedentary life style that transformed a traditional subsistance fishing economy.

Looking at the following map, you can see which nations have the most overweight populations.

From the International Association For Studying Obesity (IASO)

From the International Association For the Study of  Obesity (IASO)

In a recent econlife post, we looked at airlines’ pricing policies. Food, baggage, reservation switches, aisle seats and now weight are all examples of the extras for which we can pay if we decide their marginal utility is worth it.

This youtube news report is a good firsthand look at Samoa Air and Samoans’ reaction to the weight policy.

Sources and Resources: For more about Samoa Airlines’ new fare policy, this Washington Post article provided the detail while this Guardian column presented the opposing view. Perhaps, though, the real issue is obesity which you can read more about here in Foreign Policy and here at the IASO website.

 

Posted by: adminEcon
Tags: , , ,
Comments (0) Add a Comment

American Airline New Logo

On my recent flight to San Francisco, I had baggage fees and reservation change fees. My exit row cost me more and if I not brought my banana and yogurt, I would have had to pay for food. I was amazed by how much the extras cost.

And now, there’s talk of oversize people paying more for their airline seats.

Citing financial, environmental and health benefits, the Norwegian economist who proposed the “oversize” fliers’ charge suggested 3 ways to “pay as you weigh.”

  1. Charge by the pound. Plane fare can depend on your weight and your baggage. Taking 150 pounds on a plane will cost one half as much as 300 pounds.
  2. Charge above a base fare for extra weight. Obese individuals would pay more.
  3. Charge above a base fare for extra weight and give a discount to those who are slim.

 

From the airline’s perspective, another fee makes sense. Baggage fees added more than $3.3 billion to the bottom line in 2012. During 2011, reservation fees were worth an extra $2.38 billion. In addition, on my flight, United needed fewer onboard attendants because they no longer had to serve a meal to everyone and they had a new revenue flow (actually a trickle) from meal purchases.

An economist would say that airline passengers are identifying the marginal utility of each extra fee and fare hike. If the good or service they get is sufficiently useful, then paying more is worth it.

And finally, here again is extra at the margin…

In 1962, the average American male backside was 14 inches wide when seated. Women? 14.4 inches. In 2002, an Air Force study noted 15 inches was the average.  Consequently, at 17-19 inches, average airline seats are too narrow. One reason is that using backside girth was a mistake. Instead, as the widest parts of our bodies, shoulders and arms would have been more accurate.

Your opinion of the oversize flier fee?

Sources and Resources: Covering topics ranging from fees to seat width, CNN articles here and here had the facts about flying. For my information on the proposed oversize fliers’ charge, this Chicago Tribune article provided the details.

Posted by: adminEcon
Tags: , , , ,
Comments (0) Add a Comment

16314_4.17_000002614112XSmall

A typical young Chinese woman is looking for a husband who owns a home. Probably, she will find one because China’s single child policy and tendency toward male preference have resulted in massive gender imbalance. With so many more marriageable men than women, the husband-hunting female wields a lot of power.

Telling us more about the results of a survey of 32,000 people from 2 Chinese research groups, the NY Times explained that the real estate boom in China has divided the young male population into the haves and have-nots. The majority of women surveyed would select men with “deeds.” Yes, Chinese women care about good morals and personality, but not as much as finance. As a result, 24 million men might remain unmarried during the next decade.

The Economic Lesson

Nobel prize winning economist Gary Becker tells us that marriage is about a lot more than love. Instead, we can best understand marriage by looking at utility functions and marriage markets.

People marry because they expect to, “raise their utility level above what it would be were they to remain single.” (The Essence of Becker, p. 273) Looking for their best mate, they compete in marriage markets that have demand and supply curves. To see Dr. Becker’s descriptive and quantitative explanations, you might want to look at The Essence of Becker, pp. 273-328.

What marginal utility might marriage provide to newlyweds?

Posted by: adminEcon
Tags: , , , ,
Comments (0) Add a Comment

In today’s Notes post, the link is to Dear Economist, written by Tim Harford for the Financial Times. Using economic ideas to provide answers about love and life, he proves that economics is about so much more than money. Opportunity cost can provide an answer to a study time dilemma, our demand elasticity will influence whether we purchase a sale item, and marginal utility can help us with diets and significant others. And this is only the beginning.

http://timharford.com/articles/deareconomist/

Posted by: adminEcon
Tags: , , ,
Comments (0) Add a Comment

15387_mzi.crlnrguj.100x100-75

It is safe to say that ten years ago, not many people would have imagined that we could purchase music right off of the Internet and have the proceeds go straight to charity.

One of the more reasonable ways to contribute to the Red campaign is to buy

Posted by: adminEcon
Tags: , , , ,
Comments (0) Add a Comment