Tuesday, December 15, 2009

Menu profits, fair trade, a clever carbon tax, Bhutan's stock market, education policy and paul samuelson

I have decided to cut down on the links posts, because every day is excessive. I will, periodically, write up posts which I think are particularly interesting.
Using the psychological concept of anchoring (in this case, you see a really high price and thus everything else looks lower priced), positioning on a page, illustrations without negative associations, and boxing/bracketing, restaurants can significantly improve revenue from peoples' ordering choices without restricting them. From "The Myth of Fair Value (and How to Take Advantage of it) by William Poundstone.
The Fair trade movement ends up hurting many, many farmers. It locks them into producing the crops that have made them poor to begin with, reduces the incentive to diversify crop production, encourages the utilization of resources on marginal land that could be better used in another setting, forces farms to eschew benefits of scale and technology and remain small (sapping migrant workers of employment opportunities and ensuring low profits for lots of farmers), guarantees market oversupply that causes depressed global commodity prices for other unprotected growers, and is grossly inefficient at transferring the price markup on fairtrade goods to the actual poor producers.
An incredible interview with Paul Samuelson. A brilliant and levelheaded economist who revolutionized the field. We could use more like him! He will be missed.
Did you know that Bhutan makes significant numbers of policy decisions based on "gross national happiness?" Here's how the head of their exchange justifies only having stocks trade twice a week and not allowing foreigners to trade:
"Isolation from global markets means little price movements. People just collect their dividends, content with the return while companies just raise capital, the original idea of stock exchanges... If people make money, that makes them happy. If they lose, it makes them sad."
An idea that sets an international carbon tax (easily modifiable into cap and trade, I think) at a level based on the rate of warming in the troposphere around the equator. If the world warms, the tax gets high. If the world doesn't warm, then the tax stays low. Anyone who really believes their own global warming prediction should be ok with this. It can never get implemented, but it's not a bad foundation to think about.
Unlike other subjects, math seems to be one where "tracking" students - placing them into honors or remedial or normal classes with equivalent peers - significantly helps all students achieve more. Other subjects have seen achievement go up when students are untracked.

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