Duncan Garner has posed the question of whether we should charge tourists more to use DOC trails to save the 100 Kiwi jobs the government is cutting at DOC

Should we charge tourists more to walk our DOC tracks and use our huts to save 100 kiwi jobs? Is this a shortsighted Govt? @radiolivenz 3pm

— Duncan Garner (@Garner_Live) March 25, 2013

Now this conflates two separate issues:

• If it is efficient to price discriminate and charge tourists more to use DOC tracks, why aren’t we doing it already?
• Are the jobs necessary to provide the desired level of service from DOC?

Charging tourists more

The first issue implies that the government is leaving money on the table. If it is, then maybe this should be looked at. There may however be valid reasons why the government hasn’t. A basic requirement for price discrimination is that arbitrage isn’t possible. It’s entirely possible that if this pricing structure was implemented people would just get around as locals would find ways to buy tickets (or whatever one does when they book a tramp on a doc track) and pass them onto foreigners at a profit. I don’t know about you but I personally feel a little uncomfortable with the idea of DOC staff checking passports on the trails. It’s also possible that tourists would resent the price discrimination and be put off, which would have the opposite effect.

But, if the reasons to not do it don’t stack up (i.e. it would be profitable), the government should be doing it independent of whether or not it cuts 140 jobs….

Trimming the fat at DOC

The second issue is whether it was efficient for these people to be employed at DOC. I.e. Is DOC “carrying too much fat”/would we be better off with these people serving some other role in the economy? This leads on the next question of analysing whether the social costs of firing them (unemployment/retraining etc..) outweigh any efficiency benefit.

And that is something which I can’t personally answer due to a lack of information. But I would note that if there is an issue of the structure of the hierarchy leading to “too many chiefs”, cutting staff isn’t really going to have much of an impact on service – and it should be taken into account. If this is the factual situation we are in, then the government keeping them employed is a form of welfare, which should be taken into account when analysing the social costs of firing them.

It is worth linking to this important point.

If it doesn’t hurt, you aren’t signalling.

Which reminds me about the advice we gave about gift picks last year!

In this sense the gift means more than just the sheer value of the present itself – it also provides information and signalling value that is used to shape the relationship for at least the next year.  The significant increase in breakups post-valentine’s day may in fact be a signal that sometimes individuals are not able/willing to do this to a sufficient degree.

So just remember as you pass over your gift today, that it will be seen as a signal of the relative value you place on matters inside your relationship that are not explicitly contracted – and if you get in trouble, I’m sure a good excuse would be to explain how they are misinterpreting this signal …

For me this is still key advice …

The surprising complexity of orange juice production:

Revenue Analytics consultant Bob Cross, architect of Coke’s juice model, also built the model Delta Air Lines uses to maximize its revenue per mile flown. Orange juice, says Cross, “is definitely one of the most complex applications of business analytics. It requires analyzing up to 1 quintillion decision variables to consistently deliver the optimal blend, despite the whims of Mother Nature.”

HT: Centives

As a result, I won’t be around to answer comments over the next few weeks.  If you really want to say something and get a response flick me an email – although I will only see that very occasionally.

However, I’m just pointing this out as an explanation for why I won’t be replying to comments – I still love you, I just can’t see the comments and so can’t reply

Centives blog