Jan
24
2012

Bleg: Shifting the demand curve for Phoenix games

So crowds for Phoenix games (the professional Wellington Football team) are struggling at the moment.  I was just wondering if you fine people had any suggestions – given that the majority of games are likely to be stuck being on Sunday’s, in what ways can the Phoenix shift the demand curve right cost effectively?

For me there are two main areas to look into:

  1. Integration with the community 1:  Letting kids in free (if they bring a paying adult) could be a relatively cheap way to get a greater amount of community integration, get the crowds up, and increase revenue.  The games are largely on a Sunday, so getting families involved is the way to go – this sort of idea needs a long term view, as the kids getting in for free will be paying in the future.
  2. Marketing:  People don’t know when the games are, and aren’t getting excited about the games.  Surely there are cheap forms of viral marketing that could help improve awareness and increase value?  To do this you need a clear idea of what the team “means” and what people “value” when going to the Phoenix – you aren’t just selling a game, you are selling more than that.
  3. Integration with the community 2:  Marketing it as part of the community.  It is a Wellington team, so we need to ask ourselves “what is Wellington”, what are some special parts of Wellington – and in what way can we integrate the Phoenix with that.  Wellington sees itself as “cool and edgy” – sort of like a mini-version of San Fransisco – so is there some way we can use a family friendly version of this concept to sell the team.
  4. Support Yellow Fever:  Surely Yellow Fever has some ideas regarding how to improve the environment within and prior to the game.  A supporters group needs support – it can’t be expected to build up everything by itself.  Now there is some of that going on for sure – but I’m sure there are ideas within Yellow Fever that could be more clearly articulated, and would cheaply add to the experience for potential game goers.

There is an underlying principal for all this to me – it isn’t as simple as some exogenous service that is watching a football game here, that won’t get much demand in Wellington.  You are selling an experience that depends on the size of the crowd coming in the first place – the people in the crowd value the community and the experience that is being provided by other people, and their actions, in the crowd.

Given that, you can only have larger crowds by having larger crowds – there is “multiple equilibrium”.  The only way to push ourselves into a state where more people come is to build up excitement and information outside of the games, and offer to work with Yellow Fever to create a dynamic environment inside the game.

Permanent link to this article: http://www.tvhe.co.nz/2012/01/24/bleg-shifting-the-demand-curve-for-phoenix-games/

Jan
19
2012

Rising inequality as a result of falling scarcity?

Via Marginal Revolution, there are a number of interesting slides discussing changes in skills, demand for skills, and wage inequality.  Further investigation brings to light a very awesome paper that discusses a standard model that shows wage inequality with different skills, how to estimate it, and where some shortcomings are.

In conjunction with our knowledge of what the data regarding the “top 1%” really means, this adds credence to the view that recent technological advancements that replaced semi-skilled labour has been a primary driver of changes in income distributions around the world.

What do I mean here?  Think of it this way, people are rewarded for their skills based on how relatively scarce the service they are providing is.  Say there are three types of labour service, unskilled, semi-skilled, and skilled.  If technology creates a cheap way of replicating semi-skilled work, and if workers in a certain category have the ability to function in any market below their skill cap, this improvement in technology would reduce demand for semi-skilled workers (due to them being substituted), increase demand for unskilled and skilled workers (due to the improvement in technology increasing “income”), and increase the supply of unskilled workers (as people who are semi-skilled are pushed to move into the unskilled labour market).

As a result, this technological improvement has the immediate impact of increasing relative incomes for the most skilled making wage income inequality greater.

Now these price signals are important, as they give people an idea of what skills to develop, and what industries they should move too.  However, in turn we can make a social argument for what falling scarcity implies that we should have greater income redistribution.

Furthermore, if rising income inequality is the result of improving technology it is far from the “end of the world” type scenario some people are painting – in truth we are all benefiting significantly from improvements in technology and falling scarcity for many goods and services, the benefits of this improvement are just accruing more to some than others.

Permanent link to this article: http://www.tvhe.co.nz/2012/01/19/rising-inequality-as-a-result-of-falling-scarcity/

Jan
18
2012

New blog: Test pattern

There is a relatively new blog around called the Test Pattern, that gets a few individuals together to debate specific public policy issues in written essays.

The current debate on the blog is around performance pay for teachers, one such discussion around its merit (or lack of) is given by Robbie Allan here.

What do I think?  I have no problem with performance pay in of itself, but it relies on low cost measures of performance.  In an area like primary and secondary school education, how observable are outcomes?  If we can’t observe actual outcomes well, performance related pay may in fact make outcomes worse – not just by leading teachers to fake results, but by convincing teachers to invest in the “wrong parts” of education.

Hell, when it comes to education do we objectively even know what areas provide the most value?  Until we really face the issue of what performance really is, the entire concept of “performance” related pay is relatively redundant.

Permanent link to this article: http://www.tvhe.co.nz/2012/01/18/new-blog-test-pattern/

Jan
17
2012

The sustainability of meat

There is an excellent post over at Offsetting Behaviour discussing the reasons why people go vegetarian, and discussing the separation of moral and allocative issues that lead to this choice.  The way I see it, there are three main reasons why a person may go vegetarian – these can be mixed and matched of course, they aren’t mutually independent.

  1. The person has an eating disorder
  2. The person gains disutility from eating a dead animal/causing the death of an animal
  3. The person gains disutility from the view that, given current institutions, the consumption of meat is unsustainable/damaging – specifically that the choice to eat meat lowers the lifetime welfare of future generations.
  4. Update:  Health, I forgot health – some people do it for health reasons.

Now I have recently gone vegetarian myself.  My reasoning was the second one.  This is strange given things I have previously said, I know -  implicitly I do believe that if the animal only lives because it is going to be consumed, and that the life it lives is a good one, then it is morally right to eat the animal.

However, I am viciously time inconsistent.  When it comes to the final stage of the animals life where it must die, I can’t handle the personal disutility I gain from the idea that the animal died to feed me.  As a result of my selfish choice not to eat meat, the animals I would have consumed never get to live those beautiful free-range lives that they deserved.  Not to worry though.

Anyway, I haven’t come here to discuss myself, I’ve come here to discuss the sustainability issue.

Is meat consumption sustainable in our finite world?

Lets note something down here.  Prices represent scarcity, as long as the “price is right” the consumption of meat is perfectly sustainable.  As Eric says:

There’s no need for a moral imperative to reduce meat-eating. Get rid of subsidies in the agricultural sector, make sure effluent externalities are properly priced or regulated, then let relative price adjustments take care of the rest. The optimal amount of meat will be eaten, so long as we keep waving our hands about the moral questions.

However, people who do not eat meat on these grounds have exactly the same argument.  They would say:

  • Meat is subsidised.
  • Externalities are not priced, regulation is not appropriate.
  • We discount the future too strongly, relative to what we believe is morally right.

Given these sets of factors people turn around and say “what can I do”.  With the price too low, there is a relative overconsumption of meat, an overutilisation of land into the production of meat, an excessive degredation of the environment.  In this context, it is completely consistent of people to say they will go vegetarian to deal with it – however, instead of complaining about the unsustainability of meat in of itself, it might be better that they say that the “price is wrong”.

I would argue that governments should come together and ensure that the worst of these issues are fixed, namely that subsidises on agricultural production are removed.  Then these people can get back to enjoying the consumption of meat, knowing that the higher price they are paying represents truly sustainable practices.

Permanent link to this article: http://www.tvhe.co.nz/2012/01/17/the-sustainability-of-meat/

Dec
25
2011

Economists: Born or trained

Although that is an interesting title, I’m not actually going to talk about anything interesting.  Instead, Merry Christmas everyone – and here is a cartoon from Saturday Morning Breakfast Cereal (again):

(ht SMBC)

Permanent link to this article: http://www.tvhe.co.nz/2011/12/25/economists-born-or-trained/

Dec
19
2011

Crisis over before Christmas?

With bond yields collapsing in Europe the implied “bank run” on the periphery appears to be over.  This is due to the ECB backstopping European banks for the next three years – in some sense they have taken on the lender of last resort role, just in a confusing, seemingly temporary, and poorly communicated way. Note:  Whether this is really “happening” is still an open question – we won’t have confirmation of this, or its impact on CDS’s, until tomorrow at the earliest.

This in no way means that the fundamental issues in Europe are over – in fact, it makes focus on the structural problems in Europe an essential part of what people should now be doing.

However, if the bank run really is over, and credit markets really are unfreezing (something we will know in the next couple of days), it is a positive for the short-term for a little country like NZ.  But lets not forget a few things:

  1. Japan, and now Europe, have shown us the vulnerability of public and private finances to changes in demographic structure – we ignore these issues at our peril, and with plenty of warning.
  2. Europe still has massive structural issues.  These still need to be solved, or we will merely have another crisis down the line.
  3. If Europe isn’t going to sort itself out, hopefully the rest of the world will see the risk and reduce their implied exposure to Europe.

Permanent link to this article: http://www.tvhe.co.nz/2011/12/19/crisis-over-before-christmas/

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