jamesz

Carrying cash is good for your wallet

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I was surprised to read that are willing to pay more when they pay by credit card. Apparently they actually have a higher willingness-to-pay if a credit card is used, relative to a cash payment. Freakonomics reports an instance where a beggar made more money than ever by just holding a sign which solicited credit card donations online!

I’m baffled as to why people would pay more by credit than by cash. Does spending just feel more tangible when you have to hand over a wad of cash? If so, I wonder if EFTPOS encourages more spending than cash!?

jamesz

On the proliferation of confusing labels

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Ezra Klein channels his econ-geek and laments that price signals don’t tell the whole story these days:

…we hope that prices include the relevant information. That’s been the goal of the environmental movement’s effort to build the cost of carbon emissions into the price of goods. Rather than asking each consumer to act as a climate scientist when wandering through Costco, the climate change community is trying to let them act as a consumer.

It’s a fair point. These days we can promote labelling and the dissemination of information, but all information processing takes time. What’s the difference between free-range, organic and eco-friendly eggs? Does the SPCA standard mean they’re free-range or just that they’re not battery hens? Is organic meat humanely slaughtered? Were the cattle raised on a farm that pollutes the local stream? Read more

jamesz

Legalising drugs

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At Obama’s recent online town hall meeting the most popular question was whether he favoured legalising marijuana. There are plenty of persuasive arguments in favour: the revenues from sales tax and taking drugs out of the hands of gangs to name but two. It was suggested to Obama that taxation of marijuana might be a good way to put a dent in the budget deficit! Of course, there are negative externalities in terms of health costs and negative internalities from addiction (OK, that’s more contentious). According to drug and alcohol rehab centers, one of the worst side effects is addiction, which can also lead to death in extreme cases.

Recent posts here have shown commenters to be against regulation where no externality can be shown. My question is, if the externalities are removed via taxation, is there any good reason to ban drugs? Can the harm from them ever be so high that banning them doesn’t markedly reduce welfare? Here we also need to bear in mind the extreme highs that result from taking drugs and their positive effect on welfare. Read more

jamesz

John Key: big government conservatism?

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Yesterday Nick Smith was thinking of taxing plastic bags. Today John Key threatened legislative intervention in an employment dispute. Now the government’s planning to spend $1.5b on telecommunications infrastructure. Now I’m not necessarily opposed to what they’re doing, but they do seem awfully interventionist for a right wing government.

How do people that voted for limited government and a retreat from the recent years of big government feel about all this? Is John Key living up to his promise to pull back from the days of the government ‘meddling’ in people’s lives?

Matt Nolan

The assault on homo-economicus

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Interesting article proclaiming the end of “homo-economicus” (ht Economist’s View).  This is an issue I care about a lot – so one day I’ll attempt to discuss the article in some detail.  Today however, I’m just linking to the article and waiting to see what interesting comments you guys have about it 😉

It also reminds me of this awesome comic from XKCD:

_

Source XKCD

Will Taylor

Aligning tax rates (again…)

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As a brief follow up to my previous post saying I’m glad that the government intends to align the top tax rates, this article I just read illustrates why I think it is stupid having different top tax rates.

I particularily liked the reference to “dopey politicians” 🙂