economix

7 Days

I’m watching vintage Anthony Bourdain — 2003 — and he’s in Vietnam and being very Anthony Bourdain.  He’s a fish out of water, but eager to learn; he’s caustic and classic but a much younger version of the person we see today. It’s fun to point a finger and say “ha, ha, isn’t he awkward!”, right up until he gamely eats the half-matured duck egg (complete with duck fetus) and can appreciate it as a culinary event instead of the classic “ew!” that 99.9% of folks I know would engender. Including yours truly.

It’s been a busy week.

A week ago tomorrow, I sat in a large dining hall at the Seattle Westin.  My brother and husband were there. My best friends were there. Some of my more colorful (and worldly) friends were there.  While I’d love to say they were there for me (and in a way, they were, and it’s wholly flattering), or that they were there for Team Read (and in a way, they were, and that’s wholly heartening), they were there for Nancy Pearl. Nancy Pearl was our guest speaker and let me tell you, it’s one thing to hear her on NPR. It’s quite another to see her in person. But of course, the real stars of the show were our teen tutors, who consistently impress me with their maturity and aplomb.  At that age I was snarfing pop tarts and hiding my grades from my parents. These kids are getting work experience and teaching 2nd and 3rd graders to read; they are looked up to not only by their tutees but also by a room of 300 adults, none with a dry eye at the end of their presentation. I’m proud to be a part of the Team Read team and looking forward to my next role as I step down from chair to secretary. And I’m eternally grateful to M who introduced me to this organization.

Last weekend, I had dinner with friends at my house — relaxing and informal; I also learned to do a gluten-free chicken parmesan (hint: garbanzo bean flour) and my sister’s banana nice cream (OMG coco whip is the secret!!)– and then on Sunday my best friend and I decided to do the Hot Chocolate 15k.

The Hot Chocolate 15k promises a lovely hoodie and all kinds of chocolate-based goodies along the raceway. It also sends you smack up the 99, up three hills, and back down them (and up them). We were walking (thanks to my recent injury) but it’s a small solace. It is 9.3 miles of sheer discomfort and as we got to mile 6 and saw the uphill slant of Aurora (the last uphill, right after you have shoved 3 or 4 chocolate marshmallows into  your face and you’re ready to play chubby bunny and you’re feeling pretty good and then you see the last, huge, uphill of Aurora and you want to say the F-word but your face is full of marshmallows) and remembered that type 2 fun doesn’t come easy. You cross the finish line, get your medal, and then get a cup of cocoa, some chocolate dipping sauce, and a bunch of stuff to dip into said sauce.

But Candie made it up to me, because we got to have breakfast at the 5Spot.

The 5Spot is in Seattle and I couldn’t find it on my own because every time I go to Seattle I get lost (this is not an exaggeration).  Our waiter had amazing purple lipstick and beautiful eyes and there’s a shirt there I like; the food was wonderful and the coffee was intense and I will go back. I also heartily approve of their attitude.  I ate and ate and ate and yet came home with leftovers (which the boy promptly ate).

Tired yet? I was, but it’s only Sunday in this chronology. Yeah, I’ll speed it up.

Monday and Tuesday was all day in an Economics class: take people whose WHOLE JOB it is to do research (with an economics or machine learning bent) and of course they are world-class (the class was run by Glen Weyl and Preston McAffee had a prominent course) and put them into a 3-day course (yeah, I only got three) and add in snacks and coffee and Q&A and stick a fork in me, I’m done. The syllabus alone is enough to make me jabber at the husband, who still gives me that little smile as he listens.

And so we find me at today. Wednesday.  I had an all-day conference on Leadership, full of those cringe-inducing group efforts that somehow were ok, and I find I am glad.  Still so much to do, but all in all a good week. There’s no big political missive here, or commentary on the state of things. Just gratitude.

Except for that friggin’ hill on Aurora.  I could do without that again. I don’t care how many chocolate marshmallows are in the offing.

 

 

That Sinking Feeling

Today’s economic topic will be the Sunk Cost Fallacy. A sunk cost is something you’ve spent money (or other investiture) on and you cannot recover said money (or investiture). The $4.50 you spent on a latte this morning is a sunk cost.  So is the $90 you spent on shoes last month. And, oddly enough, so is the “free” doughnut you ate this morning, because even though it was monetarily free, it wasn’t calorically free – you “paid” in terms of calories for the day and, assuming you weren’t near-bulimic afterwards, you cannot retrieve those calories.  (And even if you did attempt to purge, you are still dealing with a sunk cost).

Generally speaking, it doesn’t make sense to take into account sunk costs when making a decision for future investiture – e.g., whether or not you spent $4.50 on a latte should not impact your decision as to if you will be buying a latte later today. You’ve already spent the money and can’t recoup it, so factoring in the presence it *would have* made in your budget is specious, you need to look at where your budget stands now. But humans don’t tend to work this way due to loss aversion.  They tend to frame an overall project to include what has been spent as well as what will be spent (time, effort, etc.) and look at it on the whole rather than what is left. One of the oddest presentations of this I am most guilty of, as are, I suspect, many of my friends: the Sunk Cost Doughnut.

I seem to be focusing on doughnuts, and this is because I had one today.  I am supposed to be watching my weight (I’m currently watching it nudge up) and today someone (Ms. Krieant, to be exact) brought in Top Pot Doughnuts, which may in fact be my favorites.  I have a workout buddy who insists that you can eat whatever you want as long as you work out enough and he is right, but he is also 25 and has been through OCS and it’s not enough for him to do pull-ups, he has to do them with a 50lb-weight strapped to his stomach. His and my mileages tend to vary.

sprinkles

mmmm doughnuts

At any rate, today I ate one (1) Chocolate with Rainbow Sprinkles doughnut, at a caloric cost of 510 calories. That would be 1/3 of my supposed day’s calories, and so it is really, really hard not to take into account my sunk cost (doughnut/510 calories) and say “well, I’ve screwed up the diet today, so I will just start again tomorrow”. On the whole this is NOT logical because in theory I can pay attention to my caloric budget and be “good” for the remainder of the day, and only come  in a “little” over budget.  If I frame my caloric choices in light of the Sunk Cost Doughnut, though, and eat whatever I want,  I would come in drastically over budget.

A suggested method by economists is to evaluate future costs and avoidable future costs to establish the true prospective cost for the day (E.g., I must have some form of dinner (future cost), it probably shouldn’t include bread or fat (avoidable future cost)).  And so, as I use my “MyFitnessPal” app and truthfully admit to my 510 calorie digression, I sit here re-evaluating my planned caloric expenditures for the day.

They’re serving birthday cake down the hall.

Sporting

NB: I may have previously mentioned that I’m not “into sports”, by which I mean I have not followed football or baseball or basketball teams. It’s only just recently that I’ve figured out when those seasons start and end, and that I have learned the rules of football (thanks to a SuperBowl party and the fact that my region’s team was in the SuperBowl this year. As the kids say, “Go Hawks!”) This post will therefore be unusual that it deals with sports. It will not be unusual in that it deals with gender perception and economics.

This past Wednesday some 700 thousand plus people descended on downtown Seattle to celebrate the Seahawk’s winning of the SuperBowl. Busses were jammed all morning, many folks did not go to work, kids skipped school; this was all for the privilege of standing along 4th Avenue, in the cold, hours on end, for a parade that ironically started late because those in the parade couldn’t get to their starting point because of all the people.

The parade seems to have made many people happy; my Facebook was replete with happy family photos of smiling, green-and-blue-dressed people, plus blurry photos of those in the parade. Everyone seems to have had a good time.

Nestled in that timeline, though, was a comment (actually two, from two different people), that the Seattle Storm (our local female basketball team) won National Championships twice, and no parade was had for them. (It should also be noted that the Seahawks paid for their own parade. )

In reviewing those comments the implication is, I think, that because it was a women’s team that won previously they were not “good enough” (not my words, just what I’m inferring from the context of the statement) because they were female. It doesn’t help that articles like this announced that the last time Seattle had earned a national title was when the Sonics won in 1979 (considerably before the Seattle Storm’s victories of  2004 and 2010 ). Forbes went so far as to acknowledge them and indicate they weren’t “counting” them. And yes, when the Sonics won in 1979 a parade was had.

There are two culprits here: sexism and economics.

Let’s take the simpler one: economics, specifically the concept of Supply And Demand. More specifically, there are demand differences between Women’s Basketball and Men’s Football. (It would have been nicer to have a Men’s Basketball team to weed out the gender variable, or a Women’s Football team, but alas we lost the former and the latter doesn’t really appear to exist except for the Lingere Bowl).

The Seattle Storm plays in Key Arena which holds  slightly over 17,400 seats; they play 34 games per season. 16 of those games are played “home”.  Ticket prices range from $16 to $155 with a mode of $28.  Let’s further say that 20% of anyone at an “Away” game is there for the Storm, and 80% of anyone at a “Home” game is. However, the Storm doesn’t actually sell all of the seats in Key Arena (they block off a portion, and they don’t often sell all the seats that are unblocked). 9,600 seats are actually available to sell and at times The Storm sells about 50% of those. Let’s assume similar seating volumes at away games, and or the purpose of this hack math, let’s say half of the time they’re at half, and the other half of the time they’re sold out, for a blended average of 75% capacity. So a back-of the-envelope dollar value for interest in The Seattle Storm would be about (9600*.75*.8*28*16)+(9600*.75*.2*28*18)= 2580480+725760=$3,306,240. (This obviously doesn’t include sponsorships, swag sales, etc.)

The Seattle Seahawks play in Century Link Field (the Clink) which holds about 68,000 seats and the Seahawks had sold out every one by July. The average ticket price was $220, they had 17 games in their regular season, and had 62,000 season ticket holders. Let’s just stick with the season ticket holders, as that is cash up front. (17*62000*220)=$231,880,000. (This also doesn’t include sponsorships, swag sales, etc.)

In short, there is a purchase-behavior disparity of 7000%.

That disparity is driven by not only volume (the Clink seating is 7x the amount in Key Arena used by The Storm), but also by price (average ticket price for the Seahawks is larger than the HIGHEST ticket price for The Storm).  Even if The Storm were to sell 100% of the available seats in Key Arena, they’d fall very short of economic comparability to the Seahawks in terms of fan fiscal investment.

But this isn’t telling us anything we didn’t already know: the demand for entertainment via male football is much greater than the demand for female basketball. The Sonics left in 2008 and their ticket demand is 44,000 season ticket holders, meaning that even if they sold at the same price as The Storm they would still outsell on overall ticket volumes. And so we can infer that demand for entertainment via male basketball is greater than the demand for female basketball.

And so we segue into sexism: essentially that people are making economic demand decisions based on gender preference in sports.  As a society we tend to like our sports hyper-competitive, confrontational, metricized and self-aggrandizing. Nowhere is this more evident than how we idolize the players, how we purchase team jerseys and say “us” vs “them” when talking about upcoming games. “We won”, “they lost” is how games are summed up; followed by an earnest delve into strategic review of plays, the metrics and statistics behind those plays, and player strength.

These are not things we encourage in our girls. Much has been made of now-pink Legos and Goldie Blox, of Sheryl Sandberg Leaning In and the overall interest in getting More Girls into STEM. We enroll our daughters in soccer just as readily as Girl Scouts, we tell them they can be anything when they grow up. A girl who is hyper-competitive though is deemed less attractive, a girl who is confrontational is deemed a bitch. (Let’s not even touch self-aggrandizing). Women’s basketball is not televised nearly as much, or touted as often, as men’s.

We make these choices, and display our preferences, by our societal expenditure. The Seattle Storm will have a parade when the larger group decides that the athletic achievements of women is as representative and worthy as that of men, and that will have to come from increased ticket sales, which will in turn have to come from increased demand.

Economics and the Power of Hindsight

I recently found myself on a direct flight, courtesy of Delta, from JFK to Seattle. Having thrown out my back (technically dislocated two rear ribs), and not slept well the night previous, I was tired and cranky as I checked in. For most travelers, checking in means using a kiosk or online app, which in turn peppers you with questions like “do you want to check your bags?” and “do you want to upgrade your seat?” As I had arrived at SeaTac on the way to JFK in pretty much the same state, I made some fiscally dubious choices on the way out, and on the way in. Here you get to learn from my mistake(s).

First, the way out: it was 5:30AM when I got to Airport Road and my flight left at 7am. I did not intend to check my bag, so that was a blessing, but I figured security would be awful (I was proven right). Therefore I opted to park at the airport rather than offsite as per usual, saving me the shuttle ride to and from the airport but costing me (it turns out) about $36 more for this trip. The verdict? Nice, but not worth it. It was nice not having to hassle a shuttle ride, and being able to pay a machine on my way to my car and just drive away, but it wasn’t $36 nice and I would’ve made my flight despite the long security line. I didn’t check my bag and I had already checked in online the night before.

Now, on the way back: it was 4:30AM when I arrived at JFK and had 3 hours to kill. My back was aching and my sleep had been nonexistent, and so I both checked my bag ($25) and upgraded to Comfort Economy (or Delta’s equivalent), for $39. (NB: each time you use the kiosk to do a transaction, you run your card for EACH PART of the transaction and get a receipt for EACH PART of the transaction. Not efficient.) The results on this are mixed: the bag check was totally worth it: for the remaining 2.75 hours I had post-security, I didn’t have to lug around a heavy bag (just a heavy laptop) and it was one less thing to have to manage from seat to coffee shop to seat to other coffee shop (there’s not a lot to do in JFK at 5am). I didn’t have to fight anyone for overhead bin space and could plop right down into my seat. Verdict: worth it.

That said, “Comfort” Economy is a joke. I had a window seat, which should have been a lot more comfortable, but it wasn’t. My knees hit the chair in front of me (I am 5’10” in flats) and the seat appeared as narrow as the “regular” Economy seats. The sole nod to comfort that I could see was that the attached-to-the-seat pillow was slightly plusher and of a lighter color leather. For $39 I wasn’t expecting first class, but an inch or two more of legroom and a nicer chair would be good. Verdict: so very not worth it.

Delta has free-first-bag bag check with certain levels of flight status/mileage membership and/or their credit card. I get a similar deal on United and it’s nice.  The question becomes if I’m willing to pay $25 for the privilege of checking my bag, would I pay the same (or more) for guaranteed overhead compartment space?