Paper Topic

I am doing my paper topic on the economics of competitive balance in professional basketball, and would like to look into the effects of individual players production effects on overall revenue

Paper Topic: Willingness to Pay for ASU Wind Turbine

My proposal will analyze the willingness to pay for the ASU Wind Turbine. This will include multiple independent variables that lead to a person(s) willingness to pay.

I will be using available data collected through surveys. I want to see how much students in particular are/were willing to pay and what exactly increased or decreases this variable.

I was lightly involved in the REI project that put this into place and this would be a great chance for me to revisit this data.

Paper Topic: Determinants of Economic Growth

My proposal will possibly analyze different independent variables that can contribute to countries economic growth.  I will refer to the Solow Model and focus on convergence.

Paper Proposal: College Football Revenue Determinants

For my senior seminar paper, I plan on estimating the determinants of college football revenues for universities. Appalachian State recently conducted a feasibility study about moving from an FCS (Football Championship Series) conference to a BCS (Bowl Championship Series) conference. In order to justify ASU's move into a BCS conference, the university needs evidence that the program will bring more revenue to ASU.

I plan to use available data to measure how variables such as conference affiliation, ticket sales, etc. affect fan attendance and revenues of a college football team. I want to determine which variables are the most important in determining revenue and attendance, and if these variables are different between FCS and VCS schools.

Paper topic: Compensation and promotion differences between men and women.

We talked about this topic a little when we discussed the first survey we took for class. I am really interested in this, and hopefully I will be able to find data that points to the reasons for the differences in compensation other than differences in productivity and career choice. I would also like to look at this data over time to see how/ if the reasons have changed and how that has affected job choice for each gender. It might also be interesting to include some data on how people perceive the differences and what they think the causes are.    

Determinants of Income

Income is often a significant determinate of many economic decisions. The determinants of income itself are just as important.  My research will use the current population survey (CPS) to look into some of these determinants of income for various demographic groups. The CPS is a very large, but accessible data set with a massive amount of information on economic activity.  I'll dig through it using regressions and hopefully come up with some compelling results.  

Paper Topic: Recreation Demand and Economic Value of Rocky Knob Mountain Bike Park

There are some interesting strategies utilized to measure the economic value of public recreational facilities.  At face value, it is hard to really grasp what they do for the local economy:  They don't bring in revenues (unless there is a use fee), they don't create many permanent jobs, and most of their benefits are hard to quantify.  Nonetheless, public recreation parks and facilities provide value to the community.  It is my research proposal to measure the demand and economic value of the Rocky Knob Mountain Bike Park.  Utilizing data from last semester's Benefit-Cost Analysis class, I will create a demand function and measure the consumer surplus provided by the park.  In addition, I will conduct a sensitivity analysis to see how a change in some variables affects the overall value of the park.

Happiness Economics

At this point, my topic for my paper is still pretty vague, but I have the general direction figured out.  I am really interested in the idea of happiness economics and the different things that are related to that.  Most of the articles that I have been looking into about this topic talk about the positive linear relationship between income and happiness.  What I would like to be able to do is not only test that idea, but also try and show the potential relationships between other economic factors and overall happiness.  In addition, I would like to show the different strengths of the different factors in these determinants.  Currently, I'm working on figuring out what kind of data is available in the research of happiness field and from there I will figure out what exactly I can do with that data.

Economic Indicators and Congressional Elections

Earlier in class, we read on the Five Thirty Eight blog about trying to predict the outcome of Presidential elections by using economic indicators. This was an interesting study, but it was limited in scope because of the fact that Presidential elections only occur once every four years. I plan on increasing the scope of this study by looking at Congressional elections (House and Senate). I will be looking to see if the same economic indicators used in trying to predict the Presidential election are effective in predicting the outcomes of Congressional elections. With 435 House elections every two years and about 33 Senate elections every two years this vastly increases the number of observations. If I start from the year 2000 and continue through the 2010 elections, I should have about 2800 observations. Hopefully, the increased number of observations will allow us to see if national economic indicators have any effect on the outcomes of elections.

The Impact of Additional Trail Access and Mileage on the Consumer Surplus of Greenway Trail Users in Western North Carolina

My senior seminar paper will measure and quantify the benefits of the Town of Boone’s Greenway Trail system and determine the benefits of expansion via additional trail mileage.  The Greenway trail currently has a 3.0 mile long paved section and additional unpaved trails that attract walkers, joggers, and cyclists.  Currently, there are two proposed extensions to the Greenway trail.  These are the South Fork New River and the Middle Fork New River extensions, each of which will add 0.5 miles and 7.4 miles, respectively.  The data was collected by means of a survey administered to a random sample of Greenway trail users between Memorial Day and Labor Day.  After collecting a sample of e-mail addresses, the survey was sent to the participants.  The survey questions were designed to indicate stated preference and revealed preference.  Stated preference of participants was captured by asking questions that will indicate contingent behavior and contingent valuation.  That is, asking people how their behavior will change given different situations and what their consumer surplus is given changes in situations, respectively.    On the other hand, revealed preference is determined from other information users provide, such as distance traveled to use the Greenway.  After collecting data from the participants, regression analysis will be used to test demand theory and the travel cost method to determine whether change in quantity leads to a change in the number of trips (x). From this data, I will determine if expanding the Greenway trail will have a positive impact on consumer surplus.  

Political Party Impact on the Economy

There has been a continuing debate over which political party benefits the economy the best.  The Republicans claim that their free market ideology effects the economy best while the democrats pro-government over-site ideology is best.  I plan on taking the top economic indicators (gross domestic product, gdp per capita, etc.) and comparing them to the party affiliation of the House of Representatives, Senate, and President (using a dummy variable to tell whether they are Republican or Democrat.)  I'll then put all of the data into one and compare all four regressions. 

Seminar Paper Topic: Economics of Sports

My topic is kind of vague right now because I have to make sure I can find the proper data, but I would like to to my topic on something to do with Sports Economics.

In particular I would like to look at the economic impact of the UEFA Financial Fair Play Rules being implemented into the international soccer stage at the club level.  The Financial Fair Play Rules focus primarily on limiting club's outrageous spending and force them to run on an economically efficient model rather than buying new players every year and going deeper and deeper into debt. 

Financial fair play measures will be implemented over a three-year period, with the break-even assessment covering the financial years ending 2012 and 2013 assessed during 2013/14, and starting with the assessment by the Club Financial Control Panel of all transfer and employee payables in the summer of 2011.

I hope to analyze and estimate what effects this will have on the competitive advantage level of overall competitiveness as well.  If this particular topic can't work out I would be open to doing anything else in the Economics of Sports area.

Link:  http://www.uefa.com/uefa/footballfirst/protectingthegame/financialfairplay/index.html

Economic paper topic: Economic Impact study of Music on the Mountaintop

Music on the Mountain top has gained momentum and popularity as a music festival and has only been around a few years. It has state wide recognition and maintains its Appalachian roots by featuring Blue grass and Folk bands such as: Sam Bush, Railroad earth, Possum Jenkins, Yo Mamas Big Fat Booty Band, Frontier Ruckus. Some local bands have also made it on the scene such as the Major Sevens and Do it to Julia.

I am currently emailing Jimmy Hunt about his willingness to provide an email list of attendees to the event. Once I can get the list I will be able to move forward with my project. I believe the information I can provide to Jimmy will be extremely valuable for him in planning/advertising for next years event.

Climate change and outdoor recreation

An example paper idea:

Climate change can have significant economic impacts on local economies due to changes in outdoor recreation patterns. For example, the North Carolina ski industry could be wiped out if winters become milder. My initial research idea is to investigate the effects of climate change on recreation participation. I plan to use one of the available recreation data sets and temperate data to see how recreation behavior is affected by temperatures. I'll then simulate changes in temperature to see how recreation behavior changes.

This is interesting if you are interested in an economics of happiness paper topic (and even if you aren't)

Jodi Beggs:

Economists talk so much about a theoretical, perfectly rational and calculating economic man that it's easy to forget sometimes that economists themselves are, in fact, human. The New York Times did a good job, however, of presenting the human side of Betsey Stevenson and Justin Wolfers, two prominent economists at the Wharton School at the University of Pennsylvania. To make things even more adorable, the two economists have a domestic partnership as well as a professional one, and much of their research centers on, you guessed it, the economics of the family. It's a good read, especially if you've ever wanted to understand how economists incorporate what they've learned from their field into their daily lives.

An easy opportunity for your seminar grade

Quote: Tuesday, Feb. 21, “Economics of Happiness” discusses a world of duality where big business and government are at odds with people all around the world demanding a re-regulation of trade and finance. This film documents communities coming together to create a new paradigm of localization.



The Economics of Happiness - Official Trailer from The Economics of Happiness on Vimeo.

Sprint Through the Finish Line: At a Loss

The article I am referring to is one dealing with Sprints widening loss over the last year. The ironic thing about it is that Sprint is increasing its loss by selling more iPhones. All of the 3 big wireless providers (Verizon, AT&T and Sprint) purchase their iPhone supplies from Apple via Cupertino, California. However, the money that they are paying for the phones is actually more than they are able to sell the phones for, theoretically. The reason for this is so that people will purchase multi-year plans as well as keeping loyal customers on board. If they were to not supply the iPhone, many customers would probably  venture to new providers that did supply the iPhone. So while Sprint is keeping its customers happy by providing the iPhone, they are actually experiencing a net loss of $1.9 billion dollars, or .45 cents a share. This was expanded from the previous year. Another reason for Sprint's addition of supplying the iPhone was in attempt to cover from 5 years of losses. So while they are reporting an increase in total customer gains (or subscriber gains), they are still selling the iPhones at a loss, which can make me think that while they are clearly trying to increase their customer base and recover from previous losses in the present, they are looking more toward the future where they will already have a large customer base and will hopefully be able to start selling the iPhones at a profit. Interesting situation that a company would literally dig the hole deeper, not knowing 100% if they will be able to start filling the hole up again in the near future.


Article Link:  http://www.businessweek.com/news/2012-02-08/sprint-loss-widens-after-iphone-demand-boosts-subsidy-costs.html

Gather Your Apples

The article I am referencing describes increased demand for tablet PCs for the holiday season, but the general demand has been on a steady rise over the past year.

If you are looking to buy a tablet PC these days, every electronic company and their mother has some kind of offering. This is a niche market that is trying to slide between laptop users, and mobile device users (iPods etc.). These tablets are more portable and less productive than a laptop, but more productive and less portable than an iPod. They are glorified multimedia devices.

Despite these products taking a strange place in the mobile computer spectrum, the demand has more than tripled in the last 14 months or so. A survey conducted in Nov. 2010 found that about 4% of people were going to buy a tablet over the holiday season to a more recent 14% in Nov. 2011. The iPad, which is Apple's offering to the tablet PC market, has revolutionized the market. The iPad almost created this market on its own. The demand for the tablet PC, especially the iPad is skyrocketing.

According to Strategy Analytics, 26.8 million tablet PCs were shipped last quarter, up a whopping 150% from the same time last year. Further more, the iPad offered by Apple dominates the market with 58% market share. That leaves the competition in the dust with the other 42% being shared by 10 or so other companies. This all illustrates the unique business opportunity that is presented when a niche market blossoms. If you have a good product to offer (Apple!) then demand for your product can take your profits sky high, as long as you are able to supply. There was a shortage of Apple iPads this holiday season.

Will this "Apple" tree ever stop bearing fruit?

Article: http://www.bgr.com/2011/11/21/tablet-demand-triples-ahead-of-holidays-two-out-of-three-buyers-want-apples-ipad/

A Changing Market for Video Games

In the past few years, the overall market for popular video games has been expanding rapidly.  With the technological advances in mobile phones and other handheld devices, such as tablets, the gaming industry has started to have many new, easy to access substitutes.  Many of these new substitutes tend to focus on the market of the casual gamer, someone who is looking for a simple to understand game for a cheap price.  These casual gamer can now go to the App store or the Android market and, for sometimes as little as 99 cents, pick up a popular and fun to play game.

What does this mean for the big name video game companies on the market?   For the more traditional video game companies, such as Nintendo, this is starting to cause them some problems.  No longer are people as willing to spend the asking prices for the consul games when there are these close substitutes for such a drastically lower price.  In January, Nintendo announced that this was its worst financial year since the company started around three decades ago.  

In order to help create a larger market for their consuls, video game companies are starting to focus not just on the game playing, but on adding enticing features, like movie capabilities, to the consuls to attempt to regain a place in the market.   The new Wii U, which is scheduled to be released soon, will have features like a wireless credit card reader in order to attract the online shoppers. 

Will the expansion of their uses help secure a niche in the market for these consuls or will the video gaming industry be forced to lower prices in order to be more competitive with their much cheaper substitutes?

Source:

http://www.businessweek.com/magazine/nintendo-needs-a-hit-in-a-hurry-02022012.html

Mixed Amphetamine Salts Anyone?

In 2011 many users of the stimulant Adderall arrived at their local pharmacy intending to refill their totally legitimate prescriptions, but instead returned home empty handed (or having snorted their last 20mg, phoned and/or drove to every drugstore within a 200 mile radius only to discover that they too were out of the drug). Adderall is generally prescribed to individuals that suffer from ADD/ADHD which the diagnosis of and by extension the prescriptions written for have gradually increased over the last decade creating steady demand growth. 

Unfortunately Adderall or rather the active ingredient “mixed amphetamine salts” is a schedule II controlled substance (along with cocaine and opium). This means the quantity supplied is set by the DEA at levels that they deem appropriate. Once again for 2012 many pharmaceutical manufacturers are warning that the DEA may have severely undershot the equilibrium quantity.

Fortunately Adderall is not the only methamphetamine derivative used to treat ADD/ADHD, it has substitutes! Ritalin (Methylphenidate) and Vyvanse (Lisdexamphetamine) are two popular equivalents that have both seen a rise in demand and experienced some shortages of their own in response to the under supply of Adderall. Another notable boon to Adderall users is its price. Adderall has not been under patent protection for some time, but the introduction of a generic version didn’t cause a price decrease. This miraculous feat was probably facilitated by inelastic demand in conjunction with supply levels set by the DEA.

Conclusion

Central planning still sucks.

source: http://www.reuters.com/article/2012/01/01/us-adhd-adderall-shortage-idUSTRE80009E20120101

The Battle for Fossil Fuel

Iran controls a large supply of the world's fossil fuel and is a major player in the OPEC cartel. OPEC is arguably the most infamous cartel organization and has major influence on the price of oil worldwide. Oil prices grew to a high of $98 per barrel Tuesday with the news that Iran plans to cut off Europe's supply of crude oil in the near future.

The European Union has established plans to implement an oil embargo against Iran this summer in effort to pressure Iran to abandon its nuclear energy program. Iran is hoping to speed up the process of detachment by threatening to cut off the EU's oil supply before the sanctions take effect.

There are multiple supply and demand shifts illustrated in this article.. If the EU loses Iran's supply of oil, the nations will need some time to find new oil suppliers to keep the price of oil at equilibrium. Iran announcing that they will limit the supply of oil shifted the supply curve to the left, causing a raise in price.

The government announced that that the number of available jobs in the United States jumped to a three year high in December. Consumer borrowing has also increased significantly. These two factors contribute to increased consumer spending, which shifts the oil demand curve to the right and in turn raises the price of oil.

However, the article also says that Americans are starting to use less gasoline. A MasterCard survey estimated that US gasoline demand is around 5% lower this year than it was last year. This could be explained by the fact that oil prices have reached a point where people have begun to look for substitutes.

Link to article: http://www.google.com/hostednews/ap/article/ALeqM5jeblknRmhkZtgLyZ7HGu9lYcq4cg?docId=a1c13fb26eac4ca3ae132b25b3f70849

The World May Be a Whole Lot Sweeter in 2012

Although it may seem like a product that many people cannot get enough of, many are forecasting a major sugar surplus this year and next.  The estimates are that sugar supplies will outpace demand by more than 9 million metric tons.  That means that there will be a surplus in raw sugar worldwide during the next year.

That will have dramatic implications all throughout the market.  Anything that uses sugar in its creation will likely see a price decrease.  That of course is a great thing if you have a sweet tooth.

Although there is a surplus in the supply of sugar, it is not due to any sort of decrease in demand.  The demand of sugar has increased annually by a rate of 2.2% for the past decade worldwide.  Some estimates put the demand growth rate jumping to 2.7% in this next year.  Therefore, demand is actually increasing at a faster rate than any time before.

Due to the increase in sugar being higher than the increase in demand, there will be a surplus in the market.  As both factors increases, both curves shift to the right.  That implies a higher quantity of raw sugar in the market worldwide, but at lower prices (due to the surplus).

Although the article never specifies what causes the surplus, it may be assumed that the supply was driven up by either technology or lower production costs.  This means that the producers are becoming more efficient at what they do.  Therefore producing more product.

Source: http://www.businessweek.com/news/2012-02-07/sugar-faces-a-big-surplus-lower-prices-coca-cola-says.html

North Dakota’s Oil is Fracking out of control

North Dakota is experiencing a tremendous boom in their economy and boasts the lowest unemployment in the nation (3.5%). While it is virtually envied by every other American state, it has brought headaches to those outside the benefits of the oil boom and affluence to those benefiting from the growth. The state is now the third largest producer of oil behind Alaska and Texas. This is because of the newly developed “fracking” technology that has recently allowed drillers to access the Bakken oil field, which takes up one-third of the entire state. One of the main issues is the population explosion affecting the states infrastructure, price inflation, and lack of housing.

With town populations literally doubling in a year has left municipalities strained to keep control and build enough housing to support the explosion. Many towns never have had to worry about zoning or city planning because the population/economy was so stagnant. Housing is in such demand that a city administrator who owns a four-bedroom house sleeps in one bedroom and rents out the other three at $800 a month each. With oil rig employees making $90,000 a year it has increased product prices in the area. Local residents in the area not involved with oil have to pay $7 for a gallon of milk, which is proving a burden and making some residents abandon their homes. A radio station in Tioga has recently closed and turned the property into a lucrative opportunity: an RV park. A new two bedroom apartment will go for more than $1,200. The low supply of housing is causing the demand curve to shift right, therefore increasing prices tremendously.

Source: http://www.boston.com/news/education/k_12/articles/2012/01/27/western_nd_officials_detail_oil_boom_problems/

http://www.npr.org/2011/12/02/142695152/oil-boom-puts-strain-on-north-dakota-towns

http://www.governing.com/topics/energy-env/north-dakotas-oil-boom-blessing-curse.html

Hollywood's Influence on Local Book Sales

Recently over Christmas break, I began reading The Girl with the Dragon Tattoo book series by Steg Larsson.  My mom convinced me to read it so we could go see the movie together.  Needless to say we never actually saw the movie because she reads at a much slower pace than myself, but I really enjoyed the series thus far.  Earlier today I was out and about in Boone trying to find a copy of The Girl Who Kicked the Hornets Nest, the third and final book in the trilogy, and I found out that literally every book store around town was sold out of not only this particular book, but the second book in the series as well, The Girl Who Played with Fire.  The only book I could find in any store was the original book that just recently was made into a major American motion picture.

I couldn't help but also notice a trend among another popular series that is soon hitting theaters, The Hunger Games.  When I was exploring Wal-Mart earlier today, literally half the books in the literary section was the first book in The Hunger Games series.  As I was pondering about what to write about in my post, I thought that this particular issue would provide a great modern day example of supply and demand.

When a popular book series hits theaters, I think we can all agree that the demand for whichever book is being put on the big screen is obviously going to dramatically rise, as seen with the two previous examples I talked about.  Thus there is obviously going to be a huge increase in the supply as well.  However, what I think many book retailers (besides online) have underestimated is the increased demand there is for additional books in these series.  Maybe a lot of other people wait to read the next book in a series until right before the movie comes out, but it seems to me that they would at least expect a higher demand for the series in general.  My basic point is here that I greatly feel local book retailers highly underestimate the book supply they feel they should carry with the other books in a series.  Obviously they will account for some increase in demand, but in this case it has been clearly underestimated.  Another point you could argue is that as a book's movie release draws closer, obviously the demand level for that book is going to increase at a higher rate.  I think larger retailers understand this, but the local book stores should understand this a little better.  If they did, I think they would get a little bit more business instead of having consumers turn to online retailers as an alternative.

An article I found on the Harry Potter series helps me reinforce my point on the demand for book sales around the release of a movie, but I felt some everyday insight might be applicable here as well.

Article: "Deathly Hallows’ film Breathes Life into Harry Potter Book Sales"

Krugman on the jobs report

Things are not O.K.:

So, about that jobs report: it was genuinely good, certainly compared with the dreariness that has become the norm. Notably, for once falling unemployment was the real thing, reflecting growing availability of jobs rather than workers dropping out of the labor force, and hence out of the unemployment measure.

Furthermore, it’s not hard to see how this recovery could become self-sustaining. In particular, at this point America is seriously under-housed by historical standards, because we’ve built very few houses in the six years since the housing bubble popped. The main thing standing in the way of a housing bounce-back is a sharp fall in household formation — econospeak for lots of young adults living with their parents because they can’t afford to move out. Let enough Americans find jobs and get homes of their own, and housing, which got us into this slump, could start to power us out.

That said, our economy remains deeply depressed. As the Economic Policy Institute points out, we started 2012 with fewer workers employed than in January 2001 — zero growth after 11 years, even as the population, and therefore the number of jobs we needed, grew steadily. The institute estimates that even at January’s pace of job creation it would take us until 2019 to return to full employment.

Making Some Coin

There has been a recent increase in the purchase of gold and silver coins in the past few weeks as investors and collectors take advantage of the lower prices of precious medals. In December of 2011 the price of gold fell to $1586.90 an ounce, marking the lowest price it had reached in several months. Analysts blamed the fall partially on yearend profit taking and partially on the falling euro and anxiety in the market saying that “investors sought cash as the safest asset.”

Regardless of the reasons for the lower prices, investors are taking this opportunity to buy gold coins causing the demand for coins to increase. Other than the recent fall in the price of gold, the sudden interest in gold coins is attributed to continued skepticism in the market and investors wanting something more reliable and liquid to invest in. The price of gold is expected to rise back to previous prices due to this recent renewed interest in the market, and as professional investors see that there is still an interest in this market. It is possible that as we see gold prices increase more and more due to higher demand, that demand in the gold coin market may fall back down. 

Video: http://online.wsj.com/article/SB10001424052970203363504577187093539644160.html?KEYWORDS=gold+and+coins#articleTabs%3Dvideo

Article: http://online.wsj.com/article/SB10001424052970204026804577098262910926568.html

           

Paying More for Peanut Butter

If you enjoy your peanut butter and jelly sandwiches, you might be seeing the price of at least one-half of the sandwich rise. The peanut crop last year was less than stellar and has caused the supply to drop severely. The lack of rain combined with higher than typical temperatures caused a sub-standard crop that caused fewer peanuts to be used for peanut butter. This combined with farmers devoting less of their land to peanuts has caused a decrease of 17% in the peanut crop.

This decrease in the supply of peanuts for peanut butter has drastically increased the price of peanut butter. Manufacturers are increasing the price of peanut butter by as much as 40%. To show some numbers, the Department of Agriculture predicts the price of one ton of peanuts typically used for peanut butter to increase from $450 to $1,150. One pound of shelled peanuts has increased from $.52 to $1.20. These price increase are obviously the reason for the price increase in peanut butter.

Following basic economic principles, the increase in price was to be expected after the decrease in supply. This will most likely lead to a smaller quantity of peanut butter being purchased by the consumers. If the weather during 2012 allows for a better supply of peanuts, we would expect the supply of peanut butter to shift back and the price to drop accordingly. But as for now, the PB&J might shift a little more to the J side.

Video: http://tinyurl.com/7k7ckwa

New Car Prices Rising Along With Sales

Although cash rebates and incentives for automobile purchases have dropped by more than $400 since 2008, vehicles have been selling in the US for record high prices which average 11 percent higher than 2008.  In 2011, Ford reported a profit of $20.2 billion and Chrysler Group LLC reported its first fourth quarter and full-year profit since exiting bankruptcy protection and announced the addition of 1,800 workers to its Illinois assembly plant.  In addition to higher prices, January sales rose 11% over one year ago to their fastest pace in close to four years.  While these signs are optimistic, J.D. Power warns that riskier consumers have been able to access loans, which allows lenders to purchase cars they may not be able to afford.

The increased sales volume of cars is the result of an increased demand for automobiles.  This is the result of either an improving economy, easier access to loans, or, most likely, a combination of the two.  While an increased sales price, volume, and the creation of jobs warrants optimism, manufacturers and analysts need to be wary of lenders purchasing automobiles that they can not afford.  If too many people default and can not afford to pay back their car loans, the gains made by the newly advancing industry may be lost.  The increased price in cars is largely due to consumers demanding new features in their cars, and more expensive standard features.  Due to increased demand for cars, and hiring of new workers in assembly plants, the supply of automobiles should increase, eventually lowering the price of cars.


Link to article: http://online.wsj.com/article/SB10001424052970203889904577201050178115844.html?mod=googlenews_wsj

Struggling Airlines and their Prospering Suppliers

Such company’s as Boeing enjoy progressively increasing growth rates in their demand chains.  Even with the price wars and cost cutting techniques of airlines throughout the world, suppliers of the airline industry are prospering.  Boeing announced an 21% increase in annual net profits for the 2011 fiscal year, totaling $4 billion dollars. 

With the introduction of the 787 Dreamliner, Boeing seems to have a “backlog” that has an ever increasing growth rate of demand that the company doesn’t seem to supply for.  Even Boeing’s main competitor, Airbus, has had a hard time keeping up with demand and supplying the world with flying buses.  

With the European crisis, soaring gas prices, and slow economic growth in the United States, companies such as Boeing and Airbus don’t seem to be affected by such problems.  These company’s problems stem from their supply chains being able to supply the world with what they demand. 

Link to:  http://www.economist.com/node/21543555

Obama's magic number

From the New York Times:

But if you want to focus on a single economic indicator, job growth during the presidential election year has a lot going for it. The job-growth numbers do at least as well as any other economic number in predicting elections, and slightly better than some other commonly used metrics, like the gross domestic product.

So the news that the economy added 243,000 jobs last month was very good for President Obama. That pace is well above the minimum level — about 150,000 jobs — that he would seem to need to increase his chances of re-election. 

Beyond the history, there are a lot of common-sense reasons to focus on the jobs numbers. They measure something tangible and important. They receive much attention from economists, investors, political campaigns and the news media, and therefore inform the public discussion. They are released every month after only a minimal lag. They are not subject to as much revision as some other economic numbers.

Economics in the Movies: Analyzing “In Time”

Yesterday, I had the unique experience of watching the science fiction blockbuster, In Time, starring Justin Timberlake and Amanda Seyfried.  The plot is built around a future where everyone is genetically engineered to stop aging at the age of 25, and time becomes the currency.  Starting on their 25^th birthday, everyone is given one year of time that can be used to make purchases, and individuals can earn more time by working.  The basic framework of the society is as follows:

• Time is a scarce resource (This is established in the film through lines such as: “Everyone can’t live forever, where would you put them?” and “For a few to be immortal, many must die.”)
• Immortality is possible as long as an individual can gain access to more time
•  Everyone automatically dies if their clock hits zero 
• There is an inequitable distribution of “Time wealth,” where some live day-to-day (literally) and others have eons of time at their disposal 
• A burdensome regressive tax exists to ensure that the poor can never build up “Time wealth.”  This presents itself in the form of both explicit taxes and implicit taxation through price increases that raise the cost of living.  This engineered inflation encourages the poor to die off at a very young age. 
• There is no unemployment, because if you don’t work you die.  This places the cost of labor at rock bottom and further increases the wealth of the upper classes that own all of the businesses.

SPOILER ALERT!: The protagonist, Will Salas (Justin Timberlake), is deeply bothered by the income disparity and, when an altruistic stranger gives him over a century of time, he and Sylvia Weis (Amanda Seyfried) set out to correct the imbalance.  They  attempt to do this by enacting a Robin-Hood-like plan of stealing time from time banks and then redistributing it among the poor.  This move represents an unrefined version of fiscal policy that champions the idea of the rich paying their “fair share” so that the poor can have an honest shot at a full life. 

Despite the fact that the movie is poorly written, has painfully obvious political motive, and the acting is borderline atrocious, I would recommend this movie to economics students. On a conceptual level, it is a fascinating case study on income redistribution and a unique (albeit unrealistic) economic structure.  Maybe we could even watch it in class…. (hint, hint)

Outside sources and interesting posts about “In Time”:

http://io9.com/5854241/in-time-really-is-occupy-wall-street-the-movie

http://tutor2u.net/blog/index.php/economics/comments/economics-at-the-movies-in-time

http://thinkprogress.org/alyssa/2011/10/28/355676/in-time-income-inequalit/

http://blog.chewxy.com/2011/11/05/the-economics-of-andrew-niccols-in-time/