One Class of Software that Piracy Can't Kill

Most software is meeting the same unfortunate fate as music (at least from the perspective of those who are paid to produce it).

Software can be easily copied, and piracy runs rampant in many major developing markets, such as China. Even for legal uses, as discussed in Chris Anderson's "Free," the cost of transmitting bits instead of atoms is near zero. Sooner or later, the price of digital information has to plummet accordingly.

However, some software companies can make substantial profits from their programs aside from charging for each copy. The most obvious is advertising, which supports many Web games. Additionally, consider a program like SAS, which is used to perform complicated data manipulation and statistical analysis.

Even today, SAS has a large base of paying customers for its software. But even if the program were widely pirated, SAS differs from other software in an important way: it's complicated and difficult to learn, but once mastered, it has incredible potential. So SAS can profit by holding training sessions throughout the country and online.

Of course, a software company cannot be a monopolist on support for its product. While it's illegal to copy and independently distribute SAS's training material, it's not illegal to sell original guidance about how to use SAS. Rival SAS reference books exist, and even SAS instructors will tell you that one of the best sources for help comes free: Google. So while people may be willing to pay a slight premium for guides published by the SAS company itself, SAS cannot charge exorbitant prices for its training sessions or materials.

Even if the licensing and training profit centers eventually dry up, SAS still has one more avenue for profit. When a company is trying to hire a statistical programmer to run SAS, it's going to have a hard time ranking the skills of hundreds of applicants. Analysts can pay SAS to take a certification test, and a passing score serves as a credible signal of programming ability. It's possible to imagine a rival certification program forming to undercut SAS's test proctoring fees, but it's doubtful that companies that hire SAS programmers would put much faith in a startup certifier when SAS's certification is already familiar and predictable. Job applicants would be willing to pay a premium to earn SAS's certification if it means putting them in the running for a higher-paying job.

Maybe Apple Should Share Its iPhone Plans?

There's been renewed speculation that a new version of the iPhone is coming out this summer and possibly a Verizon version as early as September (Verizon's network uses a different protocol than AT&T's does, so making a Verizon-compatible version is no small feat).

Successive generations of cellphones are strong substitutes for one another. It's understandable why manufacturers don't announce new models very far in advance, as they immediately cannibalize sales of the current model in the interim.

But Apple seems to be in a unique situation. Its iPhone is tied to AT&T's network, which iPhone users have been complaining about for years and which has been cited as the No. 1 reason not to get an iPhone. For customers already with Verizon, it takes an awful lot to switch networks (especially if you're under Mom and Dad's plan or if you're locking into a contract), so many of them are buying other smartphones instead. I would think that an official announcement of an imminent Verizon iPhone would be enough to persuade many prospective Verizon smartphone buyers to wait a few months, and that Apple would make more money in the end from such a move.

Then again, maybe Apple isn't making promises far ahead of time for fear of not delivering. Or for fear of giving Verizon too much negotiating leverage.

The Hot Girl Resource Curse

Economists have long speculated about the existence of resource curses. For instance, a nation rich in a finite resource such as oil might rely too heavily on it and fail to develop other areas of its economy.

What about a hot girl resource curse? On average, we would expect hot girls to have an easier time at life while they're young. If you constantly have guys fawning over you, it's hard to make yourself buckle down and learn Chaucer or calculus. These girls have less of an incentive to study or invest in other areas of themselves, as they can go through their young lives with stuff being handed to them.

But just as Arab countries may eventually run out of oil, the hot girl's main resource--her looks--is also finite. Once her beauty fades, she may regret not having invested in other areas of herself earlier in her life.

If You're Really Human, Type "Antlers"

I recently wrote an e-mail to a marginally famous person, and I got back the following response:

Your mail to me (reproduced below) was not delivered because you are not on my "whitelist" of approved senders.

To add yourself to my whitelist, please resend your mail with the word "antlers" anywhere in the subject line.

If you do this once, you will be added permanently to the whitelist and you'll never have to do it again.

I'm sorry for the minor inconvenience, but this is the only effective way to stop spam.

This seems like a reasonable request, but it got me to wondering why we don't see this more often.

All forms of spam I can think of can be described this way: A group of transmitters is trying to send information to a recipient. Many of the transmissions come from legitimate sources, but others are sent automatically by spammers.

The onus to deal with spam doesn't always fall to the same side of the transaction. Transmitters bear the burden for things such as buying concert tickets. Ticket buyers are asked to solve a CAPTCHA, or a garbled word image that is difficult for computers to understand, to ensure that spammers don't buy up all of the tickets. To somewhat offset the pain, many sites use reCAPTCHA, which helps digitize books when users solve CAPTCHAs.

Conversely, the task of dealing with e-mail spam usually falls to the recipient. Many mail clients have spam filters built in, but they aren't perfect. Spam dupes some users into downloading viruses or giving away sensitive personal information, and pretty much everyone is annoyed by spam to some degree.

So why isn't the "send me a message with antlers in the title" approach more common?

E-mail spam filtering has to make a tradeoff between two types of errors: marking spam as legitimate e-mail, and marking legitimate e-mail as spam. For most people, the latter is worse than the former. For instance, I'd happily delete 10 mislabeled spam messages instead of losing one legitimate message.

The "antlers" approach will often fail. Some people won't follow the instructions correctly, so their messages will never get through. Additionally, sometimes users get important e-mail from automated sources, which won't be able to understand and comply with the "antlers" request. For instance, Amazon sends me messages when there's problems with my order. I've also received automated messages from potential employers telling me I need to fill out a form online or I will no longer be considered for the position.

In short, dealing with spam as a recipient is annoying, but it's worth the effort to avoid missing important messages. And the annoyance wouldn't stop if the system were reversed; we'd just to have solve "antlers" problems whenever we sent an e-mail to someone new.

Kill Yourself to Donate Your Organs and Save 5 People?

I've been wondering about a version of the transplant problem thought experiment for years. The way I've always formulated it was this:

Right now, I could volunteer to donate all of my organs, saving at least a handful of lives at the cost of my one life. Five people (or so) get to live, while only one person (me) has to die.

Am I really that selfish to value my own life so much more highly than those of other people, even if they are strangers? I can think of two "economics"-type solutions to this dilemma, but I can't say I buy into either fully.

First, some might argue, sacrificing myself for organs at age 23 isn't optimal. The world would be better off if I live a long time, experience all sorts of utility for myself, and then donate my organs after I die.

I could be wrong, but I think I could save more people donating now, when I'm healthy, than I could by waiting until I die. At that point, I don't need my organs anymore, so the donation is essentially costless, but I would expect that my organs would be in rather bad shape and thus much less useful. Yet I choose not to donate early. (Anyone with a firmer grasp of biology who sees a flaw in this argument can feel free to point it out in the comments.)

Second, one could argue that you can save more lives by living than you can by killing yourself and sacrificing your organs. If you devote your life to some sort of charitable or missionary work, it's easy to imagine scenarios in which this is true.

This is much more of a stretch, but one could also argue that pursuing your goals is better than sacrificing yourself, no matter what your pursuit. Technology and economic progress have allowed billions of people to enjoy so much wealth and pleasure in ways that wouldn't be possible if people were sacrificing themselves all the time. Such societal progress requires expertise and mastery in countless fields, perhaps including the one you want to work in.

Steven Landsburg's book is again the source of inspiration for this post. The transplant problem is, incidentally, a variation of the more widely known trolley problem. The problems typically involve a third party: If you're a surgeon, would you harvest someone else's organs to save five people who otherwise are going to die within the hour? Would you push a fat man in front of an out-of-control train to save five people tied to the track? However, I've always thought of them in the first person: Would I be willing to sacrifice myself to save others?

(Note to relatives and close friends: I'm very happy with life and not at all on suicide watch. It's just a thought experiment!)

Good Enough for Stanford Is Good Enough for Us

University of Rochester economist Steven Landsburg's "The Big Questions" has a fascinating discussion about how we value our own opinions above those of people who are just as smart, capable, and well-informed as we are. This stubborness often leads us to needlessly duplicate the work of others, such as in evaluating job applicants:

[George Mason University economist Robin] Hanson's best guess is that disagreements persist because we tend to overestimate our own intelligence, and therefore tend to put too much weight on our own opinions. One sees this in academic circles all the time. Every year, the members of my department devote prodigious amounts of energy--perhaps half our working hours over a period of several months--to evaluating the qualifications of applicants for faculty positions. At the same time, the faculties of MIT and Stanford are evaluating pretty much the same pool of candidates. Yet we persist in making offers to candidates we believe are strongest, as opposed to the candidates our Stanford colleagues believe are strongest--even though they're surely as well qualified to make judgments as we are. We could save ourselves a lot of time and effort by just announcing a policy that we're willing to hire anyone with an offer from Stanford.

An offer from Stanford is a very credible signal of quality. So credible, in fact, that the University of Rochester could use it as a substitute for its own expensive and time-consuming applicant screening process.

Taking this idea one step further, if such a practice were the norm, all the universities would want some place like Stanford to do all the legwork of screening applicants, while the rest of the universities could pick up the people who decline Stanford's offer.

Of course, Stanford isn't going to make enough offers to support the rest of the system (and it might even begin to make offers strategically to hurt the copy cats). And many, if not most, people with such an offer would accept it. Even expanding the criteria to "we'll hire anyone with an offer from an Ivy League school" or something similar wouldn't cut it, either.

But I could imagine a world in which some centralized body interviews and evaluates all the candidates. Universities would then be willing to hire an applicant if he has a sufficiently high score.

Then again, such mass evaluation has proven imperfect in the past. High school students with the best SAT scores or GPAs don't always become the best college students (though there is enough correlation that these measures still have value). Law students with the best grades or scores on the bar exam aren't always the best lawyers. But does the econ department at Rochester make better hires under the current system, which brings in face-to-face contact and subjective evaluation, than it would if it just based hires on scores? More importantly, even if the current system picks applicants slightly better, is it worth the huge amount of effort the system requires?

Maybe the differences between universities and departments are more important than Landsburg lets on. Perhaps the perfect candidate for Stanford is a poor fit for Rochester, if the programs have different focuses. Also, it would be difficult to assign objective scores to rate the quality of professors in the arts and similar disciplines.

The Use of Your Likeness at Sporting Events

All professional sports teams, as far as I know, include language on the back of their tickets mirroring this policy from the San Diego Padres:

This ticket grants MLB, National League, Padres and anyone authorized by the Padres irrevocable permission to use the holder's voice, image or likeness for any live or recorded video display, broadcast or other transmission, reproduction or other depiction in any media now or hereafter existing for any legal purpose without the consent of the holder.

In other words, by showing up at the game, you agree that your image may be published in newspapers, posters, and team promotional materials. You might be shown on TV attending the game, even if you told your boss you were sick that day. Your heckling may be heard on the radio broadcast, even if you've had too much to drink.

It's nearly impossible to photograph the game's action without capturing fans in the background. Clearly, requiring the team to get waivers signed for every picture is untenable. A single unaccounted-for person or holdout could stonewall a photo's publication. Teams and fans are both better off when everyone's likeness can be published at will, as it saves considerable expense and headache.

While the chances of any particular fan being photographed are small, being in the wrong place at the wrong time can have long-lasting consequences. You could end up like Steve Bartman, who can't do anything to prevent people from circulating the infamous photo of him arguably interfering with a foul pop-up in the 2003 NLCS, perhaps costing the Cubs a chance at the World Series. Or you could be like Helen Gawn, the nun who caught Bobby Thompson's "Shot Heard 'Round the World" in 1951 when she wasn't supposed to be at the game and who spent the rest of her life making sure no one found out (as amazingly recounted in the book "Miracle Ball").

Why Grades Matter in Law School but not Journalism School: Part 2

(See also part 1, where I talk the signaling effects of grades for the two professions.)

Two more reasons why grades matter in law school but not for journalism school: (1) small variances in skill are more important for lawyers and (2) young talented lawyers are easier to retain.

A small skill difference in a trial lawyer can mean the difference between a legal victory and a defeat, often with millions of dollars at stake. Thus, it's worth trying to get metrics, such as grades, on the skills of prospective lawyers, even if they are imprecise.

On most traditional newspaper beats, a highly talented journalist isn't much more valuable than an average journalist. Having the best reporter in the world on the Manatee County, FL, courts beat won't generate much more revenue for the paper than an average reporter would. The potential audience for the subject is only so big; this was especially true before the Internet and widespread syndication. There's less of an incentive to hunt for the best reporters out of college, especially based on such an imprecise measure as grades.

The true cream of the reporting crop can be extremely valuable, but once these reporters have demonstrated their talent, they have every reason to leave for bigger newspapers. There, they can earn more money, reach a wider audience, and live in a bigger city. The small papers that hired them out of college don't have the resources to make an equally appealing offer. Even if small papers are successful in hiring the very best journalists out of college, the papers will have a hard time retaining them.

On the other hand, law firms can more easily hold on to young talent. A young promising lawyer may very well stay at the firm that hired him out of college, as he will begin to gain seniority and work his way up to partner. Because law firms can expect to extract so much value from young employees who blossom, they have a big incentive to try to hire the best candidates right after they graduate.

The Post Office and Status Quo Bias

The United States Postal Service is expecting to lose a quarter of a trillion dollars over the next decade (see this Washington Post story for more background). One of the perennially proposed solutions has been to cut delivery service to five days a week.

Our demand for postal delivery has plummeted as the economy has become increasingly digital, so cutting service to five days probably makes sense. After all, there is no postal delivery on Sundays, and the world still goes 'round.

The status quo bias is a major barrier to adopting such a schedule. Because six-day service has been the norm for decades, a small portion of our population can show the rest of us concrete personal examples of how a reduction in service would hurt them. This makes the reduction politically difficult to implement, even if the sixth day of service comes at great cost to our society as a whole and only benefits a handful of people.

Imagine instead that five-day service had been the norm all along and that six-day service was in fact optimal. Academics and economists could present compelling logical and statistical arguments for why a sixth day of service would be worthwhile, yet these arguments would only be hypothetical and thus not as strong as the personal appeals in the previous scenario.

The few people who urgently need items delivered on Saturdays could rely on UPS, FedEx, or courier services. Mail sent at the end of the week could arrive at its destination one day later. This would inconvenience some people, sure, but wouldn't it be worth it if it saves taxpayers billions of dollars?

Rich in Money vs Rich in Time

A good passage from a book called "Free: The Future of a Radical Price," which I'm reading now:

If you're a kid, you probably have more time than money. That's the force behind MP3 file trading, which is kind of a hassle but is free (albeit illegal!). As Steve Jobs famously pointed out, if you download music from peer-to-peer services, you're likely to deal with problematic file formats, missing album information, and the chance that it's the wrong song or a poor quality version. The time it takes to avoid paying means "you're working for under minimum wage," he noted. Nevertheless, if you're time-rich and money-poor, that makes sense. Free is the right price for you.

But as you get older, the equation reverses and $0.99 here and there no longer seems as big a deal. You migrate into a paying customer, the premium user in the freemium equation.

This has certainly proven true in my life. I've ditched the Napsters and BitTorrents of my teenage years. Now, my fiancee and I love to sort through our Netflix queue together, and we actually get kind of excited waiting a few days for the next movie to arrive. (Though, unfortunately for me, she's having the new Twilight movie sent to us for Monday. Bleh!) We also don't mind paying the bill, as it's only a few dollars a month.

Similarly, now paying 99 cents to have a song downloaded instantly to my iPhone wherever I am is nothing compared to the pain that I would have to endure to get the same song illegally.

The Spy Speaks

After yesterday's incident with the Washington Nationals tickets department, Adam Froemming left another message on my cellphone, saying that I had made him a "minor celebrity" in his office and asking me to call him back.

I've had a few newspaper jobs. Finally, my journalistic curiosity got the best of me and I gave Adam a call.

It was a fairly pleasant conversation. Adam said the Nats don't just call people out of the phonebook but instead call people who have purchased tickets previously. He tries to make a personal connection based on someone's e-mail address (i.e., if it ends in house.gov) or on his or her area code (for instance, he recognized my number as being from San Diego, where he once spent a summer). In my case, he Googled me and found out that I had written about baseball. He said some people appreciate this, though he admitted that others, like me, were a little creeped out.

At the end of our 10-minute chitchat, he actually went into the whole spiel about the benefits of being a season ticket holder. To which I responded, "I can't give you the satisfaction of saying you talked the crazy blogger guy into buying season tickets after all."

I've never sold stuff over the phone before, so maybe the tactic is more effective than I think. For now, I guess we'll just have to agree to disagree.

Please Rate iPhone App Before Deleting

Whenever you decide to delete an iPhone app, you're prompt to rate it. The only other way to rate apps, as far as I know, is to go back into the App Store and find the app again, which requires a bit of effort and isn't very intuitive.

The app rating process has a self-selection bias, as only those users with extreme feelings about the app are bothering to rate it: either people who are deleting the app off their phones or people who like the app so much that they are going out of their way to rate it. The majority of users are going unheard.

While the rating system seems flawed at first glance, perhaps it's just right for Apple's needs. Apple has recently been on a crusade against pornographic content and apps that offer minimum user functionality. Its App Store has exploded in size so much that it is experiencing diseconomies of scale: there are so many apps out there that users are having trouble telling the good from the bad.

By encouraging a lot of ratings for apps that are consistently being deleted, the ratings quickly reflect these apps' true, poor quality. So while the distinction between 4-star and 5-star apps probably isn't that meaningful, Apple's system accomplishes a much more important goal: helping people avoid the duds.

The Washington Nationals Are Spying on Me

I just got a targeted phone pitch from the Washington Nationals season ticket office.

So targeted, in fact, that it reminded me of the recent Onion headline "Google Responds To Privacy Concerns With Unsettlingly Specific Apology."

Here's the transcript of the voicemail left on my cellphone this afternoon:

Hey Gregory, this is Adam Froemming with the Washington Nationals, calling for a couple reasons. One is I read your ... your ... I guess, article ... on the economic school of thought of the stolen base, and I thought it was fascinating. I'm a big stat geek myself, so I love breaking that sort of stuff down. The other thing is, you came a bunch of times to baseball games last year, and we have a lot of flex plans that I think would be good for you, because they are buy four games, and you get one free, and you already came to four games last year. So right off the bat, we're saving money, and as an economist, you're well aware of things like that. My direct number is 202-640-7691. Give me a call when you get this. Talk to you soon.

Well, two can play this game! If the Washington Nationals can spy on me, I can spy on them right back.

Being a new blogger with relatively little traffic doesn't have many advantages, but one of them is that it's fairly easy to analyze your traffic reports and piece together how a specific person got to your site. Around the time of the voicemail, someone with a D.C. ISP address did a Google search for my e-mail address, and my blog was one of the top hits. This person clicked around for a while, and the last page he or she read was another post about baseball.

When you buy baseball tickets online, you are required to give your e-mail address and phone number. My phone number doesn't appear anywhere on this blog, so my best guess is that the Nationals are going down the list of people who bought tickets online last year, Googling people's e-mail addresses, trying to find some personal connection with them, and then calling them with a personalized pitch.

Interestingly, about half an hour before the voicemail from the Nationals, I also got two e-mails that were sent at the same instant: "Don't miss the Dodgers in Washington!" and "Don't miss the Padres in Washington!" Each had the dates of when the team would be in D.C. I follow both teams, as I grew up in Southern California. While I suppose I am the perfect audience for such a pitch, it's a bit unsettling that Major League Baseball knows enough about me to deduce that I live in Washington and that I like two teams in the NL West.

Now, for the usual economic analysis: is this type of marketing campaign worthwhile? He's right, I already went to a lot of games last year, and I'm surely going to several more this year, so any benefit to the team is only on the margin. In other words, if I would have spent $100 on Nationals tickets this year anyway and he persuades me to buy a $300 season ticket plan, the Nationals benefit by $200. Of course, we would also have to factor in how much my spending would change on parking, concessions, and merchandise, as well as whether I would be bringing more people with me to games.

I imagine that sales pitches like the one I received don't take much time to put together, maybe 10 minutes or so. The question then becomes: are the people being called going to go to enough additional games to justify the effort? This is wild speculation, but I think someone could justify his or her salary making these types of calls all day if they end up selling 5 or 6 season ticket plans each day.

However, I have to wonder if this kind of marketing might backfire. As I described, it's a little creepy knowing that MLB has so much information on you. And, what's more, I really hate it when people call me Gregory.

UPDATE 3/18 3:14 PM: The spy speaks ...

UPDATE 3/18 4:16 PM: Adam has e-mailed me, giving permission to provide his name and phone number. Have at it, you journos out there.

So What If URL Shorteners Are Slow?

From TechCrunch:

Turns out most really don’t perform all that well, and that URL shorteners actually increase the load time of pages significantly. As you can tell from the graph embedded above, a lot of URL shortening services add half to nearly a full second to page load times.

To measure this, WatchMouse checked each URL shortener every five minutes from one of its monitoring stations, which are located across the globe. For each short URL, only the redirection was measured, not the actual loading of the target page.

Pingdom did similar research on the speed and reliability of URL shortening services in August 2009, although they only looked at independent URL shorteners and not the ones from Microsoft, Facebook and Google.

Google does a pretty good job in terms of performance with Goo.gl and YouTu.be, but it still takes those about 1/3 of a second to resolve pages, which makes a world of difference if you think about how many website addresses get shortened on a daily basis.

I don't see how such delays make "a world of difference." Economists sometimes do zany things like multiplying each 1-second delay by the billions of times short URLs are clicked a day and then by the average wage rate to calculate some omnious figure representing the loss to society caused by slow URL shortening services.

On an individual level, a short delay isn't much of a hassle. If you click a short URL, you aren't that much better off if it loads 1 second faster. To argue that I'm doing something like 7 seconds less of work a day and calling this a real impact in the aggregate is foolish. Even if you open dozens of short URLs in separate tabs, you can't read all of them at once anyway; the rest will load while you're reading the first few. Perhaps this delay will impact your local servers, but only marginally so. We certainly wouldn't be millions of dollars better off if such delays didn't exist.

In Defense of Driveby Culture

Marketing blogger Seth Godin bemoans our fickle online media consumption in a recent post, which of course I will excerpt for those of you too lazy to click through and read the whole thing for yourself. (You would think linking to someone else's work would be an explicit enough endorsement, but I am amazed at how often bloggers write stuff like "it's worth reading the whole thing." I sure hope you're not linking to articles you didn't even bother finishing yourself!)

Imagine if people went to the theatre or the movies and stood up and walked out after the first six seconds. Imagine if people went to the senior prom and bailed on their date three seconds after the car pulled away from the curb.

The majority of people who sign up for a new online service rarely or never use it. The majority of YouTube videos are watched for just a few seconds. Chatroulette institutionalizes the glance and click mentality. I'm guessing that more than half the people who started reading this post never finished it.

If people give up on a blog post you've written, is it their fault, or yours? In all likelihood, whatever you were saying just wasn't interesting enough. On the Internet, switching between content is extremely cheap and easy, so the standard of "interesting enough to keep reading or watching" is dauntingly high. Not to mention that much of your audience is looking at your site during work.

This is one of the starkest examples of opportunity cost I know of: time spent reading subpar blog posts takes time away from reading superior blog posts, or doing other activities. Therefore, I really can't fault online readers for being so demanding.

Perhaps the most famous proponent of this mentality is George Mason University economics professor Tyler Cowen. In his book "Discover Your Inner Economist," he writes:

When should we finish a book we have started? In this regard I am extreme. If I start ten books maybe I will finish one of them. I feel no compunction to keep reading. Why not be brutal about this? Is this book the best possible book I can be reading right now, of all the books in the world? For me at least, the answer is usually (but not always) no. Whatever is the best possible book to be reading, I am willing to buy it or otherwise track it down. Most other books don’t make the cut.

Unless you know me personally (and perhaps even if you do), reading Econ Tricks is probably an inefficient use of your time. Why read a 2-month-old blog written by a grad student when there's so much out there on any of my topics written by people who are more intelligent, more experienced, more articulate, and more highly credentialed than I am?

Filling Out Your Bracket, Econ Style

When it comes to March Madness, an economist should just pick all the favorites, right? After all, the highest-ranked team should theoretically be favored in every game (except for that pesky 8-9 matchup, where the No. 9's have won 54% of the time). So why not "pick chalk," as they say, march all of the No. 1 seeds to the Final Four, and call it a bracket?

While such a bracket is the optimal strategy in a vacuum, it's almost certainly not going to win you the office pool. There will be upsets galore throughout the tournament, but there's no way of telling where they'll occur (and just because teams with, say, animal mascots or those who wear red jerseys have fared better in the past doesn't mean they'll come through again this time).

To win, a lot of your random picks will have to come through, and a lot of your friends' will have to falter. You want to make your bracket as different as possible from the rest of the pool, while still picking favorites for most of the matchups. If you're wrong, you would have lost anyway, but if you're right, you're going to pick up points where others won't. So if you are filling out a bracket among a group of coworkers in Washington, DC, you probably shouldn't pick Maryland or Georgetown to go deep into the tournament, because it's likely that many other people have picked them as well.

It also helps to know a little something about college basketball, but who has time for that?

App Developers Are Ditching the iPhone

Via TechCrunch:

As Apple goes on the offensive against Android, it risks alienating more and more developers. Today, another prominent developer is chose the opposing side. Tim Bray, the well-known software architect and blogger, is joining Google to help rally even more developers around the Android mobile operating system.

Bray is the co-inventor of the XML Web standard, and most recently worked at Sun Microsystems. In a blog post, he explains that he is drawn to Google in part because he hates the iPhone, or at least its closed and controlling environment from a developer’s perspective.

Refusing to make apps for the iPhone is a puzzling move. The only relevant consideration for creating an iPhone app is whether the expected revenue will compensate for the costs of production. App developers are free to forsake the iPhone, but most of them would be losing money to do so.

Android apps and iPhone apps make poor substitutes. Once someone has made the hefty investment of buying a particular smartphone, they are very unlikely to switch for the sake of a few apps. If your app is unavailable, users will either buy close substitutes or go without.

Of course, the story changes completely if app developers leave the iPhone en masse, enabling Android to offer a superior app collection. But this would create quite the coordination problem, as it would require each developer to leave substantial money on the table in hopes that everyone else plays along too.

The "People Are Idiots" Explanation Isn't Good Enough

I think I've found my new favorite economics quote, by George Stigler:

Mistakes are indeed made by the best of men and the best of nations, but after a century are we not entitled to question whether these "mistakes" produce only unintended results? Alternatively stated, a theory that says that a large set of persistent policies are mistaken is profoundly anti-intellectual unless it is joined with a theory of mistakes. It is the most vacuous of "explanatory" principles to dismiss inexplicable phenomena as mistakes--everything under the sun can be disposed of with this label, without yielding an atom of understanding.

I learned of this quote from JC Bradbury's "The Baseball Economist," in a section where he discusses why there have been essentially no left-handed catchers in the major leagues for the past century.

Do We Love Baseball Less Than We Did 50 Years Ago?

I'm reading "Veeck As In Wreck," by Bill Veeck. He owned several MLB teams over the years and pioneered all sorts of giveaways and gimmicks to get fans through the turnstiles, most notably sending midget Eddie Gaedel up to bat for the St. Louis Browns in 1951.

His autobiography, written in 1962, recounts how baseball was starting to face competition from other forms of entertainment:

We are in the entertainment business, competing for the entertainment dollar. Competition is tougher. In 1902, there wasn’t much else you could do unless you wanted to stay home and sing along with the player piano. We are now competing directly with horse racing and harness racing. (At the time I was surveying Pittsburgh, the team’s greatest asset, to my way of thinking, was that there was no race track in the area.) Like everyone else, we are competing with television. Golf has become a mass sport. There has been an upsurge in individual sports like boating and sailing, fishing and hunting. Indirectly, we are competing with pro football and pro basketball and I suspect that one day we will be competing with soccer.

Today, the thought of horse racing as the primary threat to baseball's popularity is rather amusing. Now, communication and media consumption are faster and cheaper than ever, and the world is expanding culturally and in terms of sheer population. There's a thousand other reasons why being a baseball fan, or doing any other activity, is relatively more expensive than it was 50 years ago.

There's just so much to do these days, and whatever we're giving up to be a baseball fan represents an opportunity cost. While there are no doubt still hardcore baseball fans among us, for most people, watching baseball has to increasingly be juggled among competing activities.

Sick Leave vs Comprehensive Leave

I briefly touched on this recently over at S&G, and unfortunately it's still been on my mind this weekend. So I figured now is as good a time as any to write about sick leave.

I'm going to make some generalizations about workplace policies, even though every office is different and there are many policies I've never heard of. But the generalizations will enable us to do some analysis.

Traditionally, workers have been offered time off from two main buckets: sick leave and vacation leave. Sick leave usually expires after a certain amount of time. When a worker leaves his job, he is paid for any unused vacation time but not for unused sick time.

Many employers are beginning to offer comprehensive leave, where sick days and vacation days count the same. Upon leaving their jobs, employees are paid out for any excess comp leave they have accumulated.

Employers want workers to be at work as much as possible but not when they are truly sick, as they can infect the rest of the office. When employees take time off when they're not sick, employers would prefer advanced notice. Employers want employee absences to be spread out, as many offices would be crippled if half of the workers were absent on any given day.

Most workers prefer to have as many paid days off as possible. They'd also prefer to be able to get days off on short notice.

Under sick leave plans, workers have an incentive to take sick leave not only when they are sick, but also for a slew of other reasons. Thirty-five percent of sick days are taken on Mondays, and I have to believe that many of those are by people who want to extend their weekends. The presence of popular sporting events has also been linked to an increase in sick leave requests (at least among men). Because sick time expires and isn't paid out upon employee termination, workers usually use some of it for other reasons besides being sick. They are encouraged not to give their employers advanced notice, even if they've planned their sick days a long time in advance.

Under comprehensive leave plans, workers have an incentive to come to work at all costs, even if means potentially infecting coworkers. A day spent bumming around the house in your pajamas means you have one fewer day available to spend on the beach on vacation. Comprehensive leave workers will be better at giving their employers advanced notice of absences, unless they fear their bosses will deny their leave requests (as the bosses are trying to keep the workforce at critical mass during popular vacation times). Comprehensive leave plans are more expensive, as comp time doesn't expire and must be paid out eventually in some form, whether it be days off or cash.

In theory, rational workers will prefer jobs with more time off to less. Yet I've taken several jobs where I didn't even know the leave policy in advance, and I'm sure many other workers have done the same. Maybe we don't ask about leave policies at job interviews because it would make us look like fickle workers. In any event, it seems that people pick jobs based primarily on salary, the nature of the work, and location.

"The Price Is Right" as Behavioral Economics Lab

Two things I wonder about regarding "The Price is Right":

(1) Misbidding

On Contestant's Row, where four contestants bid for an initial prize and the right to play a game and spin the showcase wheel, it's amazing how often the last person makes inefficient bids.

No matter what the prize you are bidding for, imagine that the first three bids in front of you are $450, $575, and $600.

If you think the item is really worth at least $800, you shouldn't bid $800, but rather $601. Otherwise, you are conceding the range between $600 and $800 to the third player, when there's no reason to do so.

Similarly, if you think everyone is over (remember, in "The Price Is Right," the winning bidder is the one closest to the actual price without going over) but you think the item is worth at least $200, you should bid $1, not $200. This way, you win if the item is priced from $1 as high as $599, but you would all be over, and bidding would start over for new prize, if the item ended up being cheaper than $200.

Yet contestants make both types of bidding errors on a regular basis.

(2) Memorizing Car Prices?

I wonder if it would be worth your while to memorize the prices of all new cars if you're going to be in the audience.

First, we'd have to estimate the chances of you playing a game involving a car, given that you are a member of the audience (using the same conditional probabilities methodology that Book of Odds does, when it calculates things like the odds of a given cow being used to make a football for the Super Bowl).

I don't know the audience size, but only six contestants per show play a game, and only a fraction of those play a game involving a car. So getting to the point where car knowledge would benefit you is remote.

If I had the inclination, I could visit a site like the Price Is Right Blog and see what makes of cars have been involved in games. Then I could research the models and their prices for each of these makes (which might be easier than you think, as each make only has about a dozen new models).

People vary dramatically when it comes to memorization skill. If you can easily memorize 100 or so five-digit numbers (and I certainly can't) and you get in a game involving a car, you're pretty much guaranteed to win. With no such knowledge, let's say your chances of winning are 50%. So, if you're playing a game for a $20,000 car, you've increased your expected winnings by $10,000.

However, because the chances of going from an audience member to a contestant involved in a car game are so small, perhaps such memorization will only increase your expected winnings by a few pennies and therefore won't be worth the effort.

Inflight WiFi and Terrorism

An article today from Boing Boing tells how a blogger was chastised for pulling up a video chat over the plane's WiFi to say goodnight to his children. Apparently video chats are prohibited because of terrorism concerns:

The flight attendant just showed me the United policy manual which prohibits "two way devices" from communicating with the ground. However, the PLANE HAS WIFI. To combat this, not unlike China, United and other airlines have blocked Skype and other known video chat offenders. Apparently, they missed Apple iChat. Oops.

Some have pointed out how terrorism strikes on two main fronts: the initial loss of life and property caused by the attack, and the ongoing fear and lifestyle changes it provokes. September 11 happened more than 8 years ago, yet it still significantly delays air transit at substantial taxpayer expense because of the security measures that have been put in place.

Allowing access to the Internet on planes but blocking certain activities is doomed to failure. There are innumerable ways that a could terrorist could send a message via WiFi to people on the ground besides video chat, and the authorities can't possibly account for all of them.

The Boing Boing article also details another reason to ban video chats: like cellphone conversations, they annoy nearby passengers.

3 Ways that Google Benefits From Its $100 AdSense Payment Threshold

Google AdSense is the most popular and lucrative advertising program on the net. It's also among the easiest to join (especially on Google's Blogger/Blogspot platform, which lets bloggers seamlessly add customized AdSense widgets).

Each publisher doesn't have to track down advertisers selling products in their particular niche. AdSense's contextual algorithms ensure that relevant ads appear on each page, which drastically increases the chances that readers will be interested in the products, click the ads, and thus generate revenue for the publisher.

A law of one price argument could be made that AdSense can pay lower rates and insist on more demanding terms than could other advertising programs. These other programs must pay higher rates (or offer better terms) to compensate publishers for relative inconvenience of using their services.

Take, for instance, the minimum payment threshold. AdSense will not pay a publisher until he or she has earned $100, while Chitika's and Amazon Associates' minimums are both $10.

A high payout threshold benefits Google in several ways:

(1) Transactions and Accounting Costs

It's cheaper to pay publishers larger amounts less frequently than it is to pay them smaller amounts more frequently. Fewer transactions means lower bank fees and accounting costs.

(2) Interest

The time value of money can be calculated from interest rates; in short, $100 today is more valuable than $100 a year from now. If Google paid a publisher $10 every month instead of $120 at the end of the year, he could invest the money along the way and come out with more than $120. Instead, Google keeps the interest, which substantially lowers the cost of making payments when they come due many months down the road.

(3) Small Accounts

Many small Web publishers will give up long before reaching the $100 payment threshold. They may shut down their Web sites, cease to publish new content, or switch to a more lucrative advertising network.

Although a publisher can cancel his relationship with AdSense and receive a payout if his account has earned at least $10, there is an expected 90-day delay before he will see the money (and again, Google is not compensating him for the lost interest).

But not everyone below the threshold who is no longer earning AdSense revenue will cancel. Google's advertisers pay Google for each and every their ads are clicked, but Google will never have to pay some of its AdSense publishers their share because of the hurdles described above.

RSS Feed Syndication: Full or Short?

A post from Econ Tricks' RSS feed, as it appears in Google Reader.

RSS feeds can be presented in one of two ways:

(1) Full feeds. Readers are presented with the headline and full text of each item, including any embedded photos or videos.
(2) Short feeds. Readers are presented with each item's title and one or two sentences of information, often the beginning of the item or a separately written summary. Readers must click the headline to read the entire post on the originating site.

The decision between the two is crucial for bloggers, newspapers, and other content producers. There are tradeoffs to each, though it will be soon be clear which option I'm partial toward.

The Case for Full Feeds

Full feeds are far easier for readers to engage with. They can still load the article in a separate window or tab if they want, but full feeds allow readers to read the content in a more convenient way. This is especially true for people accessing RSS from portable devices such as iPhones, as users don't have to load the original Web site in a separate window over a sluggish cellphone network.

When an RSS user wakes up in the morning to hundreds of unread items, he's likely to skip many of the marginally interesting short feed items that must be opened in a new window or tab.

For users on the fence about following a particular feed, having to deal with a short feed might be enough to drive them away. In other words, I would expect a blog to attract more readers with a full feed than with a short feed, all else equal.

Items from full feeds are more likely to be e-mailed, posted to Facebook, tweeted, or otherwise shared. Sharing tools are built into many RSS clients, and they're more likely to be used if readers can judge the quality of the article within the same window, instead of opening a separate window, reading the article, determining its merit, and then either going back and finding the item in the RSS client or searching the source Web site for its own unfamiliar version of sharing tools.

Although full feeds may generate fewer clickthroughs to the originating site per user, publishers can still monetize this readership by automatically including advertisements on each feed item or by interspersing special advertising items into the feed. I imagine that such ads would pay abysmal rates, as most RSS users are efficiency nuts and newshounds who aren't going to look very closely at advertisements at the bottom of each feed item before moving on.

Not all content producers are motivated by profit. For writers who care only about maximizing readership, full feeds seem like the slam-dunk choice.

Additionally, short feed publishers may be underestimating just how fickle online readers are. In a recent survey, a reported 44 percent of Google News readers just scan headlines and never click any of them. RSS readers are probably even more fickle, so short feed publishers may be alienating a large portion of their potential readership.

The Case for Short Feeds

As explored above, people who read a site's content only in their RSS client without ever visiting the underlying site are extremely hard to monetize. It's no surprise that all mainstream newspapers and magazines (at least to my knowledge) run short feeds. Journalism is increasingly strapped for cash these days, so advertising revenue has to be the number one consideration. Short feed publishers are betting that getting more readers to the actual site, even if it means alienating hordes of RSS users, is the best strategy in the long run.

Once readers are engaged with the source Web site, they might explore other articles, click advertisements, or even sign up for a paid subscription (though RSS users aren't usually the type to sign up for such things). Still, it's not abundantly clear that short feeds will generate more revenue than full feeds would, especially because they make the RSS experience far less useful and because RSS readers are much harder to monetize anyway.

If you haven't guessed by now, Econ Tricks uses a full RSS feed. A good overview of RSS is here.

Does Ebay Shipping Hurt the Environment?

A recent New York Times story explores how eBay is trying to market an environmental appeal for buying used goods. The story ends with some economic discussion:

EBay hired Cooler, a company that calculates carbon footprints, to determine how much carbon shoppers save by buying something used instead of new. They say that the leather handbag, for example, saves as much energy as a flight from London to Paris.

Cooler calculated the total cost of creating a new item, including materials and manufacturing, and factored in the cost of packaging and shipping eBay items via fuel-guzzling planes or cars, Ms. Skoczlas Cole said.

I doubt that the shipping of eBay items hurts the environment much, on the margin.

New items also have to be shipped: from the manufacturer to the retailer and from the retailer to the customer's home. It's unclear that shipping used items requires more fuel, so a shift from new goods to eBay goods isn't necessarily bad for the environment.

Additionally, shipping is dominated by fixed costs--a certain number of trucks and delivery routes exist regardless of whether you send your item, so mailing one more package probably isn't going to burn more gas.

Why Do Newspaper Hire Bloggers?

Why do newspapers hire bloggers, when most of the content they produce does not appear in the print newspaper and can only generate revenue online? For instance, the Washington Post has 99 active blogs, by my count.

A naive line of reasoning could go as follows:

(1) Generic Blog generates $5,000 a month in advertising revenue.
(2) If the newspaper pays Generic Blogger less than $5,000 a month, Generic Blogger can move his blog to his own domain and enjoy free hosting at one of several blogging services.
(3) If the newspaper pays Generic Blogger more than $5,000 a month, Generic Blogger will be willing to stay because he cannot make more money with the blog elsewhere, but the paper will lose money on the blog every month.

You might protest that most newspaper blogs are written by reporters who already work at the paper and are producing valuable content for the print edition as well. But blogging represents an opportunity cost for reporters: time spent blogging takes away time from reporting, writing, and polishing stories. Simply put, if reporters weren't working on blogs, they could put out a better print product.

However, a newspaper blog may indeed generate more revenue for the newspaper than the blogger could get by going it alone. Employing the blogger at some salary between the two amounts makes both sides better off.

Newspaper blogs benefit from network effects. A Washington Post blog has a built-in audience that a rogue blog doesn't. Post blogs can cross-promote one another, as well as other Post content. The printed paper can tease to blog content, generating more interest in the Web site. And blog content can be published in the print edition occasionally to fill space.

A blogger employed by a newspaper instantly has more credibility than most other bloggers, and we would expect such a blog to attract a relatively larger audience and therefore generate more revenue. By lending its masthead to bloggers, a newspaper is giving them a tacit endorsement of quality. Readers know that a newspaper blogger who is consistently being antagonistic or making shallow and erroneous arguments will eventually get the boot, while a self-published can rant on and on for years, no matter how little expertise he has.

There are some downsides for the blogger to working at a newspaper. The blogger must submit to the paper's editorial guidelines, and it's never more fun to work for someone else than to be your own boss. The paper may assign the blogger other reporting tasks or switch his beat to something less enjoyable. Additionally, the paper may decide to discontinue the blog. But blogs are more mobile than you might think, especially if the blogger has built a name for himself. A good example is Jon Weisman's Dodger Thoughts, which has had five homes in eight years, most recently moving from the Los Angeles Times to ESPN.com.

When to Write Poorly

Writing is a crucial skill to invest in, no matter what your field. Whatever other knowledge you have is worth little if you cannot effectively explain it to others.

In Western society, the onus for ensuring understanding falls to the writer or speaker, not the reader or listener. Malcolm Gladwell points this out in "Outliers," in which he discusses how foreign pilots would often crash because they communicated problems too subtly to air traffic control:

Western communication has what linguists call a “transmitter orientation”—that is, it is considered the responsibility of the speaker to communicate ideas clearly and unambiguously. … But Korea, like many Asian countries, is receiver orientated. It is up to the listener to make sense of what is being said.

Sometimes, however, clarity in writing is sacrificed for other goals.

In academic journals, writers aim to impress. Writing that is overly technical, poorly organized, and difficult to follow can still build prestige for the writer, even if the underlying arguments are rubbish. Additionally, complicated math is often used for show, even if simpler math would be more appropriate for the topic. Making your paper easier to understand only makes it easier for others to criticize your arguments or data.

In the legal world, writers aim to complicate. Lawyers write contracts and other legal documents in language that can only be understood by other lawyers, keeping them all in business. Lengthy, convoluted documents are less likely to be read carefully by the people signing them, to the advantage of the parties creating such documents.

In academia, writers aim to meet page requirements. A high school student might make his point in 5 pages, but he is forced to include 5 more pages of tangents, needless repetition, and other fluff to reach a 10-page minimum. Similarly, the majority of doctoral students will submit dissertations that are hundreds of pages long, no matter what the topic.

Should the NFL Play in the Summer Instead?

Lambeau Field in Green Bay, WI, in 2007. CC photo from Chad Davis on Flickr.

Football prides itself on toughness. Unlike in baseball, NFL games are almost never canceled because of inclement weather. Although the players are expected to play through anything, is it wise for the league to expect the same from its fans?

Sitting shoulder to shoulder with other fans for a three-hour game no doubt is more pleasant on a sunny day than it is during a snowstorm, at least for the 23 NFL teams (out of a total 32) that don't play in domed stadiums. Holding all else equal, we would expect fans to be willing to pay higher ticket prices if it means enjoying the football game in more pleasant conditions. Is the NFL leaving revenue on the table by playing during the worst weather of the year (August to February)?

Probably not. Although watching football is more pleasant in sunny weather, so is a slew of other activities. By playing in bad weather, football can be king of winter, as it has fewer things to compete with. This is even more true for another important NFL revenue base: the fans watching at home. The NFL generates monster TV ratings in part because, for many fans, there isn't much they want to do in dreary weather besides staying home and watching the game.

The weather is less likely to affect football fans on the margin as it is for baseball fans. Many people who couldn't care less about baseball might buy a $10 bleacher ticket to spend a sunny afternoon at the ballpark with their friends, but fewer people are going to go to an NFL game on such a whim, with the average ticket price being $75.

YouTube to Auto-Caption Videos

From TechCrunch:

In November of last year, the company began to roll out auto-captions on a limited scale, which use speech recognition to automatically transcribe what’s said in a video. And now, it’s going to enable the feature for all videos uploaded to YouTube where English is spoken.

This move will engender a lot of goodwill for Google, and rightly so, for enabling deaf people to consume video content that they otherwise couldn't. Even if the transcription is poor (and I've seen some pretty bad transcripts from humans covering live events), it's better than nothing.

More importantly, this will give Google more text to scan and analyze. The system will have a better idea of what each video is about and therefore be better at suggesting related videos. It will also make it easier for Google to correctly target advertising based on the content of each video. More relevant advertising leads to higher clickthrough rates and more money for Google's bottom line.

Naming Campus Buildings after Alumni

Chico State's O'Connell Technology Center.

George Mason University, where I attend grad school, seems to have more than its fair share of buildings with generic names: College Hall, East Building, Engineering Building, Fine Arts Building, Lecture Hall, Performing Arts Building, Student Union I, Student Union II, and West Building (see the campus map).

Compare this to California State University, Chico, where I went for undergrad (map). There is a Performing Arts Center and a Physical Sciences Building (where, oddly, I once had a Spanish class), but the other buildings are named for alumni or nearby counties.

The difference is probably due to the age of each school. Chico State is the second-oldest CSU campus, established in 1887. GMU was established as part of the University of Virginia in 1957 and became independent in 1972. Although Chico State today has roughly half the student population of GMU, it has several times as many alumni (living or dead).

If someone were to construct a model for optimal timing for the naming of buildings, what would it entail? Certainly it would factor in the number of noteworthy alumni and the number of campus buildings over time. The alumni base grows every year, and the number of campus buildings is growing at most universities, but it's hard to predict the rates and accelerations of either decades into the future.

The university doesn't want to name all of its buildings after alumni too quickly, as the accomplishments of future alumni may be far grander. But at any point, the university can sell the naming rights, so to speak, by offering to name a building after a graduate upon receiving a sizable donation (though of course not all namings are conditional on a donation). Although the university may be better off in the long run if it paces itself, in any given year, there's a temptation to name all the buildings and reap the donation windfall now. This is "mortgaging the future" in a sense, as buildings named now can't be named later (unless new buildings are constructed, and one could argue that the university could always find something to name after a large donor). This instant gratification is functionally the same as how Indiana leased the rights to a foreign firm to collect highway tolls for 75 years in exchange for a hefty one-time payment.

What are the drawbacks of naming buildings after alumni? First, constantly renaming the buildings at your school can lead to confusion, but the students are coming and going so frequently that it probably doesn't matter much. There's something to be said for having a name that represents the building's function, like the Technology Center, but why not make it the O'Connell Technology Center (as it is at Chico State)? Of course, naming buildings after living people runs the risk of the person ending up in an embarrassing scandal; although this isn't the perfect analogy, remember that the Houston Astros once played at Enron Field.

Incidentally, GMU already has a Finley Hall, so it won't be an issue for me if I become wildly rich and successful (not that I'm holding my breath).

D.C. Bag Fee: Focus on Trash, not Tax?

D.C.'s plastic bag issue, in brief:
(1) businesses bag items
(2) customers discard bags
(3) bags end up in the Anacostia River

D.C.'s solution: tax each bag 5 cents.

I ran across an article from the San Francisco Chronicle from 2005 talking about a 17-cent bag fee that was under consideration at the time:

Under the grocery bag proposal, there would be no refunds for shoppers who return bags and thus no motivation for people to paw through trash bins plucking bags out of the waste stream.

"There is no incentive on the back end," says Margaret Walls, a resident scholar and economist at Resources for the Future, a nonprofit think tank in Washington.

But why can't there be such an incentive? There are two phases of the bag pollution process: customers getting the bags and afterward disposing of them improperly. Why can't we subsidize solutions to the latter (namely, through recycling) instead of taxing the former?

Recycling of plastic bags, it turns out, is inefficient and far too expensive. According to one source, recycling a ton of plastic bags costs about $4,000, while manufacturing the same amount from scratch costs about $30.

In addition, to motivate any substantial amount of recycling of plastic bags, customers would have to receive a decent sum in return. The cost of a new bag to a grocery store is less than 1 cent, but it would take much more than that to get people to recycle. If we factor in the subsidies necessary to get people to recycle, the cost is far more than $4,000 a ton. So perhaps D.C. is right in trying to address the bag collection step instead of the bag disposal step.

Besides, one could argue that small monetary rewards have already been proven not to work. For years, grocery stores (at least in California) have knocked a few cents off your bill if you brought reusable bags, yet the vast majority of customers choose not to. Interestly, this is essentially the same as a bag tax, but the only difference is the framing or anchoring. A 5-cent subsidy for bringing your own bag is analogous to a 5-cent tax for not bringing your own bags, yet the compliance rate under the former is drastically lower than it is under the latter. Traditional economics is not very good at explaining this inconsistency, and it must defer to psychology or behavioral economics and discussions about risk aversion, or how a small loss brings out much more of an emotional response than does the equivalent small gain.

I've written a few other things about the D.C. bag fee, which you can read under my Environment and Recycling label.

Concerts and Hand Stamps

My hand 24 hours (and a shower and several vigorous hand washings) after a Rodrigo y Gabriela concert at the 9:30 Club in D.C. My fiancee's is below.

"I am never going back to 9:30 Club. Last time, my hand stamp took 3 days to wear off!"

Okay, so no one says that, or would act that way. Economists talk about how higher prices and added inconveniences drive away some marginal customers, but a longer-lasting-than-desired hand stamp from a concert has no apparent downside for the venue. A different kind of ink likely would vanish quicker, but what incentive does the venue have for using it? The disfigured splotches make for great free word-of-hand advertising as people return to work the next day. Heck, some dork might even write a blog post about it.

D.C. Bag Fee: Just Make the Decision for Me

I've recently switched jobs, and I noticed a peculiar thing about how two Subway restaurants are dealing with D.C.'s bag fee. Since January 1, District merchants have been required to charge five cents per plastic or paper bag they give to customers, in an effort to keep the bags from ending up in the Anacostia River.

My old Subway, by L'Enfant Plaza, gives customers their sandwiches without the plastic bag (though they are still wrapped in the paper). My new Subway, by McPherson Square, always bags the sandwiches and subtly adds the 5 cents to the bill.

While these approaches are opposites, I prefer either to a third option: being asked each time whether I want a bag and having a tinge of guilt no matter what I decide. While classical economics tells us it's better for consumers to have as many choices as possible, behavioral economics and psychology have increasingly suggested that perhaps we're better off not thinking about certain options (Barry Schwartz's "The Paradox of Choice" deals with this phenomenon in depth).

This has certainly been true for grocery stores; I know more than a few D.C. residents have gone out of their way to shop in the Maryland or Virginia suburbs to avoid the bag tax, even though they could get 20 bags for a dollar and hardly be out any extra money at all.

I've written previously on the D.C. bag fee here and here.