I’ve been reading this one for a few days off and on. Sendhil Mullainathan speaks with Harold Pollack about how scarcity, having too little of anything really, changes how you think. The interview makes the claim that scarcity is scarcity, whether it’s money, time, or friends.
The scarcity trap captures this notion we see again and again in many domains. When people have very little, they undertake behaviors that maintain or reinforce their future disadvantage. If you have very little, you often behave in such a way so that you’ll have little in the future.
In economics, people talk about the poverty trap. We’re generalizing that, saying this happens a lot, and we’ve experienced it. For example, sometimes you get really busy. Then you’re stuck, and you just can’t seem to climb your way out. Dieters experience this, too. It’s very hard
Another tragic example concerns lonely people. The lonely are interesting because it’s so tempting to say: “Oh, lonely people. Yeah, those are just losers, or whatever. Those are people who can’t make friends.” Actually, the data suggests that the vast majority of lonely people don’t lack any social skills at all. It’s just they found themselves in lonely situations.
I’m always fascinated by the ‘economics of music’ blog posts when they come from the musicians. Uniform Motion has a new album out, but not in stores because they don’t have a distributor. They were kind enough to let us know what they earn when you listen to their music (or buy it from a digital service like iTunes). These numbers also make more clear their decision to let you pay what you want for a digital download. *The post is in Euros, but you’ll understand.
With Spotify, weâ€™ll get 0.003 EUR/play.
If you listen to the album all the way through, weâ€™ll get 0.029 EUR.
If you listen to the album 10 times on Spotify, weâ€™ll get 0.29 EUR
If you listen to it a hundred times, weâ€™ll get 2.94 EUR
If you listen to the album 1,000 times (once a day for 3 years!) weâ€™ll get 29.47 EUR!
If you use the free version of Spotify, it wonâ€™t cost you anything. Spotify will make money from ads. If you use any of the paid versions, we have no idea how they carve up the money. They only disclose this information to the Major record labelsâ€¦
Via Stellar / @Chartier
Tyler Cowen writes in the NYTimes
The subsidies are largely invisible to drivers who park their cars â€” and thus free or cheap parking spaces feel like natural outcomes of the market, or perhaps even an entitlement. Yet the law is allocating this land rather than letting market prices adjudicate whether we need more parking, and whether that parking should be free. We end up overusing land for cars â€” and overusing cars too. You donâ€™t have to hate sprawl, or automobiles, to want to stop subsidizing that way of life.
Basically, unless you’re drafted in one of the fist several rounds, you don’t make very much money. Depending on the state, most players make less than minimum wage, and that’s only during the 4.5 months they’re actually paid. Not very glamorous at all. Really interesting read.
But the biggest difference may very well be the money. The minimum annual salary in Major League Baseball currently sits at $400,000. Meanwhile, most players at the minor league level who havenâ€™t reached minor league free agency are lucky to make $10,000 over the course of a season; a survey of players revealed that those in rookie ball make $1,250-1,300 a month while players in Triple-A, the highest level of the minors, can make roughly $1,000 more per month while under the contracted amount.
(Thanks, Jonah and Andy)
This, from Steve Waldman, is an important distinction to understand, and his proposal for transactional credit as a public good makes sense, on a first reading.
This Guy Kawasaki post of pictures from his local mall illustrates perfectly something that’s happening all over. We’ve ventured into the malls/outlets twice since Christmas and the whole world is 20%-50% off. I’ve never seen that before. Sure there’s a clearance rack, but the name stores appear desperate to move merchandise. I’ve got a bunch of gift cards and I’m getting nervous places will go out of business before I can use them. Is there a word for that?