Being poor changes how you think

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.

Being poor changes how you think

How much does a band get paid from Spotify?

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, we’ll get 0.003 EUR/play.
If you listen to the album all the way through, we’ll get 0.029 EUR.
If you listen to the album 10 times on Spotify, we’ll get 0.29 EUR
If you listen to it a hundred times, we’ll get 2.94 EUR
If you listen to the album 1,000 times (once a day for 3 years!) we’ll get 29.47 EUR!
If you use the free version of Spotify, it won’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 labels…

Via Stellar / @Chartier

How much does a band get paid from Spotify?

Free parking not actually free

Tyler Cowen writes in the NYTimes

The subsidies are largely invisible to drivers who park their cars — 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 — and overusing cars too. You don’t have to hate sprawl, or automobiles, to want to stop subsidizing that way of life.

Free parking not actually free

The Economics of Minor League Baseball

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 haven’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)

The Economics of Minor League Baseball

Everywhere is Having a Sale

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?

Everywhere is Having a Sale

TiVo Guilt – The Opportunity Costs of Too Much TV

CNN says that people have too many programs saved on their TiVos

With infinite media, you have infinite choices, and therefore you have infinite opportunity costs,” he says. “Your satisfaction index of the thing you actually choose can never be equivalent to the infinite opportunity costs, so we’re in this position of being behind the cognitive eight-ball all the time.

I don’t even have a TiVo and this happens to me. We have to watch Dexter, True Blood, Californication, Weeds, we’re behind on 30 Rock and the Office and Friday Night Lights and I’ve just last night finished Generation Kill. Lost Season 4 ended last week for me. And those are just the shows with which we’re relatively caught up. What about BSG or The War or The IT Crowd?

I think this is like the RSS post Matt put up a couple days ago about getting rid of feeds he’s not interested in (read: doesn’t have time for) anymore. It hurts. Is RSS Bankruptcy a good option? Should people declare TiVo bankruptcy and burn the whole fucking place down?

What I really want to know is who will spearhead the TiVoZero movement, Merlin Mann is too busy tackling email.

TiVo Guilt – The Opportunity Costs of Too Much TV

Publishing is Changing

A couple weeks ago, there was a long article in New York Magazine about the end of publishing. It was interesting in the way that watching a car accident happen is interesting, only this is a car accident that you could have predicted was going to happen 20 years ago. You simply can’t keep paying a lot of money for something (in this case a book) that’s not going to make you a lot of money.

Last week, the author of that article tied it all together with another short blurb comparing Random House to General Motors, the only difference being Random House’s back list has some value.

It got me thinking a couple things:

It’s not that publishing is over, or banking, or auto manufacturers, or the music industry. This isn’t a coincidence. These are all businesses that haven’t evolved from where they were and they’re getting punished for it.

Why do e-books cost as much as an album? The article above has the price of ebooks for your Kindle at $9.99 similar to a price for an album on iTunes. Maybe iTunes has kept the price of an MP3 low, but a song or album you can listen to over and over and over again, while a book…how often do you read a book? Even your favorite book. If publishers agree to lower the cost of ebooks to $5, they’ll sell more than twice as many. Mark it, dude.

Oh, and the NY Times Magazine says journalism has to change, also, or they’ll be dead, too.

Oh, and James Surowiecki says Newspapers are toast, too.

Had the bosses realized that they were in the transportation business, rather than the railroad business, they could have moved into trucking and air transport, rather than letting other companies dominate. By extension, many argue that if newspapers had understood they were in the information business, rather than the print business, they would have adapted more quickly and more successfully to the Net.

Publishing is Changing

So What’s Wrong With Suze Orman?

I get Frank Rich’s point:

Given that John McCain’s economic team was headlined by Carly Fiorina and Joe the Plumber, the country would be dodging a fiscal bullet even if Obama had picked Suze Orman.

But if I were him, I would have gone with someone like James Cramer or Ben Stein as the punchline as opposed to someone who argues that if you don’t have the money you shouldn’t spend it. That’s just me, though.

So What’s Wrong With Suze Orman?