EWOT Goggles #14

Surprise, surprise, I have another EWOT from my Sports Business Journal. I apologize for the repetition but the articles really do apply to what we are learning in class.

The name of this article is "Practice facilities heat up construction market" and was written by staff writer Don Muret.

Yesterday, I was reading an article about how many Division I universities are investing in multi-million dollar practice facilities for their basketball teams. For this EWOT, I am going to specifically focus on what I read regarding the West Virginia University (WVU) basketball program.

In early January, WVU will open its newly made $23.6 million basketball practice facility. Basketball practice facilities are the newest fad among college basketball powerhouses- teams want them to aid in recruiting (practice facilities clearly are something desirable to have for potential recruits) as well as to have an exclusive place for which only student-athletes can practice and is not open to the general student population.

In the article, it talks about all the many reasons why WVU decided to invest. The one thing I want to mention to connect it to class is the reason that covers the topic of the demand curve.

In the article, it talks about how WVU began construction and paid for the construction of its new practice facility during the recent economic recession. Specifically, the article says "The Great Recession took hold and the bottom dropped out of the construction market, reducing labor and material costs to bargain-basement prices. WVU took advantage of the economic downturn for its [basketball practice facility] project that began four years ago..."

Basically, what the above quote is showing is that the entire demand curve shifted in. Because of the economic recession, people had less money to spend and thus there was less of a demand for construction as a whole (it wasn't just one price that changed. People had less money to spend, so therefore, the entire demand curve shifts in).

Since WVU was not directly impacted by the recession (seems like colleges like WVU were not hit so hard during the recession), WVU made a very smart economic decision. Since prices were down for construction, they bought. They figured that once the economy returned to its normal form, prices would increase. Thus, by buying during the recession, they would be saving money. If they waited until the recession was over, they would have to pay more money. So they decided to buy during the recession.

Now that the economy has begun to return to shape, the demand curve for construction may be shifting back up to where it once was, thus increasing prices for construction. So, as the article states, it does appear that WVU made a very good economic decision- by buying during the recession, when the demand curve shifted down, the school ended up having to pay less money for a very expensive practice facility than they would have if they waited to pay for the building after the recession was over.

EWOT Goggles #13

I subscribe to the magazine Sports Business Journal, a weekly publication covering just what the title says it does: sports business!

I usually read through the entire magazine and find countless examples of things that pertain to our learnings in ECON 108. This week's edition fit that bill once again.

For my EWOT, I want to discuss an article written by John Lombardo about the new Philadelphia 76ers (of the National Basketball Association) owner Adam Aron. Aron bought the 76ers, a struggling franchise (both economically and talent-wise), from Comcast Spectacor a few weeks ago.

Comcast was in dire need of selling the team. Comcast was in debt due to its ownership of the 76ers, who failed to earn a profit for the company over the past few years. I can recall watching games on television and at the Wells Fargo Center (where the 76ers play) where more than half of the stadium's seats were empty.

In recent years, fan support for the 76ers has been very poor and very few people have been attending home games. In fact, the article points out that "Last season, the Sixers averaged 14,567 fans per game at 20,328-seat Wells Fargo Center, the seventh-lowest attendance in the 30-team NBA."

The lack of fans last year in 2010 had a lot to do with the loss in profits, as the team was not selling tickets as much as it needed to. And the bottom line is that ticket sales make up the bulk of revenue for professional sports team.

So, the first thing Aron did after buying the team was cut ticket prices on 9,000 of the tickets in the Wells Fargo Center, some by as much as 50%.

This very fact brought me back to class, specifically what we have learned about demand curves.

In 2010, Sixers home-game attendance was very low as fans did not want to go to the games. Some of this may have had to do with the price being too high for tickets for how much fans valued the 76ers. Therefore, on the demand curve, price would be high and quantity demanded would be low (because as the Law of Demand states, when prices are higher, quantity demanded is lower). Now that prices are being lowered by Aron, quantity demanded will most likely increase and more people will want to attend 76ers games since the price to attend (in monetary terms) will be lower.

Based on what we have learned so far about demand curves, Aron seems to be doing the right thing. Quantity demanded for tickets was low in 2010 and that very much had to do with the expensive monetary price to attend games, as well as the "expensive" price of having to support a bad team. But since the price for tickets has been lowered, people will have more of a reason to attend games because there is less of a monetary cost, and therefore, we should expect to see quantity demanded increase.

I know I am very interested to see how this business decision pans out for Aron and the 76ers. Like I said above, we should see 76ers ticket sales increase, but it will be interesting to see what actually happens come the NBA season, which is slated to open up on Christmas day (the NBA Lockout is finally over!)

EWOT Goggles #12

Today I went to the supermarket with my friend to buy some food.

I was in the mood to buy some chips and salsa, so I went to that aisle to get some.

When I got to the salsa, I looked at the price and it was extremely high for my tastes- $4.00. I couldn't believe it and I had no idea why the price was so high.

I remember going shopping for salsa with my mom during high school, and although I can't remember the exact price of salsa, I know for sure it did not cost anywhere close to $4.00.

I stopped to think for a moment and thought back to our lessons this past week and the week before about rationing through the price system. I came to a couple conclusions about the price change in salsa in economic  terms.

For one, the price of the salsa was such because that is a price at which people value it. As we learned with Prof. Rizzo's hotel room example at the Masters Golf Tournament from class, if there was not another person willing to buy the salsa at that price, it wouldn't be listed at that price because then no one would buy it.

I also thought back to the lessons we learned about rationing goods. It is clear that the price of the salsa reflects rationing through the price system: If the price was as low as it previously was when I was in high school, perhaps the demand would be too high. Thus, the quantity demanded would shoot up. As a result of this, the quantity supply might behave oppositely and go down (supply/demand curve).

Thus, with the suppliers producing less salsa, there is not as much in circulation. Therefore, the price system makes it so those people who value/desire the salsa the most will be able to get it- in the end, I really wanted salsa badly so I bought it. This shows that I valued having the salsa highly, and perhaps the high price of it prevented another person who did not value it as much at that price from buying it before I could get to it.

Although I did end up buying the salsa, I did consider a couple things: were there any good substitutes I could get instead of salsa. My options were as follows:

1. Get a different, cheaper dip.
2. Make my own salsa.

Option 1 was possible but I really wanted to eat salsa, so another type of dip was not a substitute in this instance.

Option 2 was a substitute, but I concluded that I valued my time more than saving a few dollars of money, and thus, it was worth it to me to buy the salsa at $4.00.

EWOT Goggles #11- Postal Service Logs Loss in Billions

My EWOT for this week is about an article I read a couple days ago by the Wall Street Journal. The article talks about how the US Postal Service just ended its fiscal year with a $5.1 billion loss and that as a result, the US Postal Service "could regain its financial footing by cutting annual costs by $20 billion by the end of 2015."

Clearly, this means that the US Postal Service will be forced to reduce jobs in their industry, which is one of the only ways the independent government agency can cut annual costs and save money.

This led me to think about some of the stuff we have learned in Economics this semester, namely the effect the influx of technology has on an industry.

To begin, it is clear that one of the reasons why the US Postal Service is struggling is because less people have a need to send paper letters. The reason behind this? Because of the influx of new technologies such as better telephones, more efficient/secure E-mail, etc.

Thus, less people are buying stamps/paying fees to to send letters so the means of income for the postal service is reduced.

The cutting of annual costs will undoubtedly cause jobs to be lost. I am just waiting for people to come out and say something such as "this is horrible! Look what is happening in our economy due to these new technologies! So many jobs are being lost! This is a result of our struggling economy! Now we are poorer!"

This is a common rationale for jobs being lost due to technology, as we have learned in economics this semester.

But, this couldn't be farther from the truth. While the influx of new technologies has indeed costed people their jobs, we are richer because of it. Jobs aren't lost- rather the composition of jobs has changed.

Sure, there may be less jobs in the postal service, but think about how many new jobs will be created to produce cell phones, increase email technologies, etc.

Not to mention, think how much wealthier we are now. Email, for example, is ultimately free from monetary cost- all you need to do is have internet access and a computer, which many people have in our country for other reasons than just sending emails. Thus, people nowadays don't have to spend money on sending letters because they can get what they want by sending an email, which is free.

Now, people don't need to spend money on stamps and thus we as a society have more money in our pockets to spend in other industries on things we value.

Also, those who lost the jobs as a postal service worker can now go work in other sectors to be more productive where they can be of more use. This also makes us wealthier because new, innovative things may be created as a result of transferring these jobs into other industries.

All of the above explains how these job losses in the postal service are actually a good thing: they might be bad for those who lose their jobs initially, but for us as a whole society, we are much better off.

The article can be seen here: http://online.wsj.com/article/SB10001424052970204190504577040350312660374.html?mod=e2tw

EWOT Goggles #10

Last week in class, we learned about middlemen- or people, businesses or organizations that bring buyers and sellers together to make a transaction more convenient. To do this, middlemen also charge an additional price for offering such convenience to buyers and sellers.

The other day, I was talking to one of my friends (Joe) and he gave me a perfect example of a middleman.

Joe was telling me how this year, his friend Shawn does not have a car on campus but he (Joe) does.

Shawn wanted some beer to enjoy his night on a recent weekend, and Joe agreed to go buy him some booze, since he had a car with which to drive to the store. But, Joe only agreed to do this on one condition: if Shawn paid him all the money for the beer plus an additional fee of $10.

I asked Joe what the additional fee was for. He told me: "Taking the time to go buy alcohol for Shawn came at a cost to me. I had no interest in drinking alcohol or buying beer, I was simply doing him a favor. I could've spent my time doing other things I valued, such as my school-work. So to incentivize me to buy him alcohol, I requested that he pay me a fee in response to the cost [of losing my time] that was placed upon me to go out of my way to get him beer."

And then it hit me: Joe was acting as a middleman, just as we learned in economics. Even though the store Joe was buying beer from was also a middleman, Joe was serving as an additional middleman- bringing a buyer and seller together. Joe was making the transaction convenient- and possible- for both parties, which is all part of being a middleman. And after putting two and two together, I realized that Joe very much deserved compensation for getting beer for Shawn, not only because it cost Joe his valuable time, but also because he was making a transaction much more convenient for both parties.

If it wasn't for Joe acting as a middleman, the transaction could never have occurred. Shawn would not have gotten the beer he wanted because he had no car to get him to the store. This shows how middlemen are indeed good for the economy- they stimulate economic growth through making transactions possible that would not have been possible without middlemen.

EWOT Goggles #9

I subscribe to a magazine called the Sports Business Journal. The content of the magazine includes exactly what the title says- business from the sporting world.

I enjoy reading the magazine because it allows me to apply a lot of my economic learnings from class to sports, which is my biggest passion in life.

San Francisco Giants Pillow Pet

Yesterday, I read an article about a new fad in the sports merchandise world called "Pillow Pets" (see picture to the right). Basically, they are stuffed animals that can be "un-velcrowed" from the stomach to transformed from a cute and cuddly friend into a pillow.

Apparently, Pillow Pets have been making record sales since they came into creation. Their sale has boomed even more since the company who initially produced Pillow Pets recently licensed the product to another company, Fabrique, to begin putting sports logos on the pets.

Take a look at Pillow Pets revenue generation since its inception in 2007 (Pillow Pets sell anywhere between $15-$30 apiece):

• 2007- $300,000
• 2008- $3 million
• 2009- $7 million
• 2010- more than $300 million

I was absolutely astonished at these figures. When I read how much money these pillows were generating, I thought to myself how ridiculous it was. I initially thought to myself- "who needs such a pillow? They are so useless! I can buy a more than sufficient pillow for much cheaper than $15 to $30. What a waste of money!"

But I continued reading the article and this is what Brian Jennings, NHL executive VP of marketing, had to say about the item's success: "They hit a great combination of the right emotional chord and the correct price point."

Bryan Swallow, VP of marketing and sales at FootballFanatics.com, said that "Adults like them because they're a connection to their favorite team. Kids need pillows for car rides, nap time or whatever, so they won't be dropped in the toy chest and forgotten."

These quotes brought me back to what we learned leading up to the first midterm. Although they may seem to be, these pillows are not at all useless and are well worth the money because people VALUE them. As we learned with the Jibbitz fad Prof. Rizzo loves to refer to: no matter how useless an item might seem, it cannot actually be referred to as useless if there are a significant amount of people who value it and are willing to pay for it.

This led me to reconsider my initial thoughts. I now realize that the Pillow Pet fad is not a useless fad but rather a useful fad. For one, it allows parents and children to connect with each other through a parent's favorite team being the pillow for a child. Thus the child gets to become a fan of the same team the parent likes by being exposed to a stuffed animal/pillow with a sports team logo on it.

Perhaps some day I will buy a Pillow Pet for my own children. After all, I do want my own children to get sufficient rest- and be a Philadelphia Phillies fan just like me!

EWOT Goggles #8

I intern at a sports talk radio station, WHTK, in the city three days a week, and today I walked into work to exactly what we learned in class today: loss of jobs, unemployment, etc.

I walked into the studio to find my host looking a bit sad. I asked him what was wrong.

He told me that the longtime producer of his show had been laid off from work. For his privacy, I will call him "Joe".

I felt horrible for Joe, as I had become close to him during my time working at WHTK. But apparently, Joe wasn't the only one laid off- a number of other people were laid off as well.

This made me think right back to class today. Although I feel horrible for Joe, I concluded that him being laid off may not be such a bad thing for the economy all because of what we learned in class today.

Today in class, Prof. Rizzo discussed how when technology/machinery takes away peoples' jobs, we as a society become wealthier because those people who lose jobs can go work in other areas and create new tools/items that will benefit us.

Now, assume that Joe was laid off because there was not a need for his services anymore (Joe was a very well-liked a respected producer, so the only reason explaining his layoff was that technology/mechanization could do the job he had previously been doing.) Of course, part of this technology/mechanization that is now able to do his job came from trade and exchange with other countries.

Joe's job as a producer was part-time. He also worked part-time at a clothing store. My show host told me that the clothing store had been wanting Joe to work full-time, but he couldn't because of his obligation to the radio show.

But now that mechanization and technology has gotten to the point where Joe's job is not needed, he can now focus more on his job at the clothing store and perhaps work full-time. This could make us wealthier as a society in a couple of ways:

1. Because Joe can now focus all of his energies at the clothing store, perhaps he will be able to innovate by making new products/developing new ideas that will appeal to the public. This would help our economy become wealthier because people would continue to and increasingly buy products at the clothing store, which puts more money into the economy.
2. Joe having his job taken away at the radio station could also reduce prices for prospective advertisers to advertise on the radio show. Not having to pay Joe (and other laid-off employees) a salary, the radio show may be able to sell advertisements at lower prices. Thus, these companies who buy the advertisements might be able to lower their prices for products as advertisements will not cost as much and they won't have to make as much money to pay off for the advertisements.
1. Thus, with the reduction in prices, people will have more money to spend elsewhere, which helps our economy because the more money we have to spend among different areas of the economy, the better off we are.

This is all a perfect example of how trade, exchange, and in this instance, unemployment, can make us wealthier. And it also shows how trade (which leads to an influx in technology and mechanization) does not destroy jobs, but rather, it creates different and in most instances, more beneficial ones to our society.

EWOT Goggles #7

Last night, I attended a Varsity Student Athlete Advisory Committee (A.K.A VSAAC, which is a committee made up of varsity athletes at the school who do things to promote U of R varsity athletics and the like).

At the meeting, VSAAC's advisor, women's basketball coach Jim Scheible, made the announcement that he needed four representatives to attend the U of R's Athletic Hall of Fame Induction banquet on this coming Friday night.

Having trouble finding volunteers, Coach Sheible tried to present some incentives for people to go, such as that it is a yearly tradition of VSAAC to have representatives attend this dinner, and thus, if no one goes, it will not be a good reflection of the organization.

He also mentioned that by going, the four volunteers would receive a "free dinner" at the banquet.

Now, I already knew I could not attend the banquet as I am going to be away for the weekend and won't be on campus on Friday night.

But even if I could attend, the incentive that Coach Sheible presented would definitely not have convinced me to go. The second he mentioned that a "free dinner" was up for grabs, I thought of economics and cringed at his comment.

As we have learned in class, NOTHING is free. There is always some sort of cost in everything, whether it be a monetary, non-monetary, or opportunity cost.

In this case, the dinner may indeed be free in terms of money, but by no means is it actually free. Let's say I was around campus for the dinner. If I decided to go, I'd be giving up a few hours of my time to attend the event. Therefore, the cost of attending the dinner would be the time I am giving up by going.

Lately, I've had tons of homework to do and a number of exams to study for. When I am away this weekend, I am going to be doing a lot of homework and studying.

Thus, if I were available to go to the dinner and I did end up going, the cost for me would be a loss of time to put towards my studies.

Because I VALUE being prepared for my classes so as to have the best opportunity to get good grades, there would actually be a steep cost for me to attend the dinner if I was not going away for the weekend.

As much as I hate to say it for the well-being of VSAAC, I value being prepared for my studies much more than attending the dinner and getting a "free" dinner ("free" referring to not having to pay any money for the food.) Therefore, I definitely wouldn't have volunteered to attend the dinner even if I could because I'd be incurring such a significant cost by doing so.

For some people. the incentive of receiving a free monetary dinner might be an extremely attractive option, but for me, I value getting my school work done much more than getting a "free" meal, which explains why the "free" meal is not so "free" after all.

EWOT Goggles #6

Earlier today, I was at the gym working out. My roommate, Steve, also happened to be at the gym but he was doing a separate workout.

We both arrived at the gym at around the same time, so we were ultimately on the same schedule. I finished about ten minutes before him, however.

Before leaving, I went up to Steve to say bye, but he told me I should wait 10 minutes for him to be done his full body workout and then, I could do a forearm workout with him.

I agreed to stay and wait for him to be done so I could do Steve's forearm workout.

I waited about 10 or so minutes and Steve was not yet done. He said he would be soon. But I didn't have that much time to spare because I had to go finish homework and take advantage of some free time I had in my schedule.

At this point, I started asking myself what I should do: stay or leave. My mind initially told me to stay and continue to wait- I had already waited 10 minutes, so I might as well continue to wait because if I leave without doing the forearm workout, then I effectively wasted my time.

But then I thought back to something we learned in economics class last week:

• Sunk Costs: resources that are not recoverable at all when I make my decision

I thought back to the story Prof. Rizzo shared in class about having a girlfriend for 5 years. He talked about how if a guy wants to break up with his girlfriend of five years, he should do so. Part of his thought process shouldn't be that he should stay with his girlfriend because if he breaks up with her, he would have wasted the last five years of his life.

In both instances, the time lost is a Sunk Cost. I, nor the guy with the girlfriend, could get the time (resources) back that I lost.

Because of this, I realized that it would actually be in my best interest to leave the gym while I was ahead. Sure, I had wasted 10 of my minutes, but if I stayed, I would be wasting more of the time that I needed to do my homework. My time lost was a Sunk Cost and I could never get it back.

I weighed the cost/benefits of staying after waiting 10 minutes and going back to my room to do work. In the end, I chose to go back. This decision was honestly completely made because of that story Prof. Rizzo taught in class about Sunk Costs. 

In the past, I probably would have stayed to do the workout because I would've had the mindset that I would have wasted my time if I didn't do the forearm workout I had been waiting for. But from what I have learned in Econ, I now understand that none of that matters because the time in this instance is a Sunk Cost, and I cannot/couldn't ever get that back.

EWOT Goggles #5

My EWOT goggle entry for this week is about something that happened last week in recitation during the Ultimatum Game.


During the ultimatum game, there was one student who constantly rejected offers that were as high as 4-6, which in my opinion is a tremendous offer. As my TA Alex taught us following the game, one should pretty much accept every single offer presented to him/her because it is better to get something than to get nothing.


But this one student (I will call him Joe) rejected several offers that Alex advocated against doing. Joe's argument for doing this was because he felt like he was being taken advantage of, and didn't want to give other people a better deal.


But as we have learned in economics throughout the semester, it is important as an economist to focus on one's self-interest over one's feelings.


Adam Smith, the great economic philosopher, advocated the belief that looking out for one's self-interest is the key to accumulating wealth/success. Prof. Rizzo explained in class that Smith believed that the way to get rich and increase production is by making rational decisions that benefit one's self-interests.


And if you think about it, this makes a lot of sense. But Joe did not do this in class. He let his emotions get in the way of his decision making. I suppose some people would argue that Joe's was smart by the rejections he made, but according to Smith's theories, he was completely wrong.


This is because Joe had an opportunity to better himself (get extra-credit), but he let his emotions get in the way of his decision making. Thus, he wasn't acting in his best interest. It didn't matter how many points the presenter offered- the bottom line is that by rejecting the 6-4 deal, Joe was accepting 0 extra-credit points instead of 4, which hurts him because now he ends up with nothing.


It is interesting to point out that if Joe actually values his feelings more than becoming wealthier in terms of extra-credit, he may have actually made the right decision. But as Alex pointed out in our recitation, it is very important in the business world to not let emotions take over decisions. 


The bottom line is that in today's world, it is imperative to act in your best interest, and that pretty much always means trying to get SOMETHING as opposed to NOTHING.

EWOT Goggles #4

My weekly EWOT entry is about a story that Prof. Rizzo sent us earlier this morning about how "Driverless Car" had been recently navigating around Berlin's streets. Basically, a car built on computer chips and technology is in the works, and in 30-40 years, the article states, we should be able to drive our very own cars without actually having to drive it. We could have have the car pick us up by pressing a button on our iPod and just relax in the back seat as the car takes us where we want to go.

I read the entire article, found it interesting, and after reading the article, I began to reflect on what I just read to try to think of it in economic terms. Click here for the link to the article.

The first thing that came to mind was that these cars would be bad because that they would kill many jobs for people (taxi drivers, for example). But then, something that was discussed in one of my weekly recitations with Alex Ray a couple weeks ago popped into my head.

Driverless cars may cause some jobs to become extinct, but they would not
be bad for the job economy because they would create "job displacement."

I remember that in recitation, Alex taught us about how "The Luddites" protested and often destroyed the creation of new technologies during the 19th century (at the peak of the Industrial Revolution) because they worried that all of these new technologies would take away their jobs in the factory, as with more machines doing the work, less people would be needed to work to make the things the machines were now making.

In other words, the Luddites believed that technology took away their jobs. But as we learned in recitation, this couldn't be farther from the truth. When new technologies are created, there is what is called "job displacement"- while some jobs are lost, others are created because there needs to be people to make the technology.

Therefore, new technology is actually a good thing, despite what the Luddites believed. New technologies allow us to become more productive, while creating different jobs for people to work. Technology may cause jobs to be lost, but from the technology, just as many different ones are created. And new technology allows us to produce more things at a faster rate than ever before.

Anyway, in terms of the "driverless car" story, I thought about what having a car like this would do to the job economy- would it be bad or good for the job economy.

I think that at first glance, many people would say that having driverless cars would not be good for the job economy- it would take away taxi companies, as people could just use a remote control to have a car pick them up. No longer would people need a taxi driver for them to take them places.

Also, a side effect of having driverless cars is that many gas stations would probably struggle, because if there were driverless cars, people would really only have to buy 1-2 cars per household, as opposed to the commonly seen, 1 car per person in each household. The reason behind this is because if lets say I needed a ride to the gym one day and my mom needed to go to the mall, the car could drive us both there and pick us up at our conveniences. Basically, the driverless car would need to make less trips since it could drive itself.

These above ideas are exactly what I thought when I finished the story. But after taking a few moments to think economically, I reminded myself that I was entirely wrong because of the Luddite example from recitation.

To begin with, the driverless cars would improve peoples' lives in society drastically, as people could get work done and do other things while driving places instead of having to worry about driving/controlling the car. People would therefore save a lot of time by having driverless cars.

Having driverless cars, just as was taught in recitation, would also create job displacement. Sure, maybe taxi drivers would become extinct. But there would still be car service companies that would be made because of these new cars. Companies would be created to have a lot of driverless cars that could be rented out to people who need a ride somewhere.

There would also be new jobs created in the form of having people build the new cars and constantly program/update the software in the cars. In cars today, there are not computer chips that control everything the car does. A lot of new jobs would be created so that people could make these new computer chips to control the car. Not to mention, all technology has to be updated at one point or another, so jobs would also be created in the form of software updaters.

As far as gasoline goes, maybe less gas would be needed but other types of fuel would be needed as well because of these new cars.

While some gas stations could continue to be gas stations, others could turn into "battery stations". In cars today, cars sometimes die and need new batteries. Think about how often a battery will need to be changed in a car that is completely full of technology. More jobs would be created in that regard- people to make stronger batteries, and jobs needed to make replacement batteries for dead batteries.

While I have found economics to be a bit confusing at times this semester, I have noticed that I am starting to think more in economic terms- at least enough so to know that while some jobs will be hurt because of the creation of driverless cars, the new jobs that will be created from it, and the improvement in everyday life that the car will give us, will make for an equally-as-good, if not better, economy.

EWOT Goggles #3

Last night, I had to deal with an important cost/benefit analysis connected to my participation on the baseball team here at the U of R. I made a decision on a situation using the economic theory we learned in class about cost/benefit.

This weekend, our baseball team hosted a number of recruits to visit the school for the weekend. Just to give a little insight, the typical recruit stays with a player on the team overnight and then spends the following day with him. The two recruits our team was hosting were staying in the Wilder Residential Hall- one of them in the Wilder Suite I live in (I'll call him John), and the other with the other Wilder Baseball Suite (I'll refer to him as Scott).

As I mentioned above, Scott was scheduled to stay in the other Wilder Suite while John was already settled in and set to sleep on the couch I have in my common room.

In the other suite, however, a player's friend had come in for the weekend to visit, and he was sleeping on the couch in the other suite.

Long story short, Scott didn't have a place to sleep at all- no extra bed/couch to sleep in. It was 10:30pm, pretty much the entire baseball team was out and about for the night, and I was left having to solve a problem that truthfully, shouldn't have been my worry- I did my job by hosting John, the other suite was irresponsible for not having a place for Scott to sleep.

Because I was the only baseball player left with the two recruits, I had a decision to make, which I thought of in economic terms:

1. Go to sleep and forget about finding Scott a bed.
2. Go out of my way to find the recruit a bed.

Here were the cost/benefits of my decision:

1. Go out of my way to find Scott a bed to sleep in.

I had a decision to make last night: to sleep or not to sleep.
The benefit of not sleeping outweighed the cost, which led
me to my decision of choosing option 1- find Scott a bed.

• Cost: Lose sleep because I'd have to go to bed later than I wanted. I had to wake up early the next morning to go and do my homework, so a result of me having to go to bed later would be having to wake up later the next morning, and thus, getting started on my homework later.
• Benefit: I'd be making sure that Scott has a good experience on his visit, which in turn might make him more likely to decide to come to Rochester (that is, assuming that in his mind, sleeping on the floor/in a chair would make his visit miserable). By coming to Rochester, Scott would definitely help our team out as he is a very good player. So therefore, the end benefit is that the baseball team at Rochester gets better.

2. Go to sleep and forget about finding Scott a bed and let Scott worry about where he was going to sleep on his own.

• Cost: Lose out on adding a very talented player to our team because of the fact that by not finding him a bed, he would probably have a miserable time on his visit because he'd be uncomfortable sleeping.
• Benefit: I'd get more sleep and thus I'd be looking out for myself as opposed to the betterment of the team. By going to sleep and letting Scott figure out his own sleeping arrangements, I'd be able to wake up earlier and get more of my homework done the following day because I'd be able to get to the library sooner.

The decision:

I chose decision 1 because I thought to myself how in the long run, potentially adding Scott to our team would be a much better benefit to receive than I could receive in option 2. In the end, after about 45 minutes of calling my friends, I found Scott a bed in the Tiernan Residential Hall. I may have lost 45 minutes of sleep, but I truly feel it was worth it.

In short, in my mind, the benefit of option one far outweighed the cost while the benefit for option two did not outweigh the cost. If we lost the chance to add a very good player to our program, I knew I'd regret making that decision down the line, which is why I decided to go with option 1.

I sincerely hope Scott had a good time on his visit- I guess I will learn next year if my decision was actually worth it when I see whether or not Scott decides to enroll at UR.

EWOT Goggles #2

In recitation this week, we talked a little bit about incentives, which is a commonly discussed topic in economics.

Specifically, my TA Alex and I talked after class about the implication of a specific situation that I face in my real life on a weekly basis.

Three days a week, I go into downtown Rochester to work a job at a local radio station. I do not have a car on campus, thus transportation is often an issue for me.

To get downtown, I have one of two options:

1. Call a cab
2. Ask my friend who has a car to take me

Taxi is the way I'm getting to work from now on because
I now understand how significant it is for someone to
have a important incentive to properly get a job done.

Every single time I have went to my job this year, I have called a taxi and have had to spend $24 roundtrip. Each time though, I am tempted to ask my friend to get a free ride.

But as I learned in my recitation class, even though it is much more expensive, calling a taxi is actually there more economically intelligent way to travel. Here is why:

I need to get to work by 3pm. If I am late, I risk being fired, which would be very bad because my job is a very good resume booster for what I want to do with my life someday- be a sports radio personality.

Therefore, I really can't afford to be late to work and risk being fired- the opportunity to work where I work is a once in a lifetime opportunity and it will allow me to learn the requisite skills to someday become a successful sports talk radio host.

Because of the risk involved in not getting to work on time, I am better off calling a taxi because of the incentives each person would receive for taking me.

The taxi driver has the incentive of being paid. Because of this, he has a lot of reason to pick me up on time and be reliable, because if he doesn't, I might never call him again for business or will not give him a tip. In short, he is very likely to pick me up on time because his incentive is money, which is necessary to have in today's world.

My friend's incentive to take me is ultimately nothing- perhaps it is just feeling good about doing a favor for a friend. But, because there is not as great of an incentive for my friend, there is more of a chance that my friend will either:

1. forget to take me and not come
2. not be in the mood to take me, so just not come

Therefore, from here on out, I am definitely going to call a taxi to take me to work. It makes a lot of sense when thinking economically about it as well.

There is a much better chance that I will get to work on time when I call a taxi, because his incentive is so great. A taxi driver is a taxi driver for basically one reason only: to make money and to make a living. Therefore, money is a taxi driver's ultimate incentive. When an ultimate incentive is at stake, there is a much better chance that someone will get a job done- and do the job well.

Because the incentive for my friend to take me is not the "ultimate" incentive, there is less of a chance that he will be reliable and do that job he would be set out to do if he agreed to take me to work.

EWOT Goggles Post #1

For my first "EWOT Goggles" post, I'd like to connect something we learned in class with something in my own life.

In the first week of class, Professor Rizzo spent a significant amount of time teaching us about different costs/benefits and the decisions one has to make in life.

Just about an hour ago, I had to make a significant cost/benefit decisions to best make use of my time, specifically when it came to deciding which campus dining hall I should eat at.

The only places to eat on campus for a full meal are Danforth, Douglas, and The Pit.

With this year's influx of new students, the student body has grown in number and it has shown in most of the dining halls.

Here is a picture of the always-over-crowded Danforth Dining Center.
Having to write this blog post left me with a serious economic decision
regarding whether or not it was the best decision to eat lunch there.

Danforth and Douglas are almost always so crowded that to eat a well-balanced and satisfying meal, I'd have to stay there for at least an hour while waiting in long lines to get the food I desire.

At The Pit, however, the waits are not nearly as long because eating at The Pit is not part of the meal plan and it costs extra money to eat there. The Pit also offers filling meals, but one has to pay extra money to eat there since it is not part of the meal plan.

Danforth/Douglas does have overall better food though, while The Pit is more cafeteria-like and is not as high-quality.

But as I write this, it is 12:30pm and I have to get this blog post written before 2pm because I have baseball practice and I don't want to be writing this post later tonight after practice because I will probably be very tired.

So at 11:30am, I had to get something to eat so that I had sufficient energy to perform well in practice. I had a decision to make- should I go to Danforth/Douglas or go to The Pit?

Here was the cost/benefit breakdown that I had to consider:


Douglas/Danforth- 

1. Cost: Having to wait a long time to eat a satisfying meal, thus giving up valuable time that could've been spent writing this blog post.
2. Benefit: Being able to enjoy my meal by eating the highest-quality food on campus, which could also allow me  to perform better at baseball practice because of having more energy.

The Pit:

1. Cost: Having to eat lesser quality food that I might not enjoy as much as Danforth/Douglas and, not to mention, the lower quality food might leave me with less energy for practice which might cause me to perform poorer.
2. Benefit: By going to The Pit, I'd be done my meal a lot faster and have more time to write a good blog post.

The winning dining hall was The Pit, where I was forced to eat less-quality
food, but was left with more time to work on this EWOT Goggles blog post.

After considering both options, I decided to go to The Pit because my baseball coach always tells us that school comes before baseball. On that note, I figured that I would be better off taking a risk and eating less quality food at The Pit so I could write the best blog post possible for class.

Thus, in my mind, the benefit of eating at The Pit exceeded the cost more than the Danforth/Douglas benefit exceed the Danforth/Douglas cost.

And now I am finished this blog post just in the nick of time- right before I need to head off to the field for practice. I hope I made the right decision.