Signed up for a supermarket loyalty rewards program? It’s a sham writes Brian Palmer:

• Loyalty programs were invented by an airline company and they make sense in industries where companies can’t differentiate themselves from their competitors.
• Supermarkets can though. Companies that attract customers through high quality products and exceptional service – such as Whole Foods and Trader Joe’s – don’t have rewards programs because their shopping experience speaks for itself.
• The supermarkets that do have loyalty programs thus feel that there is no reason for shoppers to shop with them and need to provide additional incentives. This should tell you something about them.
• These programs aren’t that great for supermarkets either. They should entice the most loyal customers to shop more – but the rewards are often so generous that retailers with loyalty reward programs don’t make any money from their top customers.
• Loyalty programs are also used to mine data. Tesco will look at your purchase history and try to market similar items with higher mark-ups to generate more profits from individuals. If you don’t shop with them for a while they’ll send coupons to lure you in. This kind of sounds like an abusive relationship.

The full article talks a lot more about the economics of the rewards card industry, and an experiment that everybody should consider engaging in. Read it here. Check out an earlier post on how Target uses its rewards program to manipulate you here.

Source: Slate

Earlier this week the company Research in Motion announced that it was changing its name to Blackberry as it struggles in a marketplace ruled by Android, iOS, and Windows Phone. Brian Palmer explored the history of corporate name changes:

• Studies suggest that corporate name changes usually either have no effect on the subsequent success of the company or a mildly negative effect.
• The few companies that do succeed usually do it because they started off as a small businesses with a local name, and are now so successful they need a global brand. Hence a company called Tsushin Kogyo changed its name to Sony to find success around the world.
• Businesses whose stock prices fell prior to a name change usually see the price continue to fall for the next three years.
• Moreover the former Research in Motion has now linked its reputation to just one product: Blackberry. If the product fails then the whole company will be associated with failure.

Read more about the types of name changes that are successful, companies that have bucked the trend, and why the Blackberry name is already off to a bad start over here.

Source: Slate

The United Nations once again tightened sanctions against North Korea. Centives favourite Brian Palmer looked at the dynamics of North Korean sanctions:

• Sanctions on North Korea are relatively light. Weapons and luxury goods can’t be sold and about a 100 individuals, companies, and government agencies are blacklisted.
• This is in contrast to countries such as Iran, Cuba, and Syria that have blanket trade restrictions imposed upon them by the United States.
• Even the existing sanctions are easily circumvented. The UN hasn’t defined what it means by ‘luxury’ goods allowing China to send North Korea tobacco and cars. Shell companies set up by the North Korean government allow it to disguise all other economic transactions.
• Yet America doesn’t make it easy to trade with North Korea, even in non-sanctioned industries. Those who want to trade get no support from the various export encouragement programs that the United States has set up.

Read more about how trade with South Korea compares with that of North Korea, and the countries that don’t take the sanctions seriously over here.

Source: Slate

How often can paper be recycled? The always excellent Brian Palmer had the answer:

• In theory paper can survive dozens of rounds of the recycling process.
• However each time paper is recycled the fibres that make it up are cut – quite often into pieces that are too small to use. This means that more realistically paper can be recycled up to about five times.
• Each time it is recycled, paper loses some of its quality. Therefore it goes from being writing paper to facial tissues, milk cartons, and, finally, cereal boxes.
• Most of the recycled paper is sent to China which doesn’t have enough forestland to feed its demand for paper.
• In fact, waste-paper might be America’s biggest export to China.

Read more about where your paper might end up, how paper is recycled, and why the United States should be thankful for China over here.

Source: Slate

America is set to become the world’s biggest energy producer by 2020. Could that mean that it will soon be joining OPEC? Brian Palmer answered:

• To join OPEC not only must countries export energy, they must also have common interests. It is unlikely that countries such as Saudi Arabia, Venezuela and Iran will think that the United States shares its interests.
• OPEC signatories also have to be able to control how much energy they produce. Yet in the United States energy production is left to the private sector, and the government has little control of the amount they produce.
• Joining would also lessen America’s geopolitical influence. If it is allowed to set prices itself – rather than be held hostage to the decision making of OPEC – it could use oil prices as a foreign policy tool by offering cheap supplies to those who act in the American interest.

Read more about other energy producers who refuse to join OPEC, and the last country that the cartel added over here.

Source: Slate

Two American states have legalized marijuana, even though the Federal Government still considers it to be an illegal drug. Both sides use various studies to back their arguments which led Brian Palmer to answer…how do you participate in a medical marijuana study – thus getting free weed?

• Scientists running the studies recruit participants online and in ads. All one has to do is call them to volunteer.
• However you’re not guaranteed to be given marijuana. Most studies have a control group that are given a placebo, thus robbing you of your high.
• Not all the studies are fun. One tests your pain threshold which involves the researchers getting you high and then…causing you pain to see how you cope.

Read more about the criteria you’ll have to pass, and the types of studies that take place over here.

Source: Slate

When you donate to the church, is your money invested well? Brian Palmer answered:

• The Church of England’s returns beat the Standard & Poor’s 500 index over the past ten years.
• The Mormon Church uses its money to invest in more than just other businesses. It holds over $1 billion of land in the United States and has stakes in the media and insurance industries. It may well be the Church that most successfully manages its money.
• The Vatican doesn’t reveal detailed financial information, but evidence suggests that its record in recent times is mixed.
• The majority of churches, though, keep their finances a secret. It appears that smaller churches have fared badly in recent times – with some going bankrupt or being foreclosed upon – while the larger ones have done well.

Read more about other churches and the oil executive who was named Archbishop over here.

Source: Slate

In the United States judges can either be appointed by an elected official, or directly elected by the voters themselves. Brian Palmer looked at how the different types of judges compare:

• Appointed judges make fewer rulings. This might be because they don’t have to justify their tenure to voters by pointing to the number of rulings they have made.
  • America’s Supreme Court – which is entirely appointed – is indicative of the trend. In the past 30 years the number of cases they’ve made rulings on has shrunk by 50%.
• While the number of rulings might be lower, appointed judges produce higher quality rulings. Their rulings are more likely to be cited by others.
• Some studies suggest that elected judges are more partisan – although other studies disagree. Even if they are though, this is not necessarily a bad thing since the judiciary shouldn’t be entirely independent of its constituency.

Read more of Palmer’s fascinating musings about the merits of elected versus appointed justices over here.

Source: Slate

New York City has gone through with a controversial policy to ban the sale of soft drinks in cups larger than 16 ounces (about half a liter.) Brian Palmer looked at when soda servings got so big:

• During the great depression an upstart Cola company called Pepsi-Cola began to sell 12-ounce bottles for a nickel. This was twice the amount of cola that Coke sold for a nickel.
• In addition to making it a more attractive value proposition for consumers, this also meant that Pepsi could use the same bottles as beer makers, cutting costs.
• Pepsi gained so much market share that it looked like Coke would lose its dominant market position. Coke soon released a “Family Size” 21 ounce bottle.
• When Coca-Cola first worked with McDonald’s the original fountain soda had seven ounces. It hit 21 ounces in 1974.

Read more about the racial undertones behind the serving sizes, and an infographic that depicts the evolution of the soda container over here.

Source: Slate