The Economics Of Prom

September 1, 2015 in Daily Bulletin

Lauren Sherman looked into the business of prom:

  • Families that earn more than $50,000 a year will spend around $800 on prom.
  • Oddly families that earn less spend more. Those that earn less than $25,000 will spend almost 1.5 times that amount.
  • Most of that money will go into the prom dress, which can cost anywhere between $200 and $800 in one major store.
  • To ensure that no two girls are wearing the same dress to a prom, stores will keep lists of the girls that have bought each of the dresses.
  • This means that big stores with a lot of inventory have an advantage. One company, rent the runway, spotted a market opportunity and offers a Netflix like service for dress rentals. The company rents $800 million of clothes a year.
  • Prom dress makers need to be agile. The dresses in demand will be those that Beyoncé and Taylor Swift were wearing in the weeks leading up to the event.
  • They also need to know the social landscape. If the prom queen buys a dress from a certain store, then they can advertise this and see a boost in sales.
  • They may also offer discounts if buyers post about their prom dress purchases on social media.

Read more about the business, the fashion shows, and broader trends for the future over here.

Source: Racked

The Impacts Of El Niño

August 31, 2015 in Daily Bulletin

Evidence indicates that the world may be set for an incredibly strong El Niño this year. The Economist had an explanation of what El Niño is and how it’s formed over here. But the more interesting article maybe about the impacts that one could have:

  • El Niño is, first and foremost, a natural disaster. The strongest ever happened in 1998 and was responsible for killing 21,000 people and $36 billion in damages.
  • Indonesia would likely be particularly hard hit if one took place this year. Dry weather would mean that coffee and palm oil production would suffer causing prices across the world to skyrocket.
  • The dryness could also mean forest fires which would release billions of tonnes of carbon dioxide into the air.
  • In Nigeria El Niño led to rain which led to stagnant pools of water that were ideal breeding conditions for malaria carrying mosquitos.
  • In the west coast of the United States El Niño will also mean more rain. In California the rains may lead to landslides in a state stricken by drought.
  • It wouldn’t even help fill up California’s reservoirs since most of the rain would just return to the ocean. What California actually needs is snow in the mountains that’ll gradually melt and replenish water supplies.
  • However an El Niño will raise temperatures, making snow less likely, and the drought even worse.
  • Some places in the US may benefit though. An El Niño event means that hurricanes are less frequent in the east and crop yields improve in the Midwest.
  • All in all the 1998 event is thought to have added $15 billion to America’s GDP.

Read more about the weather event, and the effects it could have across the world if it strikes over here.

Source: The Economist

 

Investing In Divorce

August 28, 2015 in Daily Bulletin

We’ve previously written about investors investing in people dying of horrible disease. Now Leah Ward Sears and Crystal Conway wrote about the opportunity to invest in divorce:

  • In divorce cases where one spouse is far wealthier than the other, the wealthy spouse may have the funds to litigate a divorce case indefinitely, forcing the poorer spouse to accept an unfair settlement.
  • Instead companies are springing up that will fund the battle. They’ll pay the legal and forensic accounting costs required to win these battles.
  • They may even pay a stipend so that their clients can pay living expenses while they wait for the divorce case to run its course.
  • Fees are high – the company may take as much as 20% of the winnings from the divorce.
  • There’s also high selection criteria. Companies want to make sure that they only get clients with strong cases. Therefore they require that the client hasn’t engaged in acts that could hurt the case such as fraud or adultery.

Read more about the business, and its future, over here.

Source: Wealth Management

The Economics Of La Tomatina

August 27, 2015 in Daily Bulletin

La Tomatina is an annual festival in a Spanish town where residents and tourists have a massive food fight with tomatoes, and then bathe afterwards in a river. 2015 is the festival’s 70th anniversary. Phil Edwards looked into the history and logistics of the event:

  • Buñol, the town that hosts the festival, has about 10,000 residents but 50,000 people show up for the world famous event.
  • Tickets to take part in the event cost between $12 and $75.
  • The town reserves 5,000 tickets for residents to ensure that the festival has a local vibe to it.
  • The festival is a boon for local traders who sell tomato themed merchandise.
  • Several imitators have sprung up across the world. There’s even a company called Tomato Battle that helps organize such events.
  • New York had one in 2013, and Tide used it as an opportunity to distribute stain removal capsules.

Read more about where the tomatoes come from, the effect that the festival has on city infrastructure, and other details over here.

Source: Vox

Mexico Is Handing Out 10 Million Free Televisions

August 26, 2015 in Daily Bulletin

Tim Johnson wrote about a generous program by the Mexican government:

  • In a bid to convert the country from analogue TV to digital the government is handing out 10 million free digital televisions to the poor.
  • The government has until the end of the year. It’s handing out about 40,000 sets a day but will have to double that if it is to make the deadline.
  • The program costs $1.6 billion.
  • The televisions being handed out are 24 inch flat screen televisions that cost $145.
  • Critics point out that the government could instead just hand out $40 decoder boxes that allow existing analogue televisions to read digital signals.
  • The government argues that analogue televisions with decoder boxes require about 350 watts to run, while a flat-screen television only requires 40 watts, making it a program that helps the environment.
  • However it has been pointed out that most people will probably just keep both televisions, buying a decoder box for the older one, and perhaps keeping the spare in the children’s room, ultimately increasing energy consumption.
  • In addition to smiling masses the program has been a boon to television manufacturers and the media conglomerates that provide digital television services.

Read more about the industry, the shifting competitive landscape, and the manufacturer that lost out because they offered “a better product” over here.

Source: McClatchyDC

Via: Marginal Revolution

Car Dealerships Are Dying

August 25, 2015 in Daily Bulletin

The Economist took a look at the business of car dealerships:

  • In the past buyers would go to dealers to figure out what car they want to buy. Nowadays customers research on the internet and come to the dealership with a model and price in mind.
  • Some dealers are trying to increase convenience by bringing cars to potential buyers’ houses for test drives.
  • But customers have realized that test drives are largely pointless, since there’s usually little that can be learnt from a quick spin, and taking one may create an irrational emotional attachment that a dealer can exploit.
  • What budding car owners do want however is someone who can talk them through the various features – without trying to sell them so they can make an informed decision.
  • They also would prefer not to haggle.
  • This is all to the carmakers advantage. Having a showroom that focuses on features could create brand loyalty through an Apple store like experience.
  • Having customers believe that prices can’t be bargained with could also help carmakers raise prices.
  • And since cars are increasingly connected to the internet and communicate data back to the carmaker, auto manufacturers are beginning to build a relationship with customers anyway.

Read more about the business, its history, the legal protections that it has, and how Tesla is trying to upend everything over here.

Source: The Economist

Netflix Adds More Than Five Days To Your Life Every Year

August 24, 2015 in Daily Bulletin

Netflix is a time sink…or is it? Rob Toledo looked at the amount of time Netflix actually saves you:

  • The average show on TV has 15 and a half minutes of ads. The average Netflix subscriber watches 1.5 hours of TV a day.
  • This means that Netflix saved users 130 hours of advertising every year.
  • And the savings are only going to increase. Networks are increasing the speed of shows to create more time for adverts.
  • This translates to 5.4 days of saved time every year.
  • A Netflix viewer could use this time to watch 65 additional movies or binge on eight seasons (177 episodes) of a TV show.

See more here.

Source: Exstreamist

Food Has Replaced Music In Culture

August 23, 2015 in Daily Bulletin

In a wide ranging article with fascinating observations Eugene Wei looked at the changing role that food is playing in society:

  • Back in the day music used to be the heart of cultural conversation.
  • Now anybody can listen to anything at any time. Indie bands are instantly available and the sense of exploration and discovery has ebbed.
  • MTV no longer dominates the airwaves. These days you hear about cooking shows.
  • Instead of lauding rock stars and guitarists we now laud chefs and restaurants, such as Jiro from Jiro Dreams of Sushi.
  • Now food offers true scarcity. If you get that one dish at that one famous restaurant, then you’re having an experience that a tiny fraction of the world will ever get to share.
  • Yet paradoxically this is because food, in general, is more abundant than ever. We experience it as art more than sustenance. Things like cronuts or cookies and cream shots are creative experiments that excite the world.

The full article talks about a lot more. You should read it here.

Source: Remains of the Day

Via: Marginal Revolution

Why Hotels Have Ice Machines

August 21, 2015 in Daily Bulletin

Go to any hotel in the United States and there’ll be prominent signs directing you to the ice machine where guests can go and get their own ice. It’s actually a little weird if you think about it. Heather Schwedel looked into it:

  • Ice machines came about in the 1890s and hotels were the first to adopt them so that they didn’t have to rely on ice miners who brought down ice from cold mountains.
  • As they were expensive customers were expected to pay for the privilege of getting ice…even decades later, when ice machines became commonplace and affordable.
  • However the founder of Holiday Inn found all the upcharges at hotels irritating so when he launched his own chain he made free ice a feature.
  • As he strongly believed in franchising – the idea that no matter where a customer is they get the same experience if they walk into a Holiday Inn property – soon all buildings belonging to the hotel chain had free ice machines.
  • This set customer expectations and competitors were quickly forced to adapt the practice.

Read more about the history of hotel ice, and the icy forehead head massages you used to be able to get back in the day over here.

Source: Slate

Countries Can Time Travel

August 20, 2015 in Daily Bulletin

The Economist took a look at countries that attempt to mess with the time-space continuum:

  • North Korea has decided to go back in time. A few days ago it turned its clocks back an hour to establish a new time zone for itself.
  • The insular country probably thinks the unique time zone is a metaphor for the country’s exceptionalism.
  • The rest of the world probably thinks that the country going backwards in time is a good metaphor for the economic and social policies of the Hermit Kingdom.
  • Other countries use time zones to assert their authority. Despite their size, India and China, for example, impose one clock on their entire populace.
  • Hugo Chavez turned Venezuela’s clocks back so that it wouldn’t share the same time zone as the United States.
  • Messing with time is a millennia old practice. The Roman Senate named the month of July after Julius Caesar.
  • When they decided to honour Augustus Caesar with his own month, they had to mess around with the days in several other months so that Augustus’ month was no shorter than Julius’.
  • Not all changes stick. France once tried to introduce a ten hour clock and Turkmenistan’s former President tried to rename every day and month, including a month just for his mother.

Read about other changes that haven’t stood the test of….time here.

Source: The Economist