Centives

Ron Moreau described the economics of the Taliban:

• The Taliban used to secure a large amount of its funding from rich Gulf States. However those countries are increasingly shifting their money to support other causes in Palestine, Egypt and Syria, making the Taliban desperate for new sources of cash.
• The Taliban leadership has turned to the production of drugs. Just three years ago it used to make up to $120 million a year taxing poppy farmers 10% and providing drug convoys with protection.
• Now however the Taliban have realized that they can increase revenue by having their own operations – from production to distribution – instead of taxing the efforts of others. Earnings are thought to have increased to $200 million.
• The Taliban’s governing body has decided that 70% of drug profits are to be given to them, and 30% are to be kept by the commanders and fighters – who are actually on the field, risking their lives to produce the drugs.
• The massive increase in Taliban wealth is evident in the luxury cars and homes that Taliban leaders are buying. They’ve also started to live in elite Pakistani districts – sharing neighborhoods with film stars, businessmen, and even senior political figures.

Read more about how the Taliban has allied with an old enemy to sell drugs, why neither America nor Afghanistan has been able to stop the production of opium, and what this all means for Afghanistan’s future over here.

Source: The Daily Beast

Game publishers are locked in an eternal battle with pirates who seek to illegally download free games. In a light hearted article Andrew Heaton looked at some of the funnier ways that publishers have tried to combat piracy:

• Pirates who played Crysis Warhead found that instead of bullets their guns shot (harmless) rubber chickens.
• Grand Theft Auto IV loads up normally for pirates but slowly, over time, the camera begins to shake uncontrollably to the point of making the game unplayable.
• Spyro: Year of the Dragon had several layers of anti-piracy protection. After pirates figured out how to crack the first layer, subsequent layers would trigger. At various times the game would show the menus in German, randomly delete saved files, and more.
• Game Dev Tycoon is a game where the player is a game developer trying to make good games and a profit. Those who pirated the game found that over time, their in-game profits would evaporate because…pirates would illegally download it, forcing the company into bankruptcy, and the game to end.

The full article is funny and informative, and contains many more examples. Read it here.

Source: Cracked

In recent times a series of science prizes have been launched that aim to rival the Nobel prizes in prestige – and have already exceeded them in terms of monetary compensation. There are various motives behind launching these prizes – sometimes they are political with Asian powers wanting to better recognize their own achievements in the field – in addition to promoting science and research. Yet Zeeya Merali writes that these prizes can do more harm than good:

• The money could do a lot of good if it was being used to fund science, but instead a fair amount of it goes into the personal bank accounts of the scientists.
• The money could be used to drive future innovation rather than reward past success. The X-Prize Foundation, for example, is offering $10-million to the first team that makes advances in sequencing the genome.
• The money generally goes to scientists who are already successful in their fields, and don’t have a lack of money for their projects – depriving lesser known scientists of needed funds.
• The prizes are usually modelled on the Nobel prizes and thus ignore valuable fields such as ecology and evolutionary biology in favour of physiology and medicine.
• The prizes have a tendency to award those who make progress in solving problems of the developed world – such as progress against cancer – rather than those who ultimately have a greater impact by working with developing countries.
• Supporters of the prize argue that they help encourage children to go into science. However there are already individuals who inspire millions of children by making interesting educational YouTube videos. These people are rarely recognized.
• Such prizes might mislead budding scientists by reinforcing the myth that scientific innovation is driven by lone geniuses.

The full article is far longer, has many fascinating examples, and is well worth a read. It looks at the catch-22 of awards recognizing existing funding trends, why the prizes can be both too risky and too conservative at the same time, why nobody will go into science for the money, and much more. Find it here.

Source: Nature

Via: Marginal Revolution

The Economist reported on a new way that students can help manage the costs of college:

• Companies such as Upstart and Pave allow individuals to sell a stake in their own earnings.
• In exchange for an initial sum of money, students agree to pay a portion of their pretax earnings for a specified period of years.
• There is normally a cap of around 10% on the proportion of their incomes that students can promise to give up.
• One service also caps the payback amount so that if the next founder of Facebook uses the service, they don’t hand over exorbitant sums of money.
• The idea is an attractive value proposition for students, since, unlike with a student loan, if their income falls, then the amount they have to pay back also falls.
• Investors also have an incentive to contribute to a student’s success – one user of the service reports receiving free study materials from a backer who is hoping to ensure their investment provides maximum returns.

Read more about how it works, what the founders of the services have to say, and how it relates to poker over here.

Source: The Economist

UPS is rolling out a new delivery management system. Marcus Wohlsen used it as an opportunity to look at some of the unbelievable numbers behind the package delivery company:

• The average UPS driver makes 120 deliveries a day. There are 15 trillion, trillion possible routes that the driver could take to make those deliveries – far more than the age of the earth in nanoseconds.
• And UPS has 55,000 delivery drivers. Those calculations have to be made for every single one of them.
• Figuring out a better delivery management system is a lucrative initiative for UPS – reducing the average amount driven by just 1 mile can save $30 million.
• UPS also has a meticulous truck packaging system that minimizes the number of inches a driver has to reach to grab a package to deliver.

Read more about the delivery efficiency manual that UPS uses, the importance of human intuition, and the new delivery management system that it is developing over here.

Source: Wired

Twilight Greenaway took a look at modern day small farmers:

• The median farm in the United States consistently incurs a net loss.
• Farms have thus become creative in identifying new sources of revenue.
• Some use their produce to create unique products such as goat milk paint or specialized jams, cheeses, and soap.
• As society has moved away from agriculture it has also become more interested in farms as a tourist attraction, and farms have capitalized on this through the addition of attractions such as corn mazes and hay rides.
• Farms have also become popular wedding venues, generating lucrative fees for farmers.

Read more about the creative ways that farms are generating revenue, how small farms compare to industrialized mega-farms, and more over here.

Source: Modern Farmer

Over at Slate Matthew Yglesias has had it with wedding presents:

• Wedding gifts come from a different era – a time of dowries and arranged marriages.
• These days couples generally live together before they get married, and so they already have a lot of the things that couples typically receive as wedding gifts.
• Couples are also older now, and have higher incomes, enabling them to purchase the items that are typically given in a wedding.
• Gifts in general are economically inefficient. Rather than trying to guess what somebody else wants the best gift is cash so that people can choose what they want to purchase.
• At least with birthday gifts though everybody gets one and so it evens out. Not everybody is getting married these days and since married couples already live longer and are happier, why should they have the added benefit presents?
• A good modern alternative is college graduation presents – people graduate with a lot of debt and could use some help getting their life started up.

Read more of Yglesias’s tirade against wedding gifts, his own wedding experience, and more over here.

Source: Slate

On domestic flights in the United States there is inevitably an issue of SkyMall magazine in the seat pocket in front of you. Rohin Dhar took a look at the economics of the magazine:

• 70% of all domestic American passengers are estimated to read SkyMall – helped, at least a little, by the rule banning the use of electronics during take-off and landing.
• The company behind the magazine makes about $130 Million in revenue – and about 40% of that is a result of the magazine.
• Its website is also fairly successful – it is estimated to be the 185^th largest ecommerce website by revenue.
• To advertise in SkyMall retailers are charged up to $129,000 for a full page ad that runs for three months, as well as a 6% transaction fee.

Read more about SkyMall’s original failed incarnation, how it has fallen into bad company recently, and more over here.

Source: Priceonomics

Akiko Fujita took a look at a man in Japan who’s making a killing selling prosthetic fingers:

• Prosthetic makers generally get business from those that have been in serious accidents or have had some forms of cancer.
• However in Japan there is a large demand for prosthetic fingers from current and former members of the Yakuza.
• In the Yakuza transgressions are punished by the severing of a finger. Average Japanese people have come to associate missing fingers with the Yakuza.
• For those who have decided to leave the organization this can make it incredibly difficult to find a job, as employers avoid those with former mob connections.
• For $3,000 individuals can get a carefully painted prosthetic finger that is almost indistinguishable from the real thing.
• People normally keep several fingers with them so that they can ensure that the prosthetic always matches their skin tone.
• It’s not all people looking for a job that get the prosthetics – Yakuza members invited to a grandchild’s birthday party might get one so that the family doesn’t know of the mob connection.

Read more about the business of making prosthetic fingers, transgressions that can lead you to lose a finger, and more over here.

Source: ABC News

Via: Marginal Revolution, JDP

Lily Kuo took a look at a startling Indian statistic:

• Despite rapid economic growth, Indians today consume fewer calories today than they did in the 1970s.
• Today the average Indian eats just under 2,000 calories a day – far less than the 2,400 calorie bar for rural poverty.
• There are several potential explanations for this – one is that the quality of water has improved which leads to better calorie absorption and lower overall food intake.
• Another is that since fewer people are working in agriculture, having instead moved to less strenuous city jobs, there is a lower need for calories.
• Indians may also just be eating more expensive food – which means that they can buy less of it, resulting in fewer calories.
• Rural Indians also seem to prefer to spend their money on rent, healthcare, and education instead of food.

Read other explanations, see what the calorie intake graph looks like, and why this might be a government problem over here.

Source: Quartz