Centives

Christopher Ingraham reported on a study about drug abuse:

• “Dry” counties – places where the sale of alcohol is banned outright – seem to have more meth labs than “wet” ones.
• This could be because those who break the law to buy alcohol anyway may also be more likely to consider breaking the law to purchase meth.
• The evidence indicates that removing the ban on alcohol could reduce the number of meth labs by as much as 25%.
• This means that, in a twist on conventional wisdom, banning alcohol becomes a gateway to harder drugs.
• There are other areas where such bans have unintended consequences. Dry counties have higher DUI related crashes than wet ones – likely because you have to go further to get your alcohol.
• They are also more likely to have high rates of binge drinking.

Read more about the study, its conclusions, what happens when you merely restrict the sale of alcohol, and other fascinating insights here.

Source: The Washington Post

Iran and global powers came to a historic agreement exchanging relief from economic sanctions for curbs on Iran’s nuclear program. While this is meant to provide a massive economic boost to Iran’s economy once the sanctions are fully lifted, for now the deal is hurting the economy wrote Najmeh Bozorgmehr:

• Iranians now expect that cheaper, better quality international goods will soon flood the market, causing them to hold off on buying things in the present, hurting the economy.
• Car sales in particular have crashed, declining by 15%, as Iranians realize that they’ll soon have a wider selection to choose from when making a multi-year purchasing commitment.
• It’ll be several months before benefits from the nuclear deal are realized meaning that the prospect of the lifting of sanctions could inadvertently trigger a recession.
• Things aren’t helped by plunging oil prices which are straining the government’s budget.

Read more over here.

Source: Financial Times

Via: Marginal Revolution

Robyn Passante spoke with a stadium vendor to understand what their day looks like:

• They begin well before the game starts by helping to prepare the drinks and snacks.
• Over the course of a game they walk around 12,000 steps while lugging around 70 pounds of refreshments.
• This means about 1,300 calories expended and can lead to up to a 10 pound weight loss.
• For their labour they get a 15% commission on sales, and average about $2,000 in profits per game.
• It’s important for vendors to pace themselves so that they’re not too tired for half-time – when profits are highest.
• Location matters. Stands filled with cash poor students are worth less than those who can afford tickets on the 50 yard line.

Read more from the interview here.

Source: GQ

As the chart above shows, it seems like donut holes have been shrinking. Phil Edwards looked into some of the potential reasons why:

• Donut holes were originally put in there to make sure the treat was fried evenly. If it didn’t have a hole then the inside would be less well cooked than the outside.
• Improved technology meant that it was possible to get a more even fry without a big hole.
• Smaller holes mean that a donut is less likely to break.
• People may have become used to cream or chocolate filled donuts, making the ring-like large-hole donuts seem like anachronisms.
• Chains each had their own standardized vision of what a donut should look like. We may now expect donuts to have small holes simply because small donut hole chains like Krispy Kreme won the donut chain wars.

Read other theories, and some caveats over here.

Source: Vox

Olga Oksman wrote about where fortune cookie fortunes come from:

• The companies that make fortune cookies have massive databases with tens of thousands of fortunes that are randomly selected and printed.
• They continuously seek to expand this database by paying high schoolers and failed writers to come up with more.
• One company pays about 75 cents a fortune and requires at least 700 of them.
• The fortunes have to be bland because each of the 3 billion cookies that are consumed need to have a fortune that could apply to anybody.
• The lucky numbers that show up on fortunes are computer generated.
• People put a lot of faith in the cookies – 110 people won the Powerball in 2005 because they all played the numbers they got in their fortune cookies.

Read more here.

Source: The Guardian

Whenever a car marker reaches the zenith of the auto industry, a scandal brings it down. Steve LeVine and Jason Karaian looked at the history and pointed to a reason why:

• GM was top dog for 77 years. Then it grew complacent and stopped producing cars that Americans wanted. It was soon overtaken by Toyota and needed a government bailout.
• Toyota created trends with the Prius. But soon safety concerns about stuck accelerator pads brought the carmaker down.
• Volkswagen grabbed the crown but is now plagued by confirmed accusations about software intended to mislead consumers and government about emission standards.
• Automobile manufacturing is a low margin business.
• To increase market share companies need to cut price, which means cutting costs, and carmakers seem to have done that by cutting corners and skimping on safety and regulatory features.

Read more here.

Source: Quartz

The Economist seemingly encouraged bank robberies, pointing out all the benefits they bring:

• After banks are robbed, loan officers sanction the same number of loans, but offer better terms for each loan.
• Interest rates are lower, and borrowers have 70% more time to pay the loans.
• They do require more collateral but for the honest bank thief who truly intends to pay back their loan this isn’t much of a problem.
• The reason seems to be that offering better loans means that nervous or traumatized loan officers have to spend less time haggling over terms with each new customer.
• The higher collateral means that loan officers also have to spend less time vetting customers.
• The effect is only seen when bank robberies are violent. Non-violent ones don’t lead to the same sort of traumatized avoidance behaviour.
• The effect lasts about 90 days.

Read more about the study that found the effect, and other details here.

Source: The Economist

“Netflix and chill” has quickly become a euphemism for people hooking up. One startup idea takes this concept further, wrote G. Clay Whittaker:

• “Netfling” is a dating app idea that matches up romantic partners according to their shared Netflix tastes.
• Netflix can be a window into our wider worlds. It knows, for example, the types of documentaries we enjoy, or our preferred brand of comedy.
• If all of the 65 million people who use Netflix signed up for the app, then it would have more users than Tinder, which is estimated to have 50 million users.

Read more about the changes that Netflix needs to make before Netfling can become a reality, and more over here.

Source: Popular Science

Archaeologists have found written archives from the 1890 B.C. town of Kanesh, in modern-day Iraq. Adam Davidson wrote about what we can glean about economics through those who lived 4,000 years ago:

• Millennia before Adam Smith the ancient town had an advanced economy. It had what were essentially checks and bonds. There were also venture capitalists that invested in groups of risky startups. And there were active debt markets.
• In an echo of the last decade this encouraged financial speculation and eventually led to economic collapse with years of recession and search for effective regulation.
• Evidence indicates that trade obeys a “gravity model”. In most cases trade between two countries is determined by the size of their economies multiplied together, divided by the distance between them.
• The archives suggest that this town, which was around when Mammoths still roamed the world, also obeyed the gravity model.
• This indicates that institutions such as the WTO, and trade deals such as NAFTA and the TPP actually have very little effect on trade.
• Instead there is a ‘natural’ level of trade between countries that doesn’t easily yield to interference or control.

Read more about what a more modern understanding of economics can do to help us deal with some of the negative consequences of trade, and other details about economic life in Kanesh over here.

Source: The New York Times

Via: Marginal Revolution