Centives

Greece has a tax evasion problem, and while many think of it as a problem within the elite oligarchy, the upper middle class contributes helps drive it wrote Mike Bird:

• Generally banks set up loans so that an individual would spend no more than 30% of their monthly income paying that them back.
• In Greece the average is 82%.
• For some professional classes such as lawyers, doctors, or those that provide financial services, more than 100% of reported income is spent paying back loans.
• This is largely because reported income is falsely under-stated to reduce income taxes.
• Banks know this, and when deciding whether or not to give out loans, they have models to take into account an individual’s job and their reported income. They can then calculate their probable actual income.

Read more about the problem of tax evasion in Greece here.

Source: Business Insider

Via: Marginal Revolution

Phil Edwards looked at how the folks behind the Guinness Book of World Records are changing how they do business:

• 20% of Guinness’ revenues now come from “consulting services”.
• What this means is that it helps companies come up with records they can break and then sends over judges to adjudicate. The resulting media attention is worth several hundreds of thousands of dollars.
• The book’s parent company has also experimented with museums similar to those that house the exhibits from Ripley’s Believe It or Not!
• Changes in business strategy are being driven in part by the decline of the book industry – although 1 million books outlining the latest records are still sold every year.
• There is also increased competition, from sites like RecordSetter where people can make and break their own records.

Read about how The Guinness Book of World Records has become a bastion of native advertising, why many of its records are tailor made for internet culture, and more over here.

Source: Vox

Jeremy Kahn delved into the fascinating Chinese pigeon racing scene:

• China’s rich are taking an interest in the sport. Pigeons start hundreds of kilometers away with an electronic device. The pigeon with the highest average speed – not the one who makes it to the finish line first – wins.
• A win can mean a prize of up to €2.5 million.
• 10% of pigeons don’t make it through the race due to predatory hawks, and pirates that wait along the race route to capture the birds and resell or ransom them.
• Scandal erupted in one race after a bird tested positive for performance enhancing drugs including cocaine.
• The sport is so popular that one Chinese businessman paid a record €310,000 for a pigeon.
• While fast the pigeon is far too valuable to race. Instead its main purpose is now to breed and create the next generation of racing pigeons.

Read what animal rights activists have to say, which country produces the best pigeons, how to tell if a pigeon will be fast, and more over here.

Source: Bloomberg

Cracked took a look at some unexpected origin stories:

• Cosmopolitan magazine started off as a conservative magazine aimed at families. Editor Helen Brown turned it into the sexually liberal publication that we all know today in the 60s.
• Shell, the oil company, got its start literally selling decorative sea shells.
• The Secret Service – the agency currently charged with protecting the President of the United States – was created to fight counterfeit money. A host of assassinations convinced the government that they needed them to protect the President instead.
• The stock market got its start in coffee houses, which were popular gathering places for rich businessmen.

Read other origin stories, and more history behind each of them, here.

Source: Cracked

On the “explain like I’m five” subreddit, redditors explained why auctioneers speak the way they do:

• Auctioneers speak fast in part to create pressure on bidders so that they don’t have time to think and are lured into impulse purchases.
• Auctions generally move a lot of goods and auctioneers try to sell one item a minute, requiring them to speak quickly.
• Those leading auctions usually say the price that something is being sold at over and over again, before declaring that it is sold, to help ensure that the person recording the sale notes down the right amount.
• It’s such an art that the National Auctioneers Association holds an annual competition where clarity, timing, originality and presence are ranked by judges.

Read the full discussion and find out more details here.

Source: Reddit

Back in 2007, Popular Science reported on a fascinating study:

• In a study exotic dancers made $70 an hour in tips when they were at their most fertile.
• This was double the $35 an hour they made when they were menstruating – or at their least fertile.
• Researchers suggested that this was because women were more flirtatious at peak fertility.
• Those who took birth control averaged $37 an hour, and didn’t see variations in their wages.
• This led researchers to lament the thousands of dollars that strippers on birth control lost every year.
• The scientists also recommended that girls in the industry schedule more shifts around specific times in the calendar.

Read more here.

Source: Popular Science

Poor countries are usually encouraged to keep taxes low to attract business and drive up spending in the hopes of boosting growth. The Economist reported on a paper that indicated that this may lead to more corruption:

• Poor countries levy taxes equivalent to about 17% of GDP. In contrast the EU takes in 40% of GDP.
• The difference is often made up through foreign aid with Africa receiving $51 billion in 2012.
• The theory of loss aversion posits that people hate losing something they have more than they enjoy gaining something of equal value.
• Applied to economic development, it could lead to greater corruption in poor countries, since corrupt politicians are stealing foreign aid money rather than citizens’ hard earned taxes.
• If instead taxes were high and people saw their own money being wasted away, civic engagement may increase, and citizens may demand more accountability.

Read how this theory fared in a small scale experiment, and other details here.

Source: The Economist

Yesterday the Indian government announced its budget for the year. Ellen Barry took a look at what goes into it in the days leading up to its release:

• For 9 days and nights about 100 government workers proofread, print, and bind 10,000 copied of the budget document.
• The workers are put behind locked doors, sealed by wax, and have all communication devices confiscated.
• Food is bought in and has to be taste tested to ensure that there’s little chance of food poisoning.
• If somebody were to get sick, they would be moved to a government hospital where they would be monitored by an intelligence agent.
• The measures date back to the time of colonization when the British would control the budget lest leaks about tax policy lead to the hoarding or dumping of goods such as tea and spices.
• The measures are successful. The budget has never been leaked.

Read about why one man was granted permission to leave the room – and why he returned the next day – stories from those who have been through the process, and much more over here.

Source: The New York Times