The Economics of Prince's Legacy: From Record Sales to International Stardom

Prince in Purple Rain, 1984.

Growing up in a larger than average (but extremely tight knight) family, our house was often noisy and there was always something going on. One of our most cherished of family activities is our frequent dance parties. Whether it's all 6 of us or just two of us, they've always been a blast and Prince has always been a staple of these--especially "Let's Go Crazy"--the one he's dancing to in the gif above. So as you can imagine, I, like many people around the country and around the world, was incredibly shocked and devastated when I heard about Prince's passing this past Thursday. "The Purple One" was just shy of his 58th birthday, not much older than my parents. So since I'm still reeling from his death today, I've decided to fully dedicate my final blog post to the man while somehow trying to tie it back to economics.

At the age of just fifteen, Prince was offered a record deal, but turned it down. This was an incredibly bold move, but this came from his desire to truly make everything his own. He was aware of his immense talent, and he wanted to produce everything himself in order to preserve his vision as an artist. A couple of years later, he was offered another deal, this time through Warner Brothers. He maintained his insistence of self-production and risked being dropped--but his passion paid off. Beginning with his second album, the self-titled Prince, he proved himself to be an incredibly talented artist at just 20 years of age with around a million records sold in the US alone. This meant that by just his second album, he had already gone platinum with an album with his first hit "I Wanna Be Your Lover". These record sales proved something--that the risk was worth it and that he knew what he was talking about. 

Prince @ the people that doubted him.

With his next three albums, Prince went from being relatively unknown to continuously being successful (Dirty Mind, Controversy, and 1999). Although 1999 went platinum, his biggest success was yet to come. When Purple Rain and its accompanied soundtrack came out in 1984, Prince was just 26 and on top of the world. His album went 14x platinum, which meant that he sold over 14,000,000 copies in the US alone.

Prince was a revolutionary. His insane record sales, wildly successful movie, and androgynous style was a defining piece of 1980s music and culture. His music will always hold a special place in my heart, and I will forever be thankful for the Purple One.

Five Steps to a (Civilization) V

Strategy games are the best. They test your ability to make smart decisions, plan for the foreseeable future, and crush all of your opponents to dominate the entire world.

Ah, okay maybe that last part isn't so common, but if you know of Sid Meier's Civilization V, ultimate ruler is the name, world domination is the game.

This is the beginning of the end for all the other civilizations out there.

The general idea of Civilization V is to grow your civilization starting from the prehistoric times and try to advance through history to become the most successful, powerful nation. You start off as some famous leader, let it be Genghis Khan of the Huns, Theodora of the Byzantium Empire, or even Gustavus Adolphus of the Swedish. Now, it's not as easy as it sounds, and this game should be handled with a lot... discretion.

Now that you know about Civilization V, you should know how to handle the game! It's not as easy as pushing down Ghengis Khan and telling him to submit to your empire, you've got to examine and understand the economic and political weight of your decisions. No successful nation became as it was without good 'ole strategy, so if you wanna pass that AP test - errr, uhhh, I mean conquer the world - then carefully follow these Five Steps to a (Civilization) V!

I'm more of a beach person myself, but hey to each his own.

Step 1: It's all about location, location, location.
When you start off the game, you're given two units to control: a fighting unit, and a settler. The settler is the important one here, because you need to direct your settler to a tile that offers the most ideal capital. The settler can found a city, and the first city they can found is your capital city, so you should choose a really nice place for all of your sheeple. Some of the most successful empires start off by a coast, and have significant, useful resourceful tiles surrounding the city. A great incentive to starting an empire off by a coast is the future expectation of naval travel. A city has to be aligned to water to enable to even begin any sort of sea-faring abilities, so why not kill two birds with one stone by choosing an area that starts you off with a potentially useful ability while also being geographically strategic. Having the early advantage of naval units can get you ahead of the game from other landlubber empires on your continent, as well as allow you to get into contact with empires across sea. Of course, the opportunity cost to choosing a coastal capital is a less security. That is, if you choose to put your city right at the edge of a continent, you open the possibility for easier targeting when other empires decide they don't like your face and decide to conquer you. At that point, you're vulnerable to attack from triremes and other long-ranged militaristic naval units. Ouch. It's all quite subjective, so how much do you weigh the opportunity cost?

Apparently this is the recipe for happiness.

Step 2: Supply the demand
As with everything in the real world, humans depend on goods in order to thrive. Likewise, your sweet little civilians need some help in order to grow and populate your cities. The world in Civ V is flourishing with tiles of untapped resources, from salt quarries to whales. In order to not only improve wealth and happiness within your cities but also be the empire with the most luxurious, desirable resources, you need to be quick to exploit the resources first since there is a scarcity in super desirable, luxury resources. When you "work" a tile, you absorb the benefits of the terrain/resource of that tile, thusly providing the city from where the workers came from to have that resource available. More resources equals happier citizens. But that isn't the only benefit to having resources! Keep in mind that once you enter the realm of awareness that no, you are not alone in the world, you've unwittingly joined a world economy. As a result, you need to interact with other nations to find out what mutually beneficial agreements you can make, for the greater good. This is why it's important to realize that....

Diplomatic relations are difficult when you're talking to a scary lady with a sword.

Step 3: Macroeconomics is your friend
As much as you'd like to pretend everyone else isn't as important as you and that you can just do you, and then boom world domination, yea no you're gonna have to actually be social. So, working with other nations is how you set up the rest of the dynamic of the game, establishment of allied forces and resentful enemies. This can only be accomplished by actually having to be social and be in contact with whatever empires you are aware that exist. By doing so, you can see how they act around you, what their general diplomatic policies are, and what the wealth of their nation is. This, is where international trade is key. Trade is what allows countries to interact with one another: you can find some sort of price equilibrium, where the value of their goods is equal to the value of your offer, whether it be a tangible or diplomatic, like open borders. Sometimes, another country has access to a luxury resource that you cannot get, or they have ownership to lands you can't pass through unless you are allies. So, it's important to understand that the workings of another nation has a huge effect on how you strategize the rest of you path to world domination, because how can you conquer the Byzantine empire when they block your every path to the outside world and are allies with all of your enemies? Mmm yea it might get a little difficult then, might wanna rework the whole being mean to everyone thing.

Solomon's temple is totally awesome, until it's weirdly built in some place like India or Canada.

Step 4: It's a Wonder you didn't already lose.
You uncultured swine, did you really think you could win this game by just beating people up and taking all the money? Have you no sense of diversity, dynamic, culture??? It's one thing to be a prosperous nation with just like, a lot of money, 2 friends, and a sworn enemy, you've got to show the world that you spend your time doing amazing things too. How do you do amazing things? Well, you discover wonders. You know how there are the Seven Natural Wonders of this world, and also some man made Wonders? Well, wonders are the key to cultural success. Every city you possess in this game can put into production something useful for your empire, it could be creating a new naval unit or building a market. However, one of the really important things it can do is put into production the creation of a wonder. Wonders are landmarks like the Taj Mahal, the Parthenon, or even the Sistine Chapel. Let's try not to think to much about why the Chinese Empire has the Sistine Chapel in its capital city of Beijing, because the point is that these are wonders yet to be introduced to this world, so you need to be the first to build it. Not only will you impress the world with your incredible architectural taste, but you'll also heighten your placing on the progressive scale for your civilization. Each civilization gets ranked for how progressive they are as an empire, and this is based off their cultural breadth. Yes, you can just simply destroy your competition and wave off the insults of what a philistine you are, but that's no fun. Of course, this is where strategy becomes extremely important to the game. Opportunity cost is really you best friend in this game, because while you put a city into production, they are unable to work on anything else besides what you designate them to work on. Also, Wonders take a lot of time and costs lots of production units to build. So, if you're currently in war with the Swedish, and they are throwing out catapults and spearman like candy to smol children, you might not want to spend about 28 turns trying to build the Kremlin. Just saying.

.... I can't quite say this peace treaty is gonna work out well....

Step V: Them's fightin' words, friend. 
Unless you're the ultimate strategist and can have some sort of emperor eye that predicts the future movements and decisions of your enemies, chances are this game takes a lot more thinking and consideration than you had intended. Civilization V is quite useful in understanding that humans are unbelievably, irrevocably irrational. Perfect economic behavior would mean that the there is some obvious price you can put on a resource or a diplomacy that should be in all sense and purposes equal in value to both parties. However, sometimes you just like, don't like a person's mien, or personality, or just them in general, so you tend to be pickier in what they offer you. Of course, someone you have no problems with can offer the exact same thing and you'd take it up in a heartbeat, but, god literally everything Gustavus Adolphus does just gets on my nerves, like, no what makes you think I'd just give you my horses for 200 pieces of gold what kind of civilization do you think I run here? (Disclaimer: I don't hate Gustavus Adolphus) It is quite possible that some of those rulers out there might feel just like that to you. You really may have met them for the very first time, but they'd already have an irrational outlook towards you and it just takes a whole lot of bargaining to find something they like about you. At that point, when the trading is just not adding up, and their irrationality is reaching pathetic new levels, you might consider moving them to the top of your To Conquer List, because chances are the utility you'll get from that friendship, considering the amount of resources you invested into it, will not be worth it.

Well, it looks like you're pretty prepared to exert your power on the lesser people now! Strategizing these sorts of things isn't easy, but by following these five easy steps, you'll be ultimate ruler in no time. Good luck!

Wine Snobs Paid Economists To Pretend They Aren't The Worst

What makes something valuable? For that matter, what even is value? Value is defined as "the importance, worth, or usefulness of something" by the internet, but that really isn't that useful of a definition. In economics, value is "a measure of the benefit provided by a good or service to an economic agent." But that isn't really a super useful definition. The reason every definition of value is basically trash is because value is a subjective thing that just can't be defined. While there are more logical or precise ways to define value compared to others, people just really aren't always that logical, so while something could be perfectly reasonably valuable to one person, someone else could think it's worthless. One man's trash is another man's treasure and all that.

One of many weird images to show up when you Google image "value," 

serving as further evidence that it is really hard to define. 

Because value is so subjective and can't be simply measured in a number like cost, a better measurement for it in economics is utils. Utils are a hypothetical unit measuring satisfaction. The more satisfying something is to a consumer, the more utils an object is said to have. Satisfaction and utility for a consumer are typically determined by factors like taste, convenience, efficiency, aesthetic appeal, and function. For example, a product like roller backpacks have a high value because they allow the consumer to easily and efficiently carry their stuff from class to class while exhibiting style and intelligence, thus attracting potential mates. It's utterly genius multi-tasking, with wheels. 

Trust me, these are making a comeback. A wise investment. 

Some people like to think of value in terms of getting more or better products for less money. Because we like things, but also like having money to spend on other things, it would make sense that when it comes to products of the same quality, consumers prefer the cheaper option, right?

Well sure, it makes perfect sense, but it might not actually be the case because, as mentioned earlier, people very rarely make perfect sense. Studies show that when people are presented with two items of exactly the same quality but with different prices attached, they actually prefer the more expensive one. This is because of perceived value. Perceived value is the worth that a product or service has in the mind of the consumer, which often differs from its intrinsic value. When people are more swayed by an item's perceived value than its intrinsic value, economists call it irrational value assessment.

Stupid economists have to come up with names for all the weird things we do.

Like, sorry I'm irrational, can I live?

So one of the ways perceived value works is through price association. Because typically things that cost more are higher quality, people often associate higher price with higher quality, and that assumption carries over even to items that are not different. To test this theory, members of the Stanford Wine Club were invited to taste different wines and give them scores. Five different bottles were brought to the tasters, but what they didn't know was that two of the bottles actually contained the same wine. The only difference between the bottles was that one was marked with a $45 price and the other with $5. Despite there being no difference in the contents, the $45 bottle was consistently rated as the best of the wines. 

So let's get this straight: two bottle of the exact same cheap, $5 wine are presented, but one has a $45 dollar price tag on it that magically makes it taste better. 

This is my favorite thing we've learned in economics, because 

I am deeply passionate about wine snobs looking like idiots.

While I would love to chalk this up to the unraveling of the grand conspiracy that there are any people who actually know anything about wine, these rich idiots paid off scientists - I mean, scientists proved with a follow-up test that there was more than just pretentiousness at work. You see, the same experiment was performed again, but under a modified MRI scanner, which showed increased levels of dopamine (the happy chemical) while people drank the $45 wine. So it wasn't just that people saw the price tag and felt compelled to say it was better; rathe the higher price actually changed the way people experienced the product. 

This experiment has been recreated for other products as well. People were asked to test either Prozac or a placebo, with the placebo having a slightly higher price. Subjects reported better results from the more expensive placebo. In another, a group of students were asked to solve puzzles after purchasing energy drinks to help improve focus. Those given a discount performed worse than those who paid full price. All these examples show that a higher price affects the way consumers view and even experience a product. If the price is higher, consumers assume that the product is better quality and more affective, causing them to actually be more affected by it. Conversely, if an item is too cheap, consumers assume that it is flawed and enjoy it less. How does that make sense, you might ask? It doesn't. But that doesn't make it any less real. 

What are you even doing anymore

All this goes to show that pricing is a dangerous game. Products cannot be too expensive or they risk being overpriced or unaffordable, but the lowest price possible is also not always the most competitive either. Because of behavioral economics, we know that people don't always make the most logical choices, so irrational value assessment is an important pricing strategy for any business. 

Confess, Always Confess!

Now most people might think economics is super boring and no one ever has fun, but you're wrong! There are all sorts of games in economics such as simultaneous games. A simultaneous game is when people have to make a choice simultaneously without knowing what the other person will choose, its all based on strategic choices. 

trying to play monopoly with Kern

The most important things in simultaneous games is that you MUST think about the other player before yourself. Now I'm not saying be considerate of others and think how much winning the game would mean to them-NO I'm saying think like them. If you know what your opponent will do then you know what your best choice will be based on what you know they will choose. It's kind of the opposite of being considerate, you're thinking about how they could play and then how you could play better than them.

The next thing you need to know about simultaneous games is that there are 2 main types: constant sum and variable sum. In constant sum the payoff of both players will always add up to a sum of 100%. In variable it doesn't, in this game players often will share a common interest. For an example of constant sum, imagine there are 2 television networks trying to decide if they should start a new sitcom or game show. Network 1 has higher rating percentages with sitcoms and Network 2 does with game shows. This means that the Nash equilibrium will be the like choice of the networks, so when Network 1 chooses sitcom and Network 2 chooses game show. Nash Equilibrium is when a player's best strategic choice coincides with their opponent's best choice. A player can also have a dominant strategy if they have 1 strategy that has a higher payoff than their others regardless of what their opponent chooses. 

The most known simultaneous game is the prisoner's dilemma. Imagine that you and your best friend get arrested and a detective offers you a shorter sentence or maybe even no sentence at all to confess and sell out your friend. You know they are also going to be offering this deal to your friend as well so now you have to decide, should I confess or not?

Well the answer is yes, always confess! Looking at the image above if these were the deals that the detective gave you it's always better to confess because at most you can get 5 years, which is a lot better than 20. 

Yes it's true snitches get stitches but looking at the odds I'd rather spend at max 5 years in jail than 20 so to my future criminal friends don't trust me not to sell you out.

The Cost of Vintage

So every person with a pair of eyes and/or ears knows that I love vintage clothes. They've become a huge part of who I am, and I love that. They've also been causing a draining whirlpool of money from my bank account. Most of the items that I buy are from as far back as the 1930's, so I can't really blame sellers for pricing things ridiculously high. But what are some of the price factors at work here?

The Jenny Skirt in Orange Border Print. Made by Pinup Girl Clothing.

Take this adorable skirt, for example. It's an American made product with a high price, for a market that most people would think of as small. In the retro-loving world, or even the body positive sector of Instagram, this company is incredibly popular. With sizes running from an XS all the way up to a 4X, their goal is to make "couture for every body" (every BODY/everybody) which I & many other customers love. However, it depends on what the person who's buying the skirt values it at. It's listed at $98, and many other sensible women (like me) could never conceive of spending that much for a piece of clothing. But for some women, it's less of a logical decision, and is made in a split second and goes a little something like this:

One of my favorite gifs.

The company knows how much the customers adore their clothing, so they cater to women who are still willing to spend a large amount on clothing but spend just a little less (aka me) by having both online and in person "yard sales". This leads to items like the Oranges skirt (remember, originally $98) to being a steal at just $60!! Woohoo!! I only own 4 items from the company, and 2 of them I got for free. So for me, the cost sometimes overshadows the benefits. But for a lot of ladies all over the world, the cuteness can be distracting.

Sorry Theresa, I Just Don't Feel The Bern

I've been on a lot of college visits this year. And I mean a lot of college visits. And every college has been remarkably different, with facilities, programs, locations, and vibes that could compare or contrast pretty significantly, but there's one thing that every college campus had without fail: the presence of that signature blue "Feel the Bern" slogan. Posters, stickers, keychains, what have you, it cannot be denied that college kids love them some Bernie. But what is it about Bernie, a 74 year-old man, that seems to resonate so strongly with the youths? Personally, I hold that there must be at least some significance in the fact that the man promising free college education is the same man beloved by the very people who are swimming in college debt, but there's more to it than that. College kids tend to be pretty idealistic, and what Bernie promises is all rooted in idealism. However, idealism doesn't pay the bills, and while I too would love to run through a meadow with the unicorns, someone is going to have to foot the bill for strapping horns onto all those horses.

This extremely fitting image already existed.

God bless the internet.

Let's take Bernie's healthcare plan for example. Bernie's plan, titled "Medicare For All," is based on the idea of providing Medicare for all citizens. Now we can debate all day about whether or not it is reasonable, possible, or necessary to provide Medicare for all U.S. citizens, but what Bernie promises is actually quite different from Medicare. Under Bernie's plan, all Americans would get dental, vision, hearing, mental-health, and long-term care. That's a lot of care, which is great, but that care costs money, which is... not so great. So, how is all this getting paid for? Where is the money coming from?

Just a suggestion. 

The answer is, no one knows. The theory behind it is that America would switch to a single-payer health-care model. In this single-payer system, the bureaucracy that currently regulates and controls insurance and healthcare would be reduced significantly which limits administrative costs, and due to the laws of supply and demand the cost of medicine and medical procedures would lower due to lack of competition that drives up prices. But this is only a theory. It is drastically different from what our current system is, and with most of the details of how exactly all of this would be implemented and paid for missing, it feels like sort of a scary gamble to be taking. Not only that, but the theory itself doesn't even account for all of the costs or payoff that it promises. Sanders claims that in ten years this plan will save ten trillion dollars. But it's not laid out clearly where exactly this money is coming from. Even with some generous estimates for what limited admin costs and lower drug prices would save, the amount does not equal ten trillion dollars.

Isn't math fun?

Look, the way I see it, if someone is going to be making all of these promises (because the promises sound pretty tempting, I will admit), there has to be a real, clearly-laid out system for how these changes are going to happen and how they're going to be successful. I understand the appeal of Bernie's idealism, but if he is actually going to be president there has to be substance behind his promises. No, I must admit, I just do not Feel the Bern. 

No one tell the students at Wash U. 

WWIII: Chopsticks vs. Silverware

So, last week I had the opportunity to have a very lively discussion with one of my classmates on something that has officially demoted him from favorite childhood friend to persona non grata.

One of the most difficult things to explain to someone who knows only American culture, which is really just a hodge podge of hundreds of other cultures, is why I keep up with my nationality's culture. Now, this isn't going to be a blogpost bashing American values, considering I was born and raised in the United States so I am in every way an American as every other native citizen. However, I am a first-generation American, because my parents emigrated from Viet Nam after the war, so the Vietnamese culture is live and well in our household. Considering this, the way I carry out my life at home is significantly different from many of my friends who have a few generations worth of relatives that were born and carried their lives out in the United States.

The age old question, which is superior? (spoiler: the answer is neither)

The question at hand was, "Why do Asians use chopsticks?" At first, the question had taken me aback, because the answer seemed obvious to me since I've used chopsticks my entire life. I'll just paraphrase the main points of his argument against the use of chopsticks for you so you can get the gist of what fueled the fire to the flames:

1. At what point did people think that using two small sticks of wood to pick up rice was a good idea?
2. You could pick up so much more rice or other foods with a fork than you can with rice.
3. Didn't they ever learn to embrace technology when spoons and forks were invented?
4. People used to drive carriages, but then cars were invented, so why are you guys so afraid of technology?
5. LEARN TO EMBRACE TECHNOLOGY.
6. Literally everything you eat with chopsticks can be used with a fork or spoon.

Same, Waka Flocka Flame. Same.

K. Okay. Alright. Sure. That's fine. Apparently I'm like Amish or something and hate technology. Cool.

So if I wanted to, I could give you the background on the use and invention of chopsticks to help you understand why they were ever invented in the first place, but I don't think that's absolutely necessary? See the problem is not why chopsticks are being used when there are supposed, better substitutes. I mean, why are chopsticks still being bought and used all over the world when there are fork and spoon substitutes? Well that's because many, many people still demand them, so there's no issue with substitutes. No that's what it just seems like it is. The real problem at hand is trying to explain the importance of culture to a person who lacks any of said culture.

At firsthand, the argument doesn't seem to have to do with culture; it's about efficiency in eating. However, the only reason are chopsticks are used is because it is the most ideal utensil for a number of foods. What types of foods? Well, ASIAN foods. Now, we've got a problem with culture.

Something about some Americans is that they don't really seem to understand that there are certain intrinsic values to keeping up with customs of a person's home country. Dinner at my home is so different than dinner at many of my friends' homes. You don't just eat dinner when it is convenient for you, or skip dinner at the dinner table and just take it up to your room. When dinner is ready, everyone goes to the kitchen table and eats together as a family. Another thing, Vietnamese food is also significantly different from American food. While in a lot of American dinners or dishes, each person has their own plate with their assorted meal, many Vietnamese dishes are cooked together in one big pan or pot and served together in a huge bowl or plate of some sort. Lots of Vietnamese food are starting off with a bowl of rice and picking up your own portions from the main dish, eating at your own pace. Therefore, this is where chopsticks become incredibly applicable. One of my favorite Vietnamese dishes is thịt kho, braised pork with whole eggs. The dish is eaten with rice, and the pork and eggs are sitting in a sauce. 

You eat this with a bowl of rice and you don't question why it's made the way it is. Simple.

Now, while some of you are saying, oh hey you can just use a fork to eat this, I don't see the problem. No, no you can't. The braised pork is cooked around the bone, so these are small pieces of saucy meat that cannot be stabbed through. You wouldn't really eat this dish with a spoon either because you have to remove your portions of pork from the family bowl, so ew. So what's the answer here?? OMG it's chopsticks! Now, when I brought up this food to my friend, my other "friends" decided to join in the argument against me so yea sure whatever that's fine too. Collusion at its finest. Except unlike the Great Monopoly Collusion of 2016, (see article here for some tragic history) this partnership isn't gonna destroy the opponent. Anyways, my friend questioned me because, (use a really stupid boy voice here) " uhhh, why don't you just take the bone off the meat? Why would you just keep the bone on that makes things difficult."

Aaaaand this is where the culture part plays in. How am I supposed to just explain to a person, "Because that is just how the dish is made????? I don't understand your confusion????? What????" No child, you don't question how a food is made the way it is, because it is made the way it is. Moving on.

Okay, let's just clear some things up. Chopsticks were made accustomed to Asian dishes, not American ones! You wouldn't eat fries with chopsticks, but you'd definitely eat sushi with them. I't's hard to understand eating rice with chopsticks, because you don't eat rice. It's even harder to eat rice with chopsticks when your definition of rice is fluffy, dry long-grain rice. Most if not all Asians eat a stickier, gummy short-grain rice. Eating this rice with a fork or spoon would really get annoying and problematic when the rice sticks literally everywhere. In this case, it is obvious that you should use chopsticks. Of course, there are many people in East Asia who do use forks and spoons when they eat, and that's fine! However, you cannot deny the fact that with many dishes, and at a number of settings, chopsticks are preferable. Manner-wise, and efficiency-wise, there are no proper substitutes for chopsticks. 

Anyways, I've yet to get a real convincing argument against chopsticks. So, which side will you fight for, chopsticks or silverware?

Monopoly is Always Evil

I love McDonald's I eat their all the time but during Monopoly season I practically eat their every day. McDonald's once a year does a Monopoly game for a month by placing game pieces on their food items. Though this seems like harmless fun McDonald's is using behavioral economics to control what you buy. They do this by threshold values and money illusion.

These threshold values are just behavior economics, during monopoly season people tend over-value certain items because they have symbolic value. Not only do you get food but you also get a fun game in your meal, with a possibility of winning prizes (up to a million dollars). McDonald's is heavily advertising their million dollar prize because there is heavy meaning behind a million dollars. I mean who doesn't want to be a millionaire!
This is where money illusion comes in because if you win you're not gonna be a millionaire. McDonald's has it set up in payment plans where you would get $50,000 annually for 20 years. So you wouldn't be a millionaire. But maybe you are thinking hey $50,000 is still awesome, and it is but $50,000 won't buy in 20 years what it would today. McDonald's is just hopping that American's don't realize this. This is money illusion because costumers are thinking about what the money prize value is worth now not the real value.

So how much would you actually receive of this 1 million dollar prize over 20 years. Well the average inflation rate in 3.5%, so that would turn your 1 million dollars into $735,000 in today's dollar value. Then don't forget about taxes (ugh don't you just hate taxes). With taxes and inflation your 1 million dollars now turns into more like $500,000. But hey money is money its better than nothing so I'm not complaining.
McDonald's earns a lot of money at this time, even though they are giving out a bunch of free prizes and money because they strategically place there monopoly game pieces. An example is how they place the 4 pieces on large fries, this is to make you think "well I guess I can spend an extra 30 cents for 2 more game pieces." Also the "awesome" free prizes they give out are always their least sold items, this is so they can get people to try these items and maybe start to like them and buy them more often.

Also they don't give that many chances to win the big prizes. In the photo above you can see that they always mass produce some game pieces but for every section they save one piece that they only make a few of. When looking at this you also need to take into consideration the amount of people who don't play. Who just eat and throw their game pieces away without looking, or forget to take them off. That is another thing McDonald's is banking on.
So McDonald's is the real winner of Monopoly but hey it's still fun . . . it's at least better than Ekern Monopoly.

Steel or No Steel

Beginning in the mid-nineteenth century, the steel industry has been a huge part of the UK's economy. Despite the blue collar nature of them, many people kept steel-industry jobs for their entire lives and in turn the Steel Companies have become family businesses of sorts. This export has been a key piece to the steadiness and success of this economy, but now the industry as a whole is in jeopardy. Since 2000, there has been a rapid incline of Chinese produced steel. The Chinese steel production is cheaper and faster than its UK counterparts and anyone else across the world.

Lookee here.

While reading an article about the steel situation, the risk of good intentions came into my mind. As many as 40,000 jobs are on the line at the moment, a huge portion of that being from the Tata Steel Company in the UK. Things have gotten so desperate that Britain's foreign secretary is practically begging China to cut back on its production. The thing is, I think that there is hardly any chance that this will happen. China's steel production has become a behemoth in terms of producing and exporting steel. Additionally, since China's economy has been struggling lately, I highly doubt that they would be willing to cut back on production purely for the sake of Britain. Although I hate to say it (because, you know 40,000 people have their jobs on the line) but I don't blame China if that is what was ultimately decided. The Chinese Steel Companies figured out a way to win the international market over with cheap prices and technically won "fair and square". However, this does not make this situation any less tragic.

Port Talbot, Wales.

Port Talbot, a small, steel-dependent town in Southern Wales, is likely going to be hit extremely hard. A working-class town with less than 40,000, the town's very existence seemingly hinges on its steel mill's success. The Original Port Talbot Mill was built in 1901, and in 1961 it closed. But soon after, another steel company purchased it. Eventually this was absorbed by Tata Steel Company (an Indian company), all the while preventing the town from suffering a crushing blow of losing the industry altogether. But this time has been different. The bleakness of the situation is intensified due to the UK's recent decline in steel production, and the likelihood of a heroic purchase from an outsider company is slim.

If You Thought Monopoly Was Vicious, Just Wait Until We Play This

For those of you unfamiliar with the show Cutthroat Kitchen, prepare to be blown away by what is probably one of the best shows on television. Now I don't say that lightly -- I love TV, and I know what constitutes good TV, and this is really freaking good TV. 

Actual quote from the show serving as definitive proof that CTK is the best.

The concept is simple: four chefs compete in three different rounds of cooking to make whatever the assigned dish is. The dish is then judged on taste, presentation, and whether or not the dish actually reminds the judge of what it's supposed to be. Seems pretty strange that one of the criteria is actually making the assigned dish though, right? Like, how hard can it be for professional chefs to be told to make a loaded baked potato and actually produce a loaded baked potato? As it turns out, it can be very hard, because when making a loaded baked potato in Cutthroat Kitchen, you might not have a potato to use, because it was confiscated and replaced with a bowl of crushed potato chips. 

Not what most consumers would consider a viable substitute.

That's the real trick of Cutthroat Kitchen. Each round begins with an auction in which chefs can purchase sabotages to hurt the other chefs' ability to cook properly, thus making it easier for them to get eliminated. The chefs are of course not meant to use their own money for buying sabotages. At the beginning of the episode, each competitor is given $25,000 in cash to use in the auctions. Whatever money you use is taken away, and if you win you only keep whatever you did not spend of the $25,000. Now that money disappears fast, and CTK is a really hard game to play, but with some understanding of economics (particularly behavioral economics and personal finance), you can employ strategies that just might get you out of Cutthroat Kitchen alive. 

Section 1: Bidding vs. Saving

So, like I said, each chef gets $25,000. However, the winning chef does not always (if ever) walk away with $25,000. That $25,000 prize is hard to come by, because it would mean surviving three rounds of sabotages being thrown at you without getting to sabotage anyone else. Because the idea of leaving with $25,000 (or a similarly high sum) is so enticing, many chefs are tempted to save their money and bid rarely, if ever, and only in small amounts. See, the mistake these chefs are making is accepting the $25,000 as theirs and seeing any time they spend the money as them "losing" their prize money. However, in reality, none of the chefs own that $25,000. People who get too wrapped up in not wanting to surrender the money that they now view as theirs to take home results in over-saving and elimination. What the chefs need to keep in mind is that if get eliminated, they walk away with $0, even if they had the whole $25,000 saved. That $25,000 they refused to spend is of absolutely no use to them if they don't actually get to take it with them. Logically, it is better to spend $24,000 and win, because while $1000 is a small prize compared to $25,000, it is a big prize compared to $0. 

Pictured here: all the things that can be bought with $0

So in the auctions, it's definitely better to spend, right? Well, in true economics fashion, the answer is yes, but also no. You see, there's basically no benefit to saving all of your money. However, you also can't blow all of your money right away. You have three rounds to get through, and if you spend too much too fast just trying to make it to the end with way less money than your opponent, you basically have two options: you can save the rest and allow your opponent to stick you with whatever sabotages are in the last round, or you can spend all of your remaining money to sabotage your opponent and walk away with only a victorious title and the pride of winning.

Pictured here: all the things that can be bought with the pride of winning.

To sum it up, when questioning whether to bid or save, it's generally better to bid because all that money you save does you no good at all if you get eliminated because you got stuck with a sabotage you could have bought your way out of, but don't get crazy! You want to save at least a little bit of that money, because whatever method you happen to come by walking away with $0, walking away with $0 sucks. 

Section 2: Sabotage Strategy

Now that we've established the basics of spending or saving when it comes to auctions, let's discuss a few of the more nuanced strategies of sabotaging other chefs. The first one I think is pretty obvious, but people fall still into the trap pretty often. 

Rule #1: Don't jump the price for no reason. Let's say the bidding starts at $500. You raise to $1000. Someone else raises to $1100. You raise to $1200. They raise to $1300. You raise to $7000 for no reason at all. Seriously, what are you doing? What are you trying to prove there, buddy? Assuming the other chef stops bidding and just lets you take it, your "victory" is winning an auction item for $7000 that you possibly could have gotten for $2000. Who cares if the other chef keeps raising just above your price? Keep going in small amounts until they're done. You don't know them. You don't know that there's something magical about the price of $7000 that they would have continued to bid until you got there and you just saved everyone a lot of time. No. All you did was jump the gun and spend more money than you needed to. That has to be like a golden rule of economics or something. Do not spend more money than you need to. People who do this are not being efficient with their limited resource of money - that money is not being optimally allocated. And now, guess what, there's another sabotage coming up and you just over allocated your cash to one thing and now you might not have the funds to feel like you can get over this one as well. Bid in $100 increments. Don't spend more money than you need to spend. Allocate your limited resources appropriately. 

This is the face of someone who is about to spend $7000 on those spoons.

Rule #2: Don't feel like you need to spread out your sabotages evenly. 

Seriously, what are you, like the Bernie Sanders of ruining someone's day? This isn't socialism, sweetie, this is Cutthroat Kitchen. Don't fall into the trap of thinking that it's best to just freely sabotage every chef who isn't you. In fact, because of the rules of this game, that's one the the worst strategies to have. Here's an example: the first sabotage of the first round is almost always the same. One out of the four chefs can buy the opportunity to confiscate some essential ingredient from the other three chefs and replace it with a less-pleasant substitute. People tend to like to spend more money on this sabotage because of behavioral economics: whoever buys this sabotage feels like they're getting more bang for their buck because they get to sabotage three chefs at once. However, this is actually a less valuable sabotage than a single-target sabotage for two different reasons. You see, on Cutthroat Kitchen, you don't need to have the best dish each round. There's no benefit to having the best dish. In fact, you don't even need to have a good dish. You just need to not have the worst dish. So if three other chefs are all sabotaged more or less equally, that can sort of even itself out. And now that you've sabotaged your three competitors, you've painted a big target on your back for them to all be gunning for you when Alton Brown brings out the next sabotage (which is a flawed strategy for the same reason. if they hit you with that sabotage, each chef will have a sabotage and each dish will have a flaw, which means the judge will have to be nit-picky and you might go home.) It's a much better plan of attack to hit one or two chefs with every sabotage you can, not even as collusion per say, just as everyone acting in their best interest to sabotage the people who are already getting sabotaged and stack up as many obstacles for them as possible. Much like a lot of things in economic competition, your product doesn't really have to be good. It just has to be slightly better than the competition and you're golden.

Cutthroat Kitchen is a really great show, but it's also a really great example of economics. Everything seems to involve economics these days, but with this show, basic economic principles we've talked about can really help with strategy. We can all rest assured that if I ever compete on CTK, my downfall won't be a lack of economics knowledge, it'll be from things like me not knowing what a Baked Alaska is or me arbitrarily not liking mushrooms or something. 

Keep an eye out for me, I might just be the next one in the shame cone.

Drowning In the Regret

PSA! This is the sequel to an adventure story of a lifetime, and it can only be read if you refer to this blogpost first!

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Part Two: Maybe a Sin....

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A brief recap: Japan makes bad life decisions and the US has to play fair.

We're all aware that the Fed has had their eyes on some nice hikes for this year, and I don't mean scenic mountain climbing in the Appalachians. Last December, the greatest person of all time, Janet Yellen, made the executive decision that the United States economy was strong enough to handle a slight raise in interest rates, after almost 10 years of levels at nearly 0 percent. The battle plan was to enact 4 different rate hikes throughout 2016 to raise interest rates to a nice healthy level. Welp, it turns out the enemy has a trump card: being economically helpless little failures.

You had ONE job Japan. ONE JOB.

In a competitive universe, economic failure in one country should translate to an advantage for the other side, that being America. Our US-centric world, much like the ideal competitive world, thrives on competition and strategy. However, there's one caveat: we are surprisingly not the independent go-getters many Americans believe ourselves to be. The presence of a united, world economy that is composed of equally dependent nations for imports and exports is what allows countries to survive and thrive. This idea is how the world makes economic decisions. Of course we aren't all completely altruistic nations, but we do often take into consideration how we can best improve our own lives without bringing damaging effect to our allies. This is why something as devastating as the drastic, economic measures used to prop up the Japanese economy is so important to the United States.

Recently, the Fed held a meeting to announce their decision to put on hold the expected rate hikes for this year. Cue my immediate shock. Now, let's first take note of the fact that I hadn't yet learned of Japan's financial crisis and was only basing the following opinions on Fed decisions.

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....Nearly a Tragedy

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For about the first time in my life, I actually doubted Janet Yellen...

Sound fx: gasp!

... Yea. I'm even ashamed of myself right as I type this all out, gosh how I could make such brash decisions. My reasoning at the time seemed clear, but I realize now the ignorance. I thought it was a bad decision on Janet Yellen's part to actually put the rate hikes on hold. In December, the simple announcement of raising interest rates had boosted American hopes that we have actually, finally recovered from our economic meltdown during the Great Recession of 2008. The responses in the stock market and some news outlets were albeit a little frantic, but that's only because some people immediately hit the brakes and had little crises when they hear the words, "interest rate hikes." Chill. But there was lots of optimism in the health of our economy when the Fed had laid out their plan to continuously raise interest rates throughout this next year, because that meant our economy had finally recovered and was fully capable to handle any increase in money required to satisfy the interest rate.

This was my mistake. There are many things that affect what the Fed decides, not just what happens on the domestic scale. Although the plan was for four rate hikes, there can be outside factors that change the Fed's decision. In this case, the outside factor was Japan. The US and Japan both have strong trade relations, so we depend greatly on Japanese imports as Japan depends on America's exports. For this reason, raising interests rates would not be in any nations' s best interest, because then the natural order following raised interest rates is a stronger American dollar. The dollar strengthens because foreign investments increase due to the benefit of higher interest rates. So, if the dollar for the US is stronger, then that means our foreign exchange is a lot greater. While this is all great, when one of our allies is struggling, it's not very considerate. So, it makes sense for the US to force their hand by putting off the rate hikes once again, because we do depend a lot on our trade with Japan, and those exports to the Japanese would be suffering greatly if the dollar exchange is so different.

Such friendship. Very ally. Many trade.

Sometimes being a strong country and doing what's right for our people is the best plan, but often times it's important to remember we aren't alone in this world. Sometimes what is right for our citizens means what is right for other nations's citizens. So, I'm sorry Janet Yellen, you were right again. I'm sorry I ever doubted you.

A GIF, Milton Friedman, and Trucker Bob?

Usually people like seeing GIFs. They can be hilarious but when I hear the word GIF I don't think about economics. But this GIF below show China's trading with the U.S. from 1985 to 2015.

This GIF shows that the value of the goods we import from China is much greater than what we export to China. The GIF also shows the United States' new trade deficit that has hit a new record of $365.7 billion dollars.

Now this doesn't mean we need to panic because this doesn't necessary mean that we are in trouble or as some candidates would say China is "beating" us. There are always two sides to every story, trade deficit is no different. Below are two arguments given to you readers, after you read them make you decision.

Side 1 - THIS IS TERRIBLE!
Dear U.S. Citizens,
Please do not be fooled by people telling you trade deficit is ok, it is NOT ok. Do you people have no shame, free market economies and Chicago economies are the only ones who see the tragedy that is trade deficit, except Donald Trump of course. Do you not remember what I thought all of you? Its simple, a good trade deficit is the best possible outcome we can have! More money for us!
- Milton Friedman

Side 2 - It's not so bad.
Dear whoever reads the blog,
I know it sounds like it's a bad thing that we have a high trade deficit but like for me it helps. It's been hard to find work and when there is trade deficit, employment is actually a lot better. And like I don't know if you noticed but when we start to import lots of stuff from China our U.S. businesses start to get really competitive and make a lot nicer things. Which is always good for me because it means they usually need an extra hand to do some work. So I like high trade deficit because it increases the number of jobs available.
- Trucker Bob

so what do you think? Is trade deficit good or bad?

The Complications of Altering the Minimum Wage

Over the last several months in particular, there has been a national debate about increasing the minimum wage and the effects that this alteration can have on the national and global economy. This has especially been a focus of the 2016 Presidential Election. The easiest proposal that has been considered is raising wages, and therefore improving the costs of living. Take the Sanders campaign for example (yes I know lawl Bernie is mah fave).  The nation wide idea of $15 minimum wage has been a center piece of that campaign in particular. His emphasis on the need for fixing income inequality has led him to be incredibly successful in many working class states.

Cute cute cute.

But the real question is--does it really work? & how do we go about doing it?

In the last 10 months or so, and even in the last several weeks, a few states have announced that they will be raising minimum wages gradually to $15. Oregon, New York, and California are the first to announce these huge increases. While these will be done gradually, there are many concerns that are being raised along with the wages. See what I did there? 

Probably you rn.

That's the interesting thing. We don't know what's going to happen in this case. Because this kind of jump in wages (even though it's gradual) hasn't necessarily happened in our nation's economic history. While I would encourage all of us to be wary of these changes, but I would also add that it is equally as important to avoid passing such immediate judgement. It's a necessity to have a living wage to keep one's head above water and many people live below the poverty line in this country and this is sometimes out of their control. So despite the fact that I have no way of knowing how this will truly affect our economy, I think it's crucial to keep an open mind and an eye on these three states till the concrete increase in 2019. There may be many more states to come.