Buying in Bulk: Money Saver or Self Sabotage?

Recently, I’ve been buying a lot more non-durable goods when they are on sale. Whereas previously I might have purchased the normal amount plus one or two units, now I’m buying like 3x or 4x the normal amount.

What initially led me here was the nagging thought that a 50%-off sale is a superb investment – especially if I was going to purchase a bunch eventually anyway. I like to think that I’m relatively dispassionate about investing and finances. But I realized that I wasn’t thinking that way about my groceries. The implication is that I’ve been living sub-optimally. And I can’t have that!

If someone told me that I could pay 50% more on my mortgage this month and get a full credit on my mortgage payment next month, then I would jump at the opportunity. That would be a 100% monthly return. Why not with groceries? Obviously, some groceries go bad. Produce will wilt, dairy will spoil, and the fridge space is limited. But what about non-perishables? This includes pantry items, toiletries, cleaning supplies, etc. 

Typically, there are two challenges for investing in inventory: 1) Will the discount now be adequate to compensate for the opportunity cost of resources over time? 2)  Is there are opportunity cost to the storage space?

For the moment, I will ignore challenge 2). On the relevant margins, my shelf will be full or empty. I’ve got excess capacity in my house that I can’t easily adjust it nor lend out. That leaves challenge 1) only.

First, the Too Simple Version.

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EWED Recommends Gifts 2021

Economists know that holiday gift-giving is inefficient. However, if it’s going to happen anyway then we try to help on the margin with our personal recommendations. First, I will explain the products that writers liked this year, and then I will list the books. I thank the writers for participating in this exercise for a second time (see last year).

Not-Books

Jeremy made strong case for portable batteries that allow you to charge your electronics. As he said, you could be someone’s battery hero! This product would make a nice tidy box to wrap for an adult and it’s under $40. Are men hard to shop for?

For stocking stuffers, Zachary recommends a children’s music CD by Laurie Berkner. Your kid will start asking for something on repeat, so why not make sure it’s something good? Zachary also reminds us to consider nostalgic wrapped snack foods.

Scott gives two solid options that are affordable and small. A keychain light for adults and a spinner toy for kids. You can buy the plastic spinners in bulk and give them out to a whole family or neighborhood of kids at the same time. A more substantial adult gift would be a folding bicycle.

I recommended a pair of running shoes and, even though this might no longer be the “hot” gift, AirPods. Some people still don’t have AirPods, and it makes a tidy package. Or, maybe your teen lost one of their ear pieces over the last year?

James reminds us to order products ahead of time because of looming supply chain delays. He also suggests some internet paid subscriptions. If you don’t want to deliver a physical wrapped package, then buying someone a year-long subscription to one of these Substacks is a great idea.

Note that the tungsten cubes you are seeing in the news are not EWED-endorsed gifts.

Books

Jeremy highlights a brand new economics book, Career and Family, about the changes in women’s labor force participation throughout the 20th century.

Yesterday, I recommended Liberty Power about American abolitionists for adults and The Voyage of the Dawn Treader for school-aged kids (in which, also, a slave trade is abolished).

Scott recommends How the Irish Saved Civilization. For many people, Scott’s book is probably a safer choice than mine because its scope is wider. Liberty Power would make a great gift for someone who reads so much that they have already finished How the Irish Saved Civilization.

James has given us a few suggestions. For fun, Murder-Bears, Moonshine, and Mayhem: Strange Stories from the Bible to Leave You Amused, Bemused, and (Hopefully) Informed. James found 4 Hour Body and 4 Hour Chef to be useful.

As a final note, a lot of my professor friends are getting the Remarkable II as a paper-reading-writing tablet. It seems superior to an iPad or previous tablets. Some functionality requires an extra data plan subscription.

Joy Recommends Running Products

Late October is a nice time to get outside in Alabama. I have answered the primal call to suburban moms and signed up for a 5K running race at the end of the month. To make running practice safe and fun, I dropped a few hundred dollars this month on products.

Now that I’m old, my first concern is not injuring myself. Having good new shoes that absorbs some of the impact from running is important. I went to a local running store and ended up getting Asics Gel Nimbus.

I really like them. Amazon link. It seems like the price ($150) in the boutique store and the Asics website and Amazon is all the same.

Assuming you are not considering getting these shoes for yourself, do not buy a woman running shoes for Christmas, obviously, unless you’ve discussed it with her. You could buy a family member the other big purchase I made for running: AirPods.

Many people already have AirPods but I’ll review them anyway. I bet there are at least 10 people out there just like me who view them as newfangled and unnecessary.

My primary reason for getting them was so that I can listen to music while I run and not have the annoying headphones cord in my face. They are great for running. By the way, I got the cheapest version since I only use them occasionally.

AirPods are more than wireless headphones.  They are smart. They allow you to take hands free phone calls when your phone is two rooms away (which can be a reason to keep them in even when you are not listening to music). They respond to voice commands and prompt you on what to say. Maybe I shouldn’t be, but I was surprised by how easy it was to start using them.

I use a free application called RunKeeper. Without any fiddling from me, the AirPods give me useful feedback on my run from RunKeeper. I don’t have to stop the music or pull out my phone to get this feedback. It just knows, and the AI is correct about what I want to hear when.

While I was at the Apple store getting AirPods, I considered getting an Apple Watch. It turns out that the Apple Watch does not have a long range from the phone. So, I cannot run a mile away from my phone and still get all services on the Watch. Since I’m not a serious runner, I did not want to spend hundreds of dollars on a new watch plus pay for a separate cellular plan for the device. I run while holding my small-ish iPhone.

Apple Watch records your heart beat. I can be a privacy grump, even though I use a lot of tech. Apple Corp. can C it’s way right out of my vital signs. I don’t even want data on my heart rate and sleep patterns, for myself. I’m already mentally overloaded, so I don’t want more data to think about.

Here’s a song I like to put at the beginning of my running song playlist: https://www.youtube.com/watch?v=FxmkYugYu7Q

Lastly, for your holiday shopping list, I will make one plug for the shirts in our Blog Store. These make a fun gift for math majors or Econ Ph.D. folk.

Some Gear I Like: Keychain Light, Helicopter Spinner Toy, and Folding Bicycle

Here are three things that I would recommend as gifts, depending on circumstances. The first is a really small, really bright keychain light, the second is a very inexpensive (40 cents apiece) flying spinner, and the third is a bike that folds up.

Photon Keychain Flashlight

I like the tiny lights from PhotonLight.com. They are so small that they do not burden your keychain, but they are powerful and physically tough. Most models are waterproof, and let you change batteries if they wear out. Nowadays everyone has a cell phone with a built-in light, but there are times when I am not actually carrying my phone (I know that may be hard for some readers to conceive of) and I need a flashlight function. If I pull out my keys to use in a dark situation, it is helpful to be able to just feel this little guy on my keychain and squeeze it, rather than pulling out my phone and manipulating that to get a light. I encourage other family members to use these little lights as a safety item.

The base model is the MicroLight I ($7.95):

This one you just squeeze to make it light up. That is perfect it you only need the light for a few seconds at a time. The MicroLight II ($11.95) adds a tiny slider on/off switch, so you can turn it on for minutes at a time, like a regular flashlight.

The Photon light model I carry is the Freedom light ($15.95). It has a number of modes you can access by squeezing for a couple of extra seconds. I put it in flashing light mode to get car drivers’ attention when I need to cross a busy road in our neighborhood. Photon sells a larger, rechargeable, very bright keychain light for $24.95.

Inexpensive Helicopter-Type Spinner Toy

Here is a fun kid toy which is really cheap per capita:

On Amazon it goes by the name of POPLAY Twisty Pull String Flying Saucers/Helicopters, 40 PCS.  Each set consists of a twisty stick, a helicopter spinner, and a little shover piece. You hold the stick in one hand, drop the collar-like shover piece down over it, then thread the spinner down the stick. To launch, hold the shover piece and lift quickly. It the spinner will reliably fly up 10-15 feet and then settle down. Kids can try to catch it on the way down.

For $15.99 you get 40 of these sets, which is 40 cents apiece (!!). So you can hand them out as party favors or whatever.

High Quality, Low-Priced Folding Columba Bicycles

I wanted to get a on-road/off-road bike that would not take up too much room in our townhouse, and that could fit in my Civic trunk. (I ditched my ancient previous bike when we moved a year ago, partly because it would have taken up too much room in our moving pod).

After a lot of roaming the web, I found a vendor that offers direct from-China-to-you savings. (Nearly all bikes are made in China, so there is no getting around that).  2KSilver supplies a wide line of “Columba” brand folding bikes. The Columba name is probably a knockoff of the highly-regarded  “Columbia” brand, but in fact the Columba bikes seem to be solid, middle-grade machines with Shimano derailleurs.   

I eyed their line-up of 20-inch wheel folding bikes, like this one ($250 plus shipping):

It weighs only 27 pounds (  kg) and folds down to 31″x14″x25″. People sometimes take a bike like this on the train for commuting; they can ride to the train station, then ride from the station in town to their office. The 20” Columba bikes look fine for that application, but with the small wheels and the 7-speed gearing only on the back wheel, the internet opinion is that this sort of bike would get tiresome riding long distances or off-road. It might make a good mid-sized children’s bike.

I ended up getting an alloy-framed bike with 26” tires and 18 speeds, for $310 plus shipping:

I have been really happy with it. The tires and gearing are perfect for my casual on/off road use (moderate-length road trips or dirt/gravel trails; not 100-mile marathons or extreme mountain biking). It has shock absorbers in the front fork and below the seat. The frame folds in half, and the seat post and handlebar assembly pop out quickly to make a package that will fit in a cloth bag. But it is a good machine at a good price even if you don’t care about compact storage.

One touch I appreciated about the web site is that (unlike some sites) they were realistic about the comfort level for tall riders. I bought the recommended longer seat post, so my legs are not crunched. They used to offer an extended handlebar stem so you are not so hunched over while riding. That seems to be out of stock, so I bought some “Bar Ends” that attach to the ends of the handlebars and stick up a couple of inches. For a younger teen or for shorter men or most women, these accessories would probably not be needed.

The seat that came with this bike was a perfectly fine, standard narrow seat. However, I find it painful to have my weight on those little “sit” bones like you are supposed to. So I ended up getting a big fat padded Bikeroo bike seat, and then putting a gel seat pad on top of that, for luxurious sitting comfort.

Bottom line: If you are in the market for a general-purpose bike for you or a family member, I’d recommend looking at the bikes available on the 2KSilver site.

Streaming Content: Scattering Vs Dumping

Like a good millennial, I don’t have cable. Instead I have Netflix, Amazon, Hulu, Disney+, YouTube, and a free trial of Apple TV. And before you say that I’m spending just as much as I would have spent on cable, just – no. First, I am not. Second, I have way more capability and discretion than I ever had with cable. Each of these streaming services now has their own studio(s) and competition is causing them to produce some content of exceptional quality. And, they differ in their decisions scatter vs dump. Amazon and Apple TV scatter their new episodes on a weekly schedule. You can still watch the episodes whenever your heart desires once they’re released. But if you are up-to-date, then you must wait 7 days until new episodes are available. Netflix, on the other hand, dumps out a new series all at once. You can spend the afternoon (or morning, or night) watching an entire season of the newest content from a high-end studio.

If we take a look through the way-way-back machine, then we can observe must-see-TV on NBC in the 1990s. Networks followed the scattering model. Most people didn’t own a DVR and on demand wasn’t really a thing except for pay-per-view. VCR (video cassette recorders) were ubiquitous, but people enjoyed watching their shows as they were released rather than later watching a recording. The 90s and early 00s were a special time for NBC in particular: Friends, Seinfeld, Frasier, 3rd Rock from the Sun, and ER were all a part of the weekly line-up – with Will & Grace and Scrubs soon following the finale of Seinfeld.

New weekly episodes that were released during a literal ‘season’ of the year had been the model for as long as television signals had been broadcasted. Several of today’s streaming services still adhere to the 80-year-old practice.

Why?

I’ve got 3 reasons for why streaming services still scatter new releases. The first is the one I that have the least to say about: Buzz. It’s good marketing for a show to be released over a longer period of time. In a world of social media, the longer the time that a show is salient in your life, the greater the opportunity for you to share the show with your friends or for critics to acclaim (or pan, as the case may be). It’s a marketing tactic. If all of the episodes in a season were released all at once, then a show would be in-and-out of your life like a stray ice cube that goes rogue from the refrigerator ice-dispenser. You care for a bit. But soon, it’ll evaporate and never be a concern again. I’m not an expert in marketing. So I’ll just leave it at that.

The second reason is due to the time value of money. The sooner that we can enjoy revenues and the later that we can push costs, the better. It’s true for multiple reasons. Financially, every day sooner that you receive a dollar is an additional day during which you can earn a return by investing it elsewhere. For ease, let’s hold the schedule of costs constant and just worry about the revenues. If a streaming service releases episodes weekly, then episodes can start dropping before the season finale is even completed. There’s nothing that says that the whole season has to be ready by the time the first episode is released.  And, when episodes are released earlier, would-be viewers are sooner willing to sign-up and become paying customers. Releasing episodes weekly allows a studio to increase revenues before the whole product has finished production.

The 3rd and final reason for streaming services to release on a weekly schedule is due to the subscription structure of marginal revenue. Streaming services earn *no* additional revenue per episode viewed by customers. The marginal revenue earned from paying customers comes from subscriptions. That is, each month of a subscription is revenue for the streaming service provider – no matter how many episodes a subscriber watches. Therefore, if a season is released piecemeal, then it increases the number of weeks during which the streaming service receives revenues from the customer. Of course, people could just wait until all of the episodes are released and then subscribe for a single weekend of lethargic binging. But that can only happen when a viewer is comfortable with forsaking the frontier of new video content. That would mean that a viewer is out of fashion and out of the conversation that their friends and co-workers are having. And if this sounds like small potatoes, then keep in mind that such conversations are often about signaling belonging, comradery, and cultural sophistication. Many people are inclined to stay up-to-date on TV, the news, and sports and therefore have a greater willingness to pay.

There you have it. The 3 reasons for streaming by scattering over weeks rather than dumping all at once are 1) More persistent saliency among viewers and potential viewers, 2) Sooner rather than delayed revenues, and 3) More periods for which streaming service can charge their customers for new content.

I only have one explanation for why some streaming services do in fact dump an entire season at once. Netflix does it on the regular and Amazon started doing it in the past several years too. I suspect that they do it as a means of attracting a particular market segment: binge-watchers. There being two players who compete on this margin may make either provider appear less attractive for consumers who desire new, binge-worthy content. But, luckily for Netflix, streaming content providers aren’t in a perfectly competitive market. That content an imperfect substitute means that it’s monopolistically competitive. And, for the moment, that means higher profits. The keen reader will recognize, however, that zero long run economic profits are also implied.

Penny-Pinchers Gonna Pinch

Text books say that there are two major problems with the Consumer Price Index (CPI). First, accounting for changes in quality is difficult. Second, the CPI is calculated by assuming a fixed basket of goods is consumed over time. For both of these reasons, the rate of inflation that is implied by CPI is typically considered to be about 1% overestimated.

Imperfectly accounting for quality improvements causes higher measured inflation because the stream of services that a product creates for the consumer has increased – even though the product is nominally the same product. For example, the camera on my smart-phone is now good enough to record a high-quality Youtube video, whereas it was of mediocre quality on my previous phone.  My life is better-off with the better camera. But the increase in my quality of life isn’t measured by the CPI. The CPI does, however, make note that I paid a higher price for a phone.

Further, people don’t consume a fixed basket of goods over time. Even if we stopped the introduction of all new products and maintained the quality of all current products, people would still change the composition of their consumption due to price changes among related goods.

When people get hot and bothered by inflation, they often appeal to people who are of less means and who would find higher prices more burdensome. For that reason, below is a graph of some calorically dense and roughly comparable food staple prices (from the PPI).  You can put a protein on top of any one of these and call it a meal: pasta, flour, potatoes, & rice.

Let’s say that a consumer consumed equal parts of these in January of 2020. The CPI assumes that the consumption basket remains constant and plots a weighted average. In such a case, price rose 2.3% through July 2021. But in real life, penny-pinchers gonna pinch. If our consumer is particularly Spartan, then he will always consume the cheapest option – he treats the different foods as perfect substitutes. The Spartan price of consuming *fell* 22.3%. To be clear, the CPI assumes that the consumption composition remains unchanged, while the consumer’s actual basket is responsive to price changes.  Even if a consumer considers these goods to be imperfect substitutes and is willing to cut any particular type of consumption in half in favor of the cheapest alternative, then the price fell by 10%. In fact, a consumer who is at all responsive to prices will always have a cheaper basket than the headline CPI, all else constant.

In conclusion, be careful with your money. Spend it well and seek out alternatives. Your flexibility determines how much money you’ll have at the end of the month. The headline CPI number impacts only the most passive consumer – and even then, budget constraints gonna constrain.

Air Fryer: Redundant, Self-Indulgent Counter-Space-Waster?

While we were all imprisoned at home in 2020, we turned to eating food, and preparing food to eat in order to occupy and comfort ourselves. People baked bread for the first time in their lives. When yeast in the stores ran out, the internet was alive with tips on how to get sourdough cultures started. And a lot of air fryers were marketed and bought.

The premise of air fryers seems unassailable: quickly circulate very hot air (up to 450 F/230 C) to get that delicious fried crispiness with minimal oil, and get it in minutes with minimal fuss and cleanup. Since we had an offer of getting an air fryer at a discount, I consulted my wise friend, the internet. I wanted to love air fryers, but it seems they don’t cook much differently than a modern countertop convection toaster/oven (“turbo broiler”). There are some space-age-looking air fryers with a more slender, curvaceous profile which has a somewhat smaller footprint than a rectangular turbo broiler, but the capacity is typically only enough for one person or a couple with modest appetites.

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Write Repeat

We at EWED hope that we are creating quality ungated content to make the world a better place. This blog is also a commitment device to write more.

Everyone expects that the only way to get better at running is to run. Not everyone realizes that writing more makes you a better writer.

As a reminder for myself to write, I created an EWED design line in the same store that I posted about yesterday.

Black T-Shirt

Tote bag for all your pens and notebooks.

There a a few other styles and iterations at the store.

The Epsilon Delta Sorority

When I was a first-year graduate student in an economics Ph.D. program, I was taking a class we called Math Econ (taught by Dr. Omar Al-Ubaydli, at the time). I also was lucky to be renting a house along with several other women in the same program. For a few weeks, our group study sessions featured epsilon and delta.

Like many aspiring economists, I had taken Real Analysis at my undergraduate institution to bulk up on math skill and impress the admissions committee.*  

I never had a chance to join a sorority as an undergraduate student. It does look fun to walk around wearing a Greek code that is only fully understood by other members of a club. So, in grad school, I wanted to make shirts for what I called our “epsilon delta sorority”. We had Greek letters and a sisterhood (brotherhood). There are lots of women and men who are in the epsilon delta sorority.

It only took a decade for me to realize my dream. I have created shirts and shipped them to the girls I lived with. So more people can join, I created a store: https://shop.spreadshirt.com/economist-writing-every-day/

Here’s me wearing a t-shirt for women

Here’s a version for men

We have accessories, too. Why not? Life is too short to not put this on a mug. Someone already told me they want to give this to their daughter, so I added kids’ sizes.

I pulled out an old paper from my Math Econ course binder for this post. Here is something I had written for the class:

*If you are looking for an introduction, try Khan Academy. Taking Real Analysis before you get to an economics Ph.D. program is helpful, although not always necessary. Multivariable calculus is more practical than Real Analysis and used on a more routine basis for economists. Some subfields require more formal proofs than others.

The Role of Prices in an Emergency, Winter Storm Edition

When natural disasters and other emergencies strike, two things are certain. First, many essential goods will run out of stock at stores. Second, economists will complain that if only prices would rise in response to the increase in demand, shortages could be avoided.

Let’s take the current winter storm passing through much of the center of the nation, importantly including the southern US where both individuals and governments are unprepared for major winter storms. Here is a sign up at Home Depot in Arkansas:

I can verify that many people in Arkansas don’t have snow shovels. I’ve seen folks using dust pans and leaf rakes to try and clear their driveway. This video is a few years old, but I have no doubt that someone in Arkansas right now is strapping a widescreen TV box to their lawn tractor to clear snow.

So why no snow shovels in Arkansas at Home Depot? The common answer: it doesn’t snow much here, so the stores don’t stock many, and then when it does snow everyone rushes out to buy them.

Simple enough, but the economist says: WRONG! The reason Home Depot doesn’t have any snow shovels in Arkansas is because they didn’t raise the price. Why do economists insist on this?

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