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OpenEcon

Sharing insights on economics, business, personal finance, and other subjects. For present students, past students, or any interested party.

Curated by Professor Jared Boyd. Greetings, my name is Jared Boyd and I am a college professor of Economics. This page has been created for anyone that likes to think about human behavior. But it's really great for present econ students that want or need to go beyond the textbook and see economics in real life situations. And it's great for past students who found economics interesting and useful

and want to continue learning more. All my students, past and present, are invited to "like" but everyone is welcome.

03/27/2018

The blue line is an estimate of potential real GDP growth in the U.S., from the congressional budget office (CBO). The important thing to realize is many economists think 2% real GDP growth is the new normal. Federal Reserve projections also have around 2% as the new normal. So what does this mean? In slow growth environments there are just less opportunities. Business opportunities pop up less frequently. Chances to upgrade your job are fewer and farther in between. That next great investment is harder to find. These are not the days of the 90's when it seemed like there was a new opportunity around every corner. And these economists don't think the new tax cuts and deregulation are going to unleash some large wave of pent up productive activity. We are likely stuck in this slow growth world until the next technology boom. When and what will it be? Biotechnology, artificial intelligence... who knows. But until it comes, factor some slow growth assumptions into your personal finance and business plans.

03/26/2018

You are looking at pure 100% maple syrup: price about $50 a gallon. Its probably the most expensive liquid I consume. Took the kids to a maple syrup farm this weekend. Learned it takes on average 40 gallons of sap to make 1 gallon of maple syrup. And one tree with one tap will produce about 10 gallons of sap per season. So four of those trees would be needed to make one gallon of syrup. Now you can see why its so expensive for the pure maple syrup, the supply is so limited. And increasing supply takes time. It would take about 40 years for a new maple sugar tree to grow big enough to tap: i.e. market supply is very inelastic. So any increase in demand will push the price higher and higher. Sure i could buy some cheaper substitute syrup but those use rice syrup or corn syrup - something much more abundant and often subsidized, and not as delicious. So I will enjoy the good stuff for now. But my elasticity of demand is not zero. If the price gets much higher I will switch to a lesser substitute. What is the most expensive liquid you buy?

03/21/2018

At barnes and noble the other day. Not surprising the cd section has dwindled to almost nothing. But what was surprising was how big their section was. I knew vinyl was making a comeback in certain circles. But i didn't realize it was so widespread. It shows the shift in preferences. Portability is less important and sound quality and the overall "listening experience" is more important. I enjoy vinyl but I will stick to my used record store thank you. I'm not dropping $30 for the new Beyonce Lemonade LP. The marginal benefit in listening experience is not worth the extra $15 compared to other formats (marginal cost), at least based on my utility function.

02/27/2018

If you could save $100 more a month, and you invested the savings in something that got you an 8% annual return (average over time), then you would have an 'extra' $349,100 at retirement!!! (assuming a 40 year work life). So the of spending an extra $100 a month now is having an extra third of a million dollars when you retire. What can you do now to save $100 a month? Share ideas in the comments.

02/21/2018

Another inspired thought. A big part of the Detroit hip-hop story is battle rap competitions, particularly in the 1990's. They took place on corners, barber shops, and famously at the Hip Hop Shop. Some battled just for the sake of competition, but some did it as a form of promotion and branding, to help advance their music career. MC's are artists but they are also sellers of a product, and to sell that product they have to engage in price competition and non-price competition. Promoting and Branding is the latter. Over the past decades battle rap competitions have move beyond local clothing shops in cities like Detroit, Harlem, and LA, to the national and even global stage. There were big platforms like scribble jam, the smack dvd series, jump off's world rap championships, Grind Time, and today there's URL, KOTD, and literally hundreds of other leagues. Detroit artists like Marv Won (in pic) have used this form of non-price competition to differentiate himself and get more paying customers (check out his music at https://marvwonder.bandcamp.com/ ) photo credit to Jenny Risher

02/20/2018

Finally saw the DIA exhibit D-Cyphered by photographer Jenny Risher. Beautifully captured images, and a very interesting story of the evolution of Detroit's hip hop scene, ranging from artists like DJ Los to royce 5 9 to MarvWon. I also came away with many names I didn't know but will further research. But the economic insight to the story is the social benefit of low barriers to entry. A sign on the exhibit wall written by Ms. Risher said "Young Detroiters began carving out their own Hip-Hop presence by rapping in basements, record stores, and talent shows. They formed independent owned record labels, built their own studios, and released some of the best Hip-Hop music ever recorded." This movement emerged in the 80s and 90s. Technology was changing and new formats of audio production and recording made the minimum efficient scale lower, meaning the average cost per recorded album (on cassette or later CD) wasn't much different if you made a couple hundred or a couple hundred thousand. This combined with little startup cost (digital sampler, drum machine, sequencer, etc...) meant smaller local studios, artists, and producers could jump in the music market and compete with major national record labels, and the creativity of the city was unleashed. (Famed Detroit producer J Dilla did a lot of production out of his home basement). If barriers to entry were high the only music that would be commercially available would come from a handful of major record labels and we would definitely not have the eclectic hip hop scene in Detroit we have now.

02/19/2018

The numbers are in. Black Panther was a mega hit, bringing in $ 201.8 million its opening weekend. If you recall the prediction market hsx.com was predicting $176 mill as of last wed. The prediction jumped to $194 mill on thurs and ended up at $195 mill. So the prediction market was only off by 3%. Not bad. So if you want to know what movie to go see next, skip the trailers and the movie critics, and just check the prediction markets, and harness the wisdom of the crowd.

02/14/2018

Excited to see Black Panther this weekend. The hollywood prediction market www.hsx.com is indicating it will be a hit, currently predicting box office sales of $355.96 million in first 4 weeks and $176.32 in the opening weekend. Prediction markets are based on the efficient market hypothesis and the idea that markets can aggregate information and summarize the prevailing best guess of the group in a single number: a price. In other words they capture the wisdom of the crowd. They can't "predict" the future but they can tell us what future event is most probable, based on all the available information. They are used for elections, in business to select which product ideas to develop. The government even considered using them to predict geopolitical events to aid in making military strategies.

02/13/2018

At a recent fundraiser in Detroit. The key to a good fundraiser is to convince the guests that the marginal utility/$ given to the charity is greater than the marginal utility /$ spent on themselves. Remember altruism is a rational behavior, subject to the same laws of economics as other income allocation decisions.

02/01/2018

Seasonal businesses like ski hills are a good example of the short run shutdown decision taught in microeconomics. During the snowy times demand is high, people like me go, and the firm makes a profit. But in the off season the demand is so low the revenue they would bring in would not cover the variable cost of production and the rational firm temporarily closes. Some places try to find off season uses for their land, and maybe they can get enough revenue to justify staying open (AR>AVC). But if you ever wondered why your favorite place is closed for the season, it's because market demand is too low and they can't generate enough revenue in those months to cover their variable costs. (this also happens to my favorite dairy queen location😣)

06/23/2017

Street murals. They're non-rival and non-excludable making them a public good. So economic theory says they are probably underproduced. Thankfully artists like Hebru Brantley / Hebru Brand still find enough incentive to put pieces like this up in eastern market (detroit). I love this one. Remember in markets like this, we all can't be free riders and those that value the artist's work must practice voluntary cooperation and still show our support. That means voting with our views and dollars. Go to his page, follow him, go to his website, buy something. I will be buying one of the fresh crew sweatshirts.
www.hebrubrantley.com

06/22/2017

Always enjoy the Diego Rivera mural when at the . There is actually a lot of economic views being expressed by Rivera. The one that grabs me the most is the duality of technology, how it can bring progress (and increase the standard of living) or do harm. On this wall he shows aviation's two sides. On the left it shows the commercial application (faster travel and transportation of cargo). Note the dove on that side (peace). On the right it shows the military application. (better weapon/ means of attacking your enemy). Note the hawk on that side (war). In economic growth theory new technological knowledge is the required ingredient for continuous sustainable growth. But with advancement comes new dangers and risk. Diego's painting was done in the 1930s. But we have similar concerns today: biotechnology, genetic engineering, artificial intelligence, etc... All these things have the potential to transform our lives in a positive way. But they also have the potential to do unimaginable damage. Just some economic food for thought. Your thoughts are welcomed in return.

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