November 14, 2005

Cosby, footwear, and the state of social science   {Comments: 7}

It's hard to believe, upon reading this shamefully simplistic post, that Alex Tabarrok is a tenured professor at a respected American university. Basically Tabarrok is trying to defend Bill Cosby from Michelle Singletary's charge that he's out of touch; in the process, he misunderstands not only Singletary's criticism, but also apparently Cosby's initial point, which was about the failures of parents, not the community as a whole.

Singletary never says that Cosby is wrong to claim that poor blacks spend too much on shoes. She makes the subtler point that Cosby's claim -- that people are out there spending $500 on a pair of sneakers -- shows how completely out of touch he is with the circumstances he's talking about. Tabarrok, however, takes this as some kind of statistic and heads straight for the consumer expenditure survey, where he finds that blacks, who earn less, spend more on shoes. QED.

But what does he really prove? Cosby's point is about poor choices in parenting, not the evils of shoes. And what, in any case, is wrong with buying shoes? Tabarrok makes no argument about parenting and doesn't bother to mention that his statistics don't provide any support whatsoever for Cosby's claim (since the entire difference in expenditure on shoes could well be explained by purchases among non-parents). Instead, he leaves us with the impression that black people are wrong (or stupid?) to be buying shoes when they have such limited resources.

Setting aside the racist overtones here, and looking -- as Tabarrok does -- beyond the nauseating discrepancy between black and non-black incomes, isn't it odd to see an economist drawing these kinds of conclusions about people based on the choices they make? After all, economics is built on the assumption that individual actors are rational. Is there some reason to suspend that assumption here?

November 10, 2005

More pain in the pocketbook   {Comments: 1}

Gapers Block links to this story about the CTA increasing fare prices starting January 1. It won't affect me at all, because I have one of these Chicago cards that automatically charges fares to my credit card (or at least I think that's how it works). Still, it's pretty upsetting to see Chicago still doing it's best to stick it to the poor. There are, it turns out, many people who do not have credit cards or bank accounts, and therefore can't use the Chicago card. These folks will now have the privilege of paying an extra 25 cents per ride.

Now maybe the folks at the CTA think they're giving people an incentive to switch to the Chicago card. The problem is they haven't provided options for people who don't have access to a line of credit, which means these people will have no choice but to pay the higher rate. As a further insult, they're putting fare card machines in Currency Exchanges around the city, but these machines will not sell the Chicago Card. It's very possible this policy is the result of a compromise (was somebody lobbying to have the Chicago Card available at Currency Exchanges?), but it ends up looking more like a targeted revenue push against those with the least financial and infrastructural resources.

I don't think price discrimination based on method of payment is tolerated in the private sector, and I certainly can't think of any case where it's both tolerated and linked inversely (as here) to people's ability to pay. Wouldn't that just create a public relations firestorm? Why doesn't it here?

November 3, 2005

Net loss   {Comments: 198}

Will Baude wishes the Netflix class action settlement were in cold hard cash rather than services. I couldn't agree more, and I have the further complaint that signing up to receive the the additional DVD would actually be a net loss for me. This is not because my time is so valuable, but rather because the upgrade will auto-renew after the month is over. That's right, the one month "settlement" may actually be a strategy to build Netflix's subscription base.

For my part, I know I can't be trusted to cancel the upgrade after the month is over -- after all, my demonstrated inability to return rentals in a timely fashion is a big reason I signed up for Netflix in the first place. I suspect the same is true for many Netflix customers.