Shall We Eat At the Burj or On An Iceberg?

By Credit Suisse’s definition, there are more millionaires today than there are Australians. These affluent individuals control about $69.2 trillion or about a third of the world’s wealth and about a half of them reside in the United States.

Likewise, the ultra rich populace is growing as well and many of these individuals can have a very difficult time spending all their money. Contrary to the classic story of the rich man who squanders away his fortune, most individuals with assets of say over $100 M can’t just simply get rid of their money. But not to worry, just hit up Ben Elliot, founder of Quintessentially, his company that caters to the rich, helping them spend their money in whatever way they find fit. Whether it be a straightforward request like booking the $18,000 a night royal suite in Dubai’s seven star Burj-Al-Arab or handling more complex requests, Elliot can have anything arranged for you. And he really has received some crazy requests; whether it be arranging a romantic dinner on an iceberg, delivering a metal detector to find your keys on the French Alps, closing the Sydney Harbor Bridge so a member can propose, arranging a party at the pyramids or airlifting a member from one part of the Amazon to another to see the rare pink dolphins, Quintessentially has rarely failed its job.

So if you become extremely rich one day and have a “special request”, you know who to call.

Pay What You CAN

                “Pay what you want” systems have been tested off and on around the country. Recently, a group of researchers at the University of California tested this policy to see how generous we really are and if such a model would be sustainable for businesses. The procedure was really straightforward; they took the amusement park ride pictures of a 100,000 people (really big sample!), split them into two groups one of which was given a fixed rate and the second an open price, and also told half the people within each group that part of the proceeds went to charity.

                The sales were lowest amongst the fixed cost group with the pay as you want members buying almost eight times as many pictures at a higher average price too. Sales generally remained the same when considering charity, but the open ended group spent even more money. Shocking as the results may seem, this isn’t the first time such results have come up. NPR covered several restaurants that tried the same thing with their food sales one of which was a Panera. There were of course those individuals who couldn’t afford to pay much as well as those who gamed the system and chose not to pay for large amounts of food. Despite these factors, the Panera reported higher revenue and profit than a similar control restaurant.

                So the truth is, humans really our generous and these kinds of sales method is viable for certain companies. This isn’t to say that Best Buy or any other company could say offer up their iPods, TVs and Game Systems for whatever you wanted to pay nor could Ferrari do the same with their cars. But if some restaurants and other daily service businesses offered “pay as you want”, the poor would benefit and the business just may be a little richer.

Expensive? Yes, but at least we have it.

I just wanted to do a quick follow-up post about how outrageously expensive college has become. I checked out how other countries’ tuitions compare to that in the United States and we for the most part face the worst costs. In most European Union states, there is a fixed low rate for domestic students to any university. Here are a few examples: England £3,000, Ireland €900, France €165, Germany €1,000 and Australia 15,000 AUD. All in all college in America is extremely expensive but it’s important that we note that all this data covers highly industrialized and developed states. In many countries around the world, college is a privilege reserved for the wealthy elite with few others ever even having a chance to step onto a campus. Nonetheless, for a country as advanced as the USA, these kinds of costs are a discrepancy that must be addressed.

Random Update: Sick, SAT, TV

So I’ve been sick since yesterday with some kind of throat infection that I seem to get about twice or thrice a year. I’ve lost my voice, am really congested and just generally don’t feel good. Luckily, districts for swimming is still 2 weeks away and shouldn’t be affected by this. The odd thing is that I very rarely get sick with anything other than this. It’s been a really long time since I’ve had the flu or any other illness for that matter so what’s up with my throat?! I’ve thought that it could be related to my tonsils but I have absolutely no knowledge of anything medicine (except for maybe what I gleaned from AP Biology). Explanations?

On an almost equally frustrating note, I had to take an SAT this exciting weekend. I can’t disagree with the concept of an SAT; aptitude is important when it comes to college and I believe the SAT does a pretty good job at measuring this accurately. This system is also a lot better in my opinion than that of some other countries; back in India where I was born and my parents grew up, college entrance often revolves around a single achievement test. Success on the test almost solely depends upon ceaseless hours to days of studying and there are almost never any second chances. The test is administered once and you can hope for your life that it’s a good day and that you’re not sick, say with a throat infection. In that way I really do favor the SAT/ACT but that’s about as far as my preferences go. The SAT is way too long! I understand the need to measure mental endurance as well and I know that there are probably longer tests out there, but still 4 straight hours including only three short 5 minute breaks  is a little too much. The most frustrating part for me is the experimental section; for those of you unaware of this, the test makers throw in an extra 25 minute section with possible future questions. It just really annoys me that while I’m working away hard, trying to stay focused, one of the sections isn’t even going to count! Well for now I’m just going to hope that my worst section was the extra one and we’ll find out on February 10^th I believe.

On Sunday I completely lost my voice and did almost nothing but watching TV. The day started off with some NHL which is a lot of fun to watch plus the fights can’t hurt. I then moved on to the 10^th Annual Eukanuba (I think that’s how it’s spelled) dog show which was actually interesting to watch except for I can’t for the life of me understand how the judges criteria in picking the best amongst those dogs. I then watched the playoffs. For no personal reasons whatsoever, I am kind of glad the Packers won. My AP US teachers is an avid Packers fan and though we can’t make fun of him now, class should be a little easier and maybe more fun this week. I don’t watch too much football but I’ll probably be supporting the Steelers at the Superbowl.

So it’s been an unusual weekend. Feel free to answer my question or share your thoughts in the comments section below.

Wikipedia: An Underappreciated Treasure

Wikipedia recently got a lot of attention after its extremely successful fundraising campaign in which the company received $16 million in donations over the course of just 50 days. Many of the approximately half million donors from around the world contributed $20 or less each to keep the site free of advertisement (now the only remaining top 10 website to be commercial free).  In this blog entry I just wanted to briefly address one debated reason for how the website raised so much money so quickly and the accuracy of the encyclopedia itself.

Now almost any of us who frequent the internet can remember the banner that has occupied the top of Wikipedia asking for contributions over the past couple of months. And the most memorable aspect of it has for many been the face of founder Jimmy Wales. A little bit ago I heard an interesting report on NPR during a more conversational segment claiming that Wales’ face was one of the primary reasons for the campaign’s success. In a rather un-NPR-like fashion the discussion revolved around how the image of an unshaved, somewhat disheveled founder has persuaded users to donate simply to get his face off of each page. Personally I can’t say I agree with this; to me his face seemed to have an extremely friendly appeal. He looked like a smart guy who needed help almost like a real nice guy who is just going through a hard time and it kind of made me want to give too (I believe in the cause and would have but of course I got lazy and didn’t). Whatever individuals took away from the banner, there must be some merit to this argument as the website raised in about a week as much as it did in a month last year. Even when taking into account the increased traffic to the site, that’s a huge jump.  So next time you need to raise some money, one sure fire trick is to plaster a picture Jimmy Wales on your pleas.

Now onto my second topic, the accuracy of Wikipedia. To get right to the point, I hate it when teacher’s say that you are not allowed to use Wikipedia in any way, shape, or form for a project. Wikipedia is one of the few places to offer a comprehensive analysis of numerous sources in a way that’s highly accessible and easy to use. Plus to be honest, whatever the teacher says, even her most prized student is likely to start at Wikipedia prior to proceeding to “better”, “more accurate” sources. Now I’m not going to go to great details and research this, but Wikipedia is cited numerous times as having similar error margins as several highly renowned publications such as the Encyclopedia Britannica. I will concede that if we were to travel just a few years back, information was often significantly flawed. I remember back in middle school when anyone could change the information on the site and I used watch students go to random pages changing details. However, with the progression of time, Wikipedia has taken significant measures to prevent vandalism which has also allowed time to remedy falsified pages. Now, experts for the websites constantly monitor new content and verify altered information. Perhaps the biggest deterrent is the simple requirement of a user account to make changes. This has, as the company cites, prevented many would be vandals with “nothing better to do” from wasting time changing data.

In the end it’s your choice as to whether or not you use Wikipedia, but to discredit it as an unreliable source is just plain wrong. After all, the very idea of Wikipedia, a universal online hub of knowledge, is a noble one and is a symbol of the union of modern technology and amassed human intellectual achievement.

Billy Walters: Bookies Better Run

I recently blogged about Warren Buffet, the genius of Warren Buffet who  has made a fortune and built the empire of Berkshire Hathaway off of his success in the stock market. 60 minutes did a story today about Billy Walters who is in many ways, Warren’s Las Vegas counterpart. Walters’ bets on basketball and football have earned him respect, a fortune of hundreds of millions of dollars and even fear amongst Vegas book makers.

Gambling permeates nearly every aspect of Billy’s life which becomes evident when you see that he bets thousands with close friends even while golfing which was his original profession.  From golfing, Walters spent years betting his way to a fortune often doing so well and winning so unbelievably high that law enforcement has come knocking on his doorstep. Now thirty years later, no one even questions Billy who has the understood power to defy the laws of betting, losing days and even months but always winning on an annual level. The degree of his success is perhaps best demonstrated by his $3.5 million bet on New Orleans in last year’s super bowl. Nowadays, you can find Walters spending his Sunday morning’s in front of his computer monitoring stats and on the line with numerous agents supplying information and capable of placing immense bets. After that, he simply sits back and watches money occasionally slip away but more often pile into his accounts.

Whether it be changing bookie’s official victory lines or reaping millions, there honestly is no one like Billy Walters in the gambling industry.

Aahhh Mechanical Beast!!! PopSci

Popular Science is one of my favorite magazines in that I have to make little effort to find out about really cool topics. In a way it’s my literary guilty pleasure which is in some cases what a magazine should be. The articles in Popular Science are fairly concise, the font isn’t absurdly small and best of all, there’s always great pictures. Take the last issue (January 2011) for example. On the cover we see perhaps the most awesome looking weapon of all time. I mean really is that a 8 cylinder Gatling gun, laser, and missile launcher all mounted on a dog-like mechanical beast. Honestly this thing looks at least ten times scarier than the mechanical hound from Fahrenheit 451 and I’ve even had a couple of nightmares featuring that guy.

Alongside these great facets, the magazine always has a few pages dedicated to announcing the kind of new products that, even if you probably won’t get them, just seem like the greatest ideas. For example (again from the new issue), we find “Gentle Wake” from LARK up which is a bracelet that gently wakes you and only you up over the course of three minutes by causing pulsing vibrations to pressure points on your inner wrist. Don’t say that isn’t a great product but then again am I going to buy it? Probably not. As an added bonus, cars also seem to find their way into each issue somewhere between the other fascinating articles. I will admit that I have a fairly limited exposure to magazines as my parents seem to only invest in ones that appear to offer some degree of coverage of world events or intellectual discoveries. With that said Popular Science has got to be one of my top picks.

PS I might do a future entry about National Geographic which is also a great magazine. It definitely isn’t one of those guilty pleasures except that it has some of the best pictures of nature you will find anywhere.

Fishy economics… I think not

When I was blogging today, I got distracted by my fishies in the sidebar again as always. As you can probably guess, the fish have nothing to do with economics and they were just a cool little add-on. Or are they? I started thinking about it and the explanation I came up with is really a stretch and probably makes me sound a little stupid but I have to have some justification for having the fish on my blog.

Economics is in many ways the study of scarcity. In this case, we have a market whose sole commodity is a bunch of yummy fuzzy orangish opulent doughnut-holes (FOOD clever right? J). The fish represent all the individual consumers who create demand for the FOOD which you or I the suppliers provide. We the suppliers can manipulate consumers especially when supply has been extinguished in this case by making them follow our mouse. Lastly, the ninja fish represent the few smart consumers who know how to remain invisible and swindle away FOOD unbeknownst to the market. They can also represent the awesome ninja-like individuals of society. And in case you don’t know who the ninja fish are, they’re the ones you can’t see against the background. They appear occasionally when they swim over other fish.

And there you have it, a very logical, not-stupid-sounding reason for me to have little fish in the sidebar of my economics blog. Now that you've been enlightened, go back to playing with the fishies.

PS If you want the fishies for your blog just click on "Add a Gadget" in the design tab, search for Fish (made by Adam Bowman) and it should be one of the first few gadgets. If you do add it make sure you offer a reason to have them!

college is EXPENSIVE! (part two)

I’m not trying to suggest that colleges keep raising prices for no reason or to get the institution and faculty richer. Rather this money is often used for expansion and similar measures to increase services for students and appeal for the college. In effect, the college is kind of like a car enthusiast with an endless budget; he keeps growing his collection and customizing his cars (like adding to existing departments of the school) all the while racking up maintenance and expansion costs.

The enthusiast can afford to keep the cars he doesn’t even look at or care about anymore. Colleges similarly tend to keep undersubscribed programs and those which generally have a higher cost to student ratio. In this way, the selective major that only has twenty students is adding to everyone else’s fees. Certain programs, even if taken by a lot of students have a likewise effect. Music majors who need one-on-one tutoring or drama/studio productions or chemistry labs with sophisticated materials and equipment are the main reason that the significantly cheaper education of say a literature or mathematics student costs so much. These factors and several more complex/insignificant expenses add up to explain what colleges do with all our money.

So what’s the solution? From a strictly economic perspective, the ideal solution would be to sever college’s access to payment methods. If grant money became less plentiful and more importantly, the government stopped subsidizing and backing student loans, then there would be few if any ways for most to afford tuition where it is now. The only real remaining source would be traditional lenders such as banks, but few of them have any reason to risk financing an unemployed or minimum wage working 18 year old. So when people can’t afford education anymore, colleges would be forced to actually budget their money in a realistic way. This is the ideal fix to get tuition to affordable rates, but as you can guess we just can’t do that. What happens to all the students caught up in this process who end up not going to college at all?

For now all we can really do is ask colleges to use their common sense. I mean really, just because you don’t have a budget like the average citizen or business or government, doesn’t mean you can keep spending at the expense of others. Hopefully, necessary changes will be made, specific majors appropriately priced and unnecessary expenses cut. With any luck the experience of college will soon be available to and less difficult for all of us!

PS Let me know what you guys think about the subject and please leave a comment if there’s any fact or perspective I didn’t take into consideration because I for one really hate it when people jump to or make false conclusions. Thanks and good luck to my fellow prospective students.

college is EXPENSIVE! (part one)

It’s scary but I’m just a year and a half away from college. And so I and many of my friends have begun the search for where we might want to spend four years and perhaps the greatest realization for many of us is that college is expensive. And not just expensive, it’s seriously ExPeNsIvE. Unless you plan on attending your own state school, you’re looking at a tuition of anywhere from $20,000 to $40,000 on average and even in state schools range from $9,000 to $25,000. And this doesn’t even include room and board which is thousands of dollars more. To me that’s just outrageous, I mean unless your family earns about $250,000 or more (so less than 1.5% of Americans), these kinds of costs are impossibly high. So I did some research about the subject and as to what colleges could ever need this much money from thousands of students for.

OK so lets go back to the year 1810, tuition at Yale was $33 or about $1,800 today. 200 years later, tuition is $37,000. That’s over a twenty fold increase… why?! In fact, much of that increase has occurred over just the past three decades affecting our and previous generations. The increase has outpaced inflation and even the infamous spike in medical bills. Again why?

Colleges are admittedly expensive with numerous specialized professors and state of the art facilities but this has always been true, not just since exactly three decades ago. In fact technological advances have made it even easier to deliver these same amenities to students as computers especially have eased nearly every aspect of education (from research to grading, record keeping etc.). Supply and demand have also had little affect. The number of degree granting institutes has tripled over the past 60 or so years but at the same time, demand has grown exponentially. Imagine your own families; ours and the past two generations for most families include the first college graduates. In fact for many of us today who seek higher paying professions, four years won’t even do and graduate degrees seem ever more important. All-in-all rising costs just don’t make sense.

Most of the loans and financial aid that facilitate each student’s total payment can be made as a result of massive grants, donations and extremely secure government backed loans. These programs which are often seen as helping students achieve the education of their dreams, often leave them indebted for decades and are the vehicle by which colleges can raise their tuitions with few or no consequences.