Tuesday , April 7 2020
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Managerial Econ

Managerial Econ is hosted by a group of economists who have written a managerial economics book together called Managerial Economics. This blog add an economic analysis to quirky topical news like why uber drivers are more efficient than taxi drivers.

Sweden’s strategy, for the long haul

Lockdowns will slow the virus (temporarily?), but will damage the economy (temporarily?).  Sweden is trying a different strategy. “It is important to have a policy that can be sustained over a longer period, meaning staying home if you are sick, which is our message,” said Tegnell, who has received both threats and fan mail over the country’s handling of the crisis.“Locking people up at home won’t work in the longer term,” he said. “Sooner or later people are going to go out anyway.” Let's...

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Dying from Protection from Gouging

David DiSalvo has a write up at Forbes on his experience trying to obtain N95 masks during this pandemic. Federal and state officials say they are "scouring the globe" for PPE while some medical professionals are going without. Here is his summary. Millions of N95 masks have been available throughout the U.S., Canada and the UK during the pandemic, according to brokers trying to sell them. The high price point per mask, driven by extreme demand, has contributed to an overwhelmed reaction...

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How to Limit Hoarding

Usually, retailers want to sell as many units to a customer as possible. And we should want them to. But currently there is a social imperative against hoarding key supplies. Some retailers are willing to forgo additional profits to pursue this social goal. The Meny supermarket in Denmark set the price of a bottle of hand sanitizer at kr40 ($5.73) but two bottles at kr1000 ($143) each. Hat tip: Carpe Diem blog

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Subsidies to “Flatten the Curve”

Summary: Trying to quarantine everyone until a vaccine is available doesn’t seem feasible. In addition, restrictions mainly delay when the epidemic explodes, e.g., see previous post on Flattening the Curve.   In this paper, we propose subsidies to both individuals and businesses, to better align private incentives with social goals, while leaving it up to individuals and businesses to decide for themselves which risks to take.For example, testing would give individuals the information...

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What does “flattening the curve” mean?

Policy makers are using the term to describe the effects of social distancing and travel restrictions.  In this post, we use a cellular automata model of infection to show how they might do this.DISCLAIMER:  THIS IS AN UNREALISTIC MODEL, FOR TEACHING PURPOSES ONLY.The images below are from a cellular automata model of the spread of a disease on a 100x100 grid.  White dots represent uninfected; red dots, infected; green dots, survivors; black dots, deaths.  The key parameters are:death...

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“Ban-the-Box” versus Alternative Screens

The “ban the box” (BTB) policies limiting an employer's ability to learn about job applicants’ criminal records are intended to improve employment outcomes for those with criminal records, with a secondary goal of reducing racial disparities in employment. However, since employees with a criminal record tend to have more workplace problems, it is valuable to employers to develop other screens to weed out these applicants. One possible screen is to reducing hiring among the demographic groups...

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Italy’s moral dilemma

NY Times Today, Italy has 10,149 cases of the coronavirus. [but] They lack machines to ventilate all those gasping for air. In other words, they have scarce resources and must allocate them somehow.  They follow a utilitarian ethic, a type of consequentialism: “Informed by the principle of maximizing benefits for the largest number,” they suggest that “the allocation criteria need to guarantee that those patients with the highest chance of therapeutic success will retain access to...

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Optomotrists tying services and products

Like most people with vision problems, I get my eyes checked (services) by an optometrist. Consumers like me could get eyeglasses or contact lenses (products) from an optician, but often our optometrists' vertically integrate into the product to provide "one-stop shopping." Such a vertically integrated optometrist may want to blunt competition in the complementary product by steering consumers to their own products. One way to do this is to not release prescription information. This...

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Should electricity be a right?

MarginalRevolution has the answer In step 1, because electricity is seen as a right, subsidies, theft, and nonpayment are widely tolerated. Bills that do not cover costs, unpaid bills, and illegal grid connections become an accepted part of the system. In step 2, electricity utilities—also known as distribution companies—lose money with each unit of electricity sold and in total lose large sums of money. Though governments provide support, at some point, budget constraints start to bind. In...

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