|
|
 Life’s Little Questions
Why are there Braille dots on the keys of drive-through ATMs? and why don’t the Japanese have many swear words? We found the man who can answer those questions —and others like them — economically.
By Jenna Schnuer
Illustration by Carey Sookocheff
FORGET THE PIE CHARTS. When Robert H. Frank, an economics professor at Cornell University’s Johnson Graduate School of Management, wants beginning economics students to help themselves to a heap of understanding of the subject’s principles, he sends them off to conjure up a question that, eventually, they’ll have to answer using economic principles. Though there are, to a certain degree, limits, Frank makes it clear that many of life’s most confusing questions — like the ones asking why retailers start the holiday season when summer’s winding down and why there is disparity in pricing between black and white MacBooks — can be solved with economics.
Thankfully, Frank doesn’t just leave the questions in his desk drawer after dispensing grades; he delivers them in some truly entertaining books. Yes, Virginia, economics can be entertaining.
With Frank’s latest book, The Economic Naturalist: In Search of Explanations for Everyday Enigmas, on your side (or on your bedside table), you won’t need an Idiot’s or a Dummies guide to get a grip on economic principles. And (shocker!) you’ll even have fun along the way. Walking you through a world of odd questions, Frank provides all the economics you’ll ever need to get through daily life. Plus, aside from a fun illustration on the front cover, there’s nary a pie chart in sight. We asked Frank to answer some of the questions we’ve had on our minds — along with some of his favorites from over the years.
Why did kamikaze pilots wear helmets? “You can offer some cost benefit explanation,” says Frank. “Maybe there’s going to be turbulence on the way to the target, and [the helmet] will help him get there if he’s protected. Maybe the target won’t be there, and he’ll have to come back — you’ll want to keep him alive for another mission. I think more persuasive is that kamikaze pilots are first and foremost pilots, and pilots wear helmets. That’s part of their identity as pilots. There are some interesting studies about the economics of personal identity.” If, adds Frank, people can’t function in the world without a “consistent, coherent personal identity … then that’s part of economics too.”
Another of your students asked why there is Braille on the keys of drive-through ATMs. So the manufacturer only has to produce one type of key. “The short, sensible answer is that it’s cheaper to do it that way,” he says.
Sounds reasonable. Now, brand extensions are all the rage at the supermarket these days. Doesn’t it dilute loyalty to the core brand when a company introduces the same product in 15 different flavors or scents? How many kinds of Tide does the world really need? “In a world where everyone is different,” says Frank, “it would be nice for everyone to get what she wanted. It’s just an extension of that. It doesn’t really cost much to add this extra variety. In the cases you’re talking about, it’s essentially the cost of printing new labels.”
So what question has surprised you the most over the years? Anything pop to mind? “ ‘Why does Japanese have virtually no swear words, while Korean is chockablock with swear words?’ The answer was that the samurai culture of Japan made it dangerous to run the risk of insulting someone, so people were cautious about how they spoke in Japan,” says Frank. “There was never a similar tradition in Korea.”
How is that a question of economics? “It’s the cost-benefit principle. I’d like to insult this guy, and in Korea, I can, but in Japan, it might be really costly if I do,” he says.
One thing that seems, well, crazy, is when hotels charge different rates for the same kind of room. Aren’t they in danger of annoying their customers? “If you can figure out ways to charge people different prices, that enables you to offer a better deal for everyone. There’s the example in the book of Apple laptop computers on sale for different prices in black and white. You might get offended if you bought the black one and realized it was the same as the white one and that you paid a premium for it. But if you reflect on the fact that the company is able to expand its market, the cost of producing extra machines is very small. So the fact that they’re able to expand the market means they can set a lower price for both machines. If they do it with what I’m calling the hurdle method, they put a hurdle in your path and tell you that if you want the cheaper price, all you have to do is jump over a hurdle — like buy the color you don’t like, wait a year and buy the paperback, or ask about the special price [when you make a hotel reservation]. As long as [those choices are] available to people, you can’t really complain that they charged you a higher price,” says Frank. “[You] could have gotten the lower price; [you] chose not to.”
Baseball players who are named rookie of the year often endure what’s known as the sophomore slump. Why aren’t they quite as good the next year? “Somebody who gets rookie of the year almost invariably has had an unusually good season,” he says. “People have good years and bad years. After an unusually good season, it’s likely you’ll have a more nearly normal one the next time.”
Why do people spend more when they’re splitting the check? “It makes it seem essentially free to order a more expensive item,” says Frank.
Okay, here’s one that’s probably on everybody’s mind right now: Why do retailers kick off the holiday sales — and music — so early? “There are a lot of sales to be had of that stuff if you’re on the shelves before [other retailers]. So if everyone else puts them on sale November 1, and you go mid- October, you’re going to get the two-week window, where you’re the only one who has them,” he says. “Once you do that, it’s going to be compellingly in their interest to follow suit, and it … keeps slipping back.”
JENNA SCHNUER is a contributing editor to American Way. She is based in New York City.
|
|
|
|
|
|