Division of Labour: March 2013 Archives
March 26, 2013
Out of the mouths of students
At the end of an assignment, a student included this joke:
One beggar says to another: "The Fed is propping up the economy with an infusion of cash.” The other one replies: “Looks like we’re gonna need bigger cups.”
March 20, 2013
On the Falcons and a New Football Stadium in Atlanta
Over at The Sports Economist, Skip Sauer asks "How Much Are the Falcons Worth to Atlanta?" and gives a thoughtful rundown of the Falcons bid for a new stadium.
Just yesterday I got my hands on some hotel occupancy and room rate data for several cities including Atlanta. Since one of the big carrots being dangled in support of a new stadium for the Falcons is having Atlanta host a future Super Bowl, I took a quick look back at hotel data around the time of the 2000 Super Bowl held in Atlanta.
First a look at hotel occupancy rates. I'm not allowed to report the actual numbers because of a confidentiality agreement, but Atlanta's hotel occupancy rate in January 2000 was 0.2 percentage points above what it was in January 2001. The occupancy rate in January of each year relative to February of that year was 95.87% in 2000 and 95.43% in 2001 suggesting an uptick of about 0.45% in the Super Bowl year. Using either measure, it looks like most of the visitors to Atlanta may have simply supplanted other visitors who might have come to town.
Now let's look at average room rates by month. January 2000's average room rate was about $6.50 more than January 2001's average room rate. The January of 2000 average room rate was 113.6% of the February 2000 average; the comparable number for 2001 was 101.8%. So it looks like hotels can charge about 12% more for rooms on average in a Super Bowl January than in other Januarys. Most of this gain presumably flows to the hotel owners rather than local employees etc. (This pattern of results is consistent with the discussion in Baumann et al.'s paper on tourism in Hawaii.)
Since the Super Bowl attracts fairly few additional visitors but does lead to a boost in hotel rates maybe the question to be asking is how much the Falcons are worth to Atlanta hotels.
Note: Many thanks to the folks at Smith Travel Research Inc. for the underlying data.
UPDATE: Since the AEA meetings (more than 10,000 economists) were held in Atlanta in January 2010, I took a look at those numbers too. Here's the January-February occupancy rate ratio for 2009, 2010, and 2011: 91.85%, 91.35%, 91.45%. There's very small decrease (not likely to be statistically significant) in the year that the AEA meetings were in Atlanta. (The old joke is that when the econ geeks come to town the hookers go on vacation so maybe that's the small decrease.)
As for room rates, the monopsony power of the AEA may be evident in the Jan/Feb room rate ratios for 2009-2011: 103.81%, 101.06%, 106.27%. The average room rate in 2010 was about $5 below that of 2009 and about $1.50 below that for 2011.
Posted by E. Frank Stephenson at 08:50 AM
March 19, 2013
Recommended Reading from The Independent Review
Two articles from the Winter 2013 issue if TIR caught my eye:
1. Steve Horwitz and Michael J. McPhillips on whether WWII ended the Great Depression.
2. John M. Cobin on market-provided fire protection services in Nigeria. Of course we already know fire protection is not a public good because it is excludable to those who do not pay for it.
Posted by E. Frank Stephenson at 12:53 PM
March 13, 2013
My wife and I have been reading and enjoying young adult literature with libertarian/dystopic themes for many years. It started with The Giver books, then The Shadow Children set, and of course lately The Hunger Games trilogy.
It’s the year 2034. Terrorists with chemical weapons are about to attack the United States. But don’t panic—the government is distributing an antidote, and three drops a day will keep you safe. Taking that daily dose is a small price to pay for your safety, right? It may seem that way, but soon Careen Catecher and Tommy Bailey will discover the truth...
You can download a chapter by joining her "fan club". If you like, help her out by sharing with your friends, re-blogging, etc..
March 06, 2013
Tragedy of the Fiscal Commons: NoVa Income Tax Edition
Northern Virginia traffic is a congested mess. However, none of the NoVa city or county governments have chosen (as they could do under Va. law) to put a one percent income tax referendum before their voters. Moreover, regional leaders were mostly, if not entirely, opposed to a measure under consideration by the VA General Assembly that would have allowed the one percent income tax to be imposed by local boards without the public referendum. (Source)
What's the rub? Here's Fairfax County Chairman Sharon Bulova: “Transportation is basically a state responsibility, [a]nd they’re not doing it. It’s a little bit of chutzpah to say the locals should be paying for it, and it’s not fair. It’s not like Fairfax and our sister jurisdictions haven’t been committing tens if not hundreds of millions of dollars on transportation. But we can’t do it alone.” And here's Prince William County Board Chairman Corey Stewart: “We have never requested that power, we don’t want that power and we would never use that power.” Of course, what Bulova and Stewart are really saying is that they want to bellyache about roads but want someone else to pay for them.
(To be fair, I should note that there is a legit concern about coordination of some projects that cross county lines.)
Posted by E. Frank Stephenson at 02:29 PM
On Walmart and Monopsony
Tyler Cowen points to this post about a paper examining Walmart's labor market monopsony power. The post contains a chart (presumably taken from the paper) showing a negative relationship between Walmart's employment share of the retail sector and per capita earnings. Walmart may or may not have monopsony power but I have at least two objections to reaching such a conclusion based on the diagram:
1. Per capita earnings differences could be entirely attributable to non-Walmart employment conditions/earnings. For example, consider two counties and assume that Walmart employs one person in each county and pays the same wage/salary in each county. Suppose in one county there is only one other person employed in the retail sector and that the remaining people in the county are unemployed. In this county Walmart would have a 50% share of retail employment but per capita earnings would be low because only two people (one at Walmart and one at another retail establishment) would be employed. Suppose in the other county that three other people have retail jobs (meaning Walmart has only a 1/4 share of retail employment) and that many other people are employed in non-retail sectors (agricultture, manufacturing, etc.). In this county Walmart would have a lower retail employment share and there would be higher per capita earnings even though Walmart's employment and pay were identical in both counties. Hence, the sort of relationship depicted in the diagram could arise entirely from souces other than the exercise of monopsony power by Walmart.
2. The counties in which Walmart has fairly high retail employment shares are probably disproportionately rural counties, particularly in the South. The low per capita earnings in these counties may be attributable to cost of living differentials, educational differentials, and differences in racial/ethnic composition of the population. If these factors are not properly controlled for then the relationship in the diagram could be spurious.
Posted by E. Frank Stephenson at 02:10 PM
The Bolivarian Paradise Must Pay Well
BTW, I wonder if ole Hugo is smelling sulfur about now ...
Posted by E. Frank Stephenson at 01:27 PM
March 05, 2013
Educrats Outnumber Teachers in 21 States
Posted by E. Frank Stephenson at 02:12 PM
March 01, 2013
Well It Looks Like the Sun Rose Today After All
So much for all the sequester hyperbole.
Of course there will still be plenty of wrongheaded claims such as this bit about "Austerity America" just as the baloney about austerity in Japan and the U.K. As for the U.S., Angus has the data and it doesn't show much austerity.
Mike Lester's cartoon in the RN-T is spot on.
Posted by E. Frank Stephenson at 08:38 AM
The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith
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