Category: Economics

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How Gyms Really Work

Actually this is how gyms work, they just dropped the pretenses.
thanks to Marginal Revolutions:

from Marginal Revolution by Tyler Cowen
Peter Risager, a loyal MR reader, relays the following to me:

A Danish chain of gyms is now offering membership free of charge, with the only caveat that you have to show up, in order for the membership to be free. If you fail to show up once per week you will be billed the normal monthly membership fee for that month. This should solve the problem with incentives that gym-membership normally carries – there is suddenly a very large (membership is around 85$ per month) incentive to show up each week.

He offers also a link in Danish.

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dani rodrik on doha round

from this article of dani rodrik:

We live under the most liberal trade regime in history not because the WTO enforces it, but because important countries — rich and poor alike — find greater openness to be in their best interest.
The real risks lie elsewhere. On one side is the danger that today’s alarmism will prove self-fulfilling — that trade officials and investors will turn the doomsday scenario into reality by panicking. On the other side is the danger that a completed “development round” will fail to live up to the high expectations that it has spawned, further eroding the legitimacy of global trade rules over the longer run. In the end, it may well be the atmospherics — psychology and expectations — rather than the actual economic results on the ground that will determine the outcomes.
So don’t cry for Doha. It never was a development round, and tomorrow’s world will hardly look any different from yesterday’s.

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Power rates could drop by P2 per kWh, UP study shows

Dr Allan Nerves was my research adviser for my undergraduate research, Very understated but a great adviser. The attack dogs are coming Doc Nerves, God Bless. Sir Ivan and Sir Wally we my professors.
from here:
Power rates could drop by P2 per kWh, UP study shows
By Donnabelle Gatdula
Tuesday, August 5, 2008
Power rates could be reduced by as much as P2 per kilowatt-hour (kWh) if the government and the private sector will come together to do their share in reducing electricity rates, according to initial results of a study commissioned by the University of the Philippines.
In a public forum which presented the draft study entitled “Anatomy of the Power Rates in the Philippines,” the four-man research team had listed 10 items in the power rates that would be looked at.
The study, which will be released in its final form within the month, is authored by Edna Espos, Allan Nerves, Ivan Benedict Nilo Cruz and Rowaldo del Mundo. The team is working on a UP Diliman Open Grant research program Office of the Chancellor through the Office of the Vice-Chancellor for Research and development).
The paper has four parts including generation; transmission and distribution; other issues such as stranded cost, incremental currency exchange rate adjustment (ICERA), subsidies and taxes; and conclusion and summary of how to reduce the electricity rates by at least P2.0913 per kWh.
Among the items in the list of possible areas that could help in the reduction of power, according to the UP research team, and their corresponding savings are: Manila Electric Co. (Meralco) power cost at optimal mix (88 centavos per kWh); reduction in generation rate adjustment mechanism (GRAM)and ICERA charges of the National Power Corp. (Napocor), (30 centavos); reduction in Napocor basic average generation charge from peso appreciation (0.06 centavos); reduction in Napocor basic charge average generation charge from plants sold and removed from rate base (32 centavos); adjustment of the National Transmission Corp. (TransCo) charges from removal of appraisal increase (18 centavos); adjustment of distribution charges from removal of appraisal increase (10 centavos); cost of missionary electrification assumed by government (3.73 centavos); removal of charge for benefits to host communities (0.04 centavos); removal of value-added tax (VAT) system loss 0.6 centavos and removal of government unencumbered share of natural gas royalty (15 centavos).
“The reduction in electricity rates can be effected through a combination of simple adjustment in regulatory/implementing policy and amendment of the EPIRA,” the team said.
Former energy secretary and UP College of Engineering Dean Francisco Viray said the recommendations made by the team of Professor Del Mundo should be restudied to take into account the present regulatory and legal framework.
Citing an example on the costs of the IPPs and Napocor as mentioned in the study, he said, “You cannot compare the avoided cost today (which is actually not an avoided cost as there is still a subsidy) with that when these IPP projects were conceived.” He added that rate cases or simulations are best tossed to the proper body which is the ERC.
The group also recommended that there should be an adjustment in regulatory and other policies to auction values of Napocor’s generating assets; for proper application of the performance-based rate; and ICERA.
They said these recommendations may also require legislative action such as the amendment of the EPIRA which include WESM; assignment of the government unencumbered share of the natural gas royalty by way of a corresponding reduction in generation charges; the removal of the universal charge for missionary electrification, stranded debts and stranded contract costs of Napocor, equalization of taxes and royalties; and environmental charge.
The recommendations, however, elicited different reactions from the industry stakeholders who were present during the forum.
Meralco president Jesus Francisco, for his part, said only 24.73 centavos of the proposed P2 per kWh of the UP-sponsored study would be adopted.
Francisco also noted that “while the study is supposed to analyze the cost structure and the technical, financial and regulatory elements of the electric power industry, we find that many of the recommendations are lacking in such analysis.”
“Since the full paper is still to be completed, we trust that our comments will be addressed in the final output,” he said.

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Fighting Poverty

from here:
Hope is oxygen to someone who is suffocating on despair.

I think that most people in developing nations such as my country this applies. I talk to a lot of people and what hits me is that extreme or even mild but prolonged poverty causes a great change in all but the best people.  Before we can even try to help someone we must first try to convince that person that he can be helped, that he can be “saved”.
There are a lot of foundations who like to help in our country but a key ingredient a lot of these foundations seem to be missing is that people who suffer from poverty are broken in a way. They are not normal or ordinary and a more mindful and involved program is needed. I’ve seen a few organizations that seem to know this. Hope they all do.

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Raising The Tide

ht to  Bill Scher
ty Brad Delong here:
This is conservatism. The dismissal of economic burdens from others making less money than you. The belief that an ideal economy can thrive with a small boat of winners and a giant sinking ship of losers. The insistence that your economic dissatisfaction is illegitimate, and can only be explained by a brainwashing from the media or politicians.
I’ve written my belief that the circumstances of one’s life affects the things one achieves  and although I believe that people can break free from the constraints of their environment(this I am trying to prove personally) I will always be thankful for whatever break that comes my way. Always realizing that what often we call hardwork may just be a different sort of luck. This is why the quote resonates with me deeply.
We should not think of ourselves to highly.  Always remember the cognitive biases.

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Oil

from here:
Americans fell in love with vehicles like the Ford pickup trucks in the 1990s, back when gas didn’t cost much more than $1 a gallon. That seemed normal at the time, because gas prices had remained in a narrow range — roughly 90 cents to $1.25 a gallon — going back to the early 1980s.
But this stability was actually a sign of something deeply unusual. The cost of most everything else was rising, as was the size of people’s nominal paychecks. So in practical terms, gas was becoming cheaper. By 1999, it had effectively fallen to its lowest point on record, about 30 percent lower than few people in my country realize this.
The over all sentiment is that we should go back to the regulated oil days. The fact is we have a weak government that can’t seem to reign in the profiteering.