Valentine's Day

With the annual agony of Valentine's Day about to hit us once again (last year I only got one card and that was from my dog so it doesn't really count!), it's time for Economics students to give some thought to the Economics behind the situation.

Here's an interested e-lesson from the Economics America which is a good place to start:

http://www.umsl.edu/~econed/lesson2.htm

If you want to find out more about the different types of roses you can buy - and some cheaper alternatives for those on your B-list - you can read about them here:

http://www.flowers.org.uk/press/press-a%20rose%20is%20a%20rose-2006.htm

Here's a tip by the way, generated from personal experience, always make sure the flowers are delivered by a handsome young man in uniform in a public place when your target is surrounded by her friends so that she is making them all jealous by receiving them - it's worth the extra tip to achieve that effect!

Also, remember that a single red rose in a presentation box has exactly the same effect as a giant bouquet - and it's much cheaper.

Meanwhile, economist Brian Kaplan looks at why women bother with a man who has already shown that he can be unfaithful in his always excellent EconLog. In particular, he relates it to the lemons problem of imperfect information - except in this case of course, the woman usually knows that she is buying a lemon, so it's not quite the same thing:

http://econlog.econlib.org/archives/2006/02/lemons_for_vale.html

Perhaps Valentine's Day is summed up best by Russian economist Michael Kouliatvtsev:

http://faculty.philau.edu/KouliavtsevM/valentines_day.htm

And finally, if you're the sort of boring person who wants to find out who St Valentine really was, it's all here:

http://en.wikipedia.org/wiki/Saint_Valentine

Past Papers & Mark Schemes

Once again, here is the link that will take you to all the past papers and mark schemes for the AQA exams.

Good luck with the re-sits this week:

http://www.aqa.org.uk/qual/gceasa/eco_assess.html

Kyle MacDonald

Kyle MacDonald is a very remarkable young man from Montreal. He succeeded in trading-up from one red paperclip to a house within a year - by simply asking people to give him something a little bit better than the object he currently had.

You can read his story here:

http://abcnews.go.com/Technology/wireStory?id=1849375

For those of us interested in Behavioural Economics, this is a fascinating story - an example of altruism. Why on Earth would you willingly give to someone you don't know something of more value than that you receive in exchange? Of course, it must depend on whether the exchange is merely about the object itself or whether there are other factors related to the exchange (such as publicity, excitement, rooting for the underdog and so on) that add value to the object being received.

Kyle also has his own blog which can be found here:

http://oneredpaperclip.blogspot.com/

So here's the plan: I have a packet of drawing pins. When you get back from the holidays, I will give each of you a drawing pin and you can spend the next three months trading-up on ebay. At the end of the three months, you can all give me everything you've gained from the exercise in exchange for the drawing pin I loaned you (well, okay, I'll let you keep 10% - that's fair). The one who gives me the most wins a signed copy of all my lecture noted on Business Ethics - it's got to be a good deal, right?

Okay, so let's get started...... I have a drawing pin.... what will you give me in exchange?

Nobel Peace Prize

In growing recognition of the contribution that a stable and growing economy can make towards world peace, the Nobel Peace Prize has been awarded this year to Muhammed Yunus, the Bangali economist who developed the concept of microcredit.

You can hear an interview with him here:

http://nobelprize.org/nobel_prizes/peace/laureates/2006/yunus-interview.html

And you can read Muhammed's story here:

http://en.wikipedia.org/wiki/Muhammad_Yunus

Normally, bank loans are given on a secured basis - meaning that the person receiving the loan must have enough wealth to pay back the loan should something go wrong. What Muhammad Yunus showed is that statistically it is worth banks making small unsecured loans using a number of other criteria - such as commitment, potential, future projections of income and so on. The Grameen Bank has shown that the payback to both the bank and the person from such loans is greater than that often received from secured loans - even allowing for the occasional business failure.

The microcredit approach allows people in developing countries to work their way out of poverty and has been a remarkable success story in South Asia.

Development Economics - module 6