11-12 When Prices Misfire:
The anecdote about incentives and births in Australia comes from Joshua Gans and Andrew Leigh, “Born on the First of July: An (Un)natural Experiment in Birth Timing,”
Journal of Public Economics
, Vol. 93, 2009. Data on the window tax come from the Wolverhampton Archives (
http://www.wolverhamptonarchives.dial.pipex.com/windowtax.htm
, accessed 08/13/2010). The analysis of the effects of the 55-mph speed limit draws from Paul Grimes, “Practical Traveler: The 55-m.p.h. Speed Limit,”
New York Times
, December 26, 1982; and M. C. Jensen and W. H. Meckling, “The Nature of Man,”
Journal of Applied Corporate Finance
, Vol. 7, No. 2, Summer 1994, pp. 4-19. The data on wages and gas prices was drawn from the Bureau of Labor Statistics and the Energy Information Administration. Data on gas mileage was drawn from the Environmental Protection Agency’s
1974 Gas Mileage Guide for Car Buyers
.
15-22 The Price of Things:
The experiment on placebo effects is found in Dan Ariely, Baba Shiv, Ziv Carmon, and Rebecca Waber, “Commercial Features of Placebo and Therapeutic Efficacy,”
Journal of the American Medical Association
, Letters, Vol. 299, No. 9, 2008, pp. 1016-1017. The relation between lap-dancer tips and menstrual cycles is drawn from Geoffrey Miller, Joshua Tybur, and Brent Jordan, “Ovulatory Cycle Effects on Tip Earnings by Lap Dancers: Economic Evidence for Human Estrus?,”
Evolution and Human Behavior
, Vol. 28, 2007, pp. 375-381. The impact of
Sesame Street
characters on children’s preferences is found in The Sesame Workshop, “If Elmo Eats Broccoli, Will Kids Eat It Too?,” Press Release, September 20, 2005. Evidence on people’s willingness to travel across town to save twenty dollars comes from “Conversation Between Economists Glenn Lowry and Sendhil Mullainathan,” Bloggingheads TV, March 22, 2010 (
http://bloggingheads.tv/diavlogs/26877
, accessed 08/13/2010). Wine preferences are drawn from Eileen Brooks, “Products and Prejudice: Measuring Country-of-Origin Bias in U.S. Wine Imports,” University of California Santa Cruz Center for International Economics Working Paper, 2003; Hilke Plassmann, John O’Doherty, Baba Shiv, and Antonio Rangel, “Marketing Actions Can Modulate Neural Representations of Experienced Pleasantness,”
Proceedings of the National Academy of Sciences
, Vol. 105, No. 3, January 2008, pp. 1050-1054; and Robin Goldstein, Johan Almenberg, Anna Dreber, John W. Emerson, Alexis Herschkowitsch, and Jacob Katz, “Do More Expensive Wines Taste Better? Evidence from a Large Sample of Blind Tastings,” Stockholm School of Economics Working Paper, April 2008. The story about pricey license plates in Dubai comes from Margaret Corker, “Read My License Plate: It Cost Me a Fortune—Oil Rich Persian Gulf Drivers Take Vanity Tags to a Whole New Level,”
Wall Street Journal
, July 1, 2008. The history of diamond marketing draws from Edward Epstein, “Have You Ever Tried to Sell a Diamond?,”
Atlantic
, February 1982; IDEX Online Research, “Bridal Jewelry Business High-Growth & Less Seasonal,” April 19, 2007; and
IDEX Magazine,
“The Key Facts About Diamond Engagement Rings,” No. 240, April 29, 2010 (
http://www.idexonline.com/portal_FullMazalUbracha.asp?id=33915
, accessed 08/05/2010).
22-24 A Histor y of Prices:
The discussion of the concept of process from Aristotle to Marx draws from Eric Roll,
A History of Economic Thought
(London: Faber and Faber, 1992). Marx’s statement about value relations is drawn from Karl Marx,
Capital: A Critique of Political Economy
, Vol. 1 (Chicago: Charles H. Kerr and Company, 1915), p. 83.
25-30 Taming Prices:
The analysis on the value of sports-club subscriptions draws from: Stefano Della Vigna and Ulrike Malmendier, “Overestimating Self-control: Evidence from the Health Club Industry,” NBER Working Paper, September 2004. The data on the costs of printing are found in
www.hp.com
;
www.riteaid.com
; Jeff Bertolucci, “How Much Ink Is Left in That Dead Cartridge?”
PC World
, November 2, 2008 (
http://www.pcworld.com/article/152953/how_much_ink_is_left_in_that_dead_cartridge/html
, accessed 08/13/2010); and Stephen Shankland, “HP Sues Firms That Refill Ink Cartridges,” CNET, March 28, 2005 (
http://news.cnet.com/HP%20sues%20firms%20that%20refill%20ink%20cartridges/2100-1041_3-5643687.html?tag=techdirt
, accessed 08/13/2010). Families’ reaction to high gas prices drawn from Dora Gicheva, Justine Hastings, and Sofia Villas-Boas, “Revisiting the Income Effect: Gasoline Prices and Grocery Purchases,” NBER Working Paper, November 2007. The analysis of companies’ reaction to changes in food prices draws from Anne Kadet, “Who Shrunk the Cereal?,”
Smart Money
, November 6, 2008; Stuart Elliot, “Food Brands Compete to Stretch a Dollar,”
New York Times
, May 10, 2009; and
Adweek
, “French’s Puts ‘Fun,’ ‘Value’ on Menu,” May 11, 2009. Data on phone prices drawn from Federal Communications Commission,
The Industry Analysis Division’s Reference Book of Rates, Price Indices and Expenditures for Telephone Service
, July 1998 (
http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/IAD/ref98.pdf
, accessed 08/13/2010);
www.att.com
; and
http://www.productsandservices.bt.com/consumerProducts/displayTopic.do?topicId=25500
. Sandra Kurtzig’s tale is drawn from
http://venturehacks.com/articles/pricing
, accessed 08/13/2010. Airlines’ reaction to Southwest Airways is found in Austan Goolsbee and Chad Svyerson, “How Do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines,”
Quarterly Journal of Economics
, Vol. 123, No. 4, November 2008, pp. 1611- 1633. Discussion of the effect of Walmart on competitors and prices draws from Jerry Hausman and Ephraim Leibtag, “Consumer Benefits from Increased Competition in Shopping Outlets: Measuring the Effect of Wal-Mart,” NBER Working Paper, December 2005; Vishal P. Singh, Karsten T. Hansen, and Robert C. Blattberg, “Market Entry and Consumer Behavior: An Investigation of a Wal-Mart Supercenter,”
Marketing Science
, September 1, 2006; Emek Basker, “Selling a Cheaper Mousetrap: Wal-Mart’s Effect on Retail Prices,”
Journal of Urban Economics
, Vol. 58, No. 2, September 2005, pp. 203-229; Emek Basker, “The Causes and Consequences of Wal-Mart’s Growth,”
Journal of Economic Perspectives
, Vol. 21, No. 3, Summer 2007, pp. 177-198; and Jerry Hausman and Ephraim Leibtag, “CPI Bias from Supercenters: Does the BLS Know That WalMart Exists?,” NBER Working Paper, August 2004.
30-32 Keeping Competition at Bay:
The discussion of automakers’ employee discount plans comes from Meghan R. Busse, Duncan Simester, and Florian Zetelmeyer, “The Best Price You’ll Ever Get: The 2005 Employee Discount Pricing Promotions in the U.S. Automobile Industry,” NBER Working Paper, May 2007. The data on price dispersion at Israeli stores comes from Saul Lach, “Existence and Persistence of Price Dispersion: An Empirical Analysis,” NBER Working Paper, January 2002. Price obfuscation online drawn from Glenn Ellison and Sara Fisher Ellison, “Search, Obfuscation, and Price Elasticities on the Internet,” NBER Working Paper, June 2004.
33-37 Searching for Fools:
The quote on fools by Daniel Kahneman is found in Lee Young Han and Ulrike Malmendier, “The Bidder’s Curse,” NBER Working Paper, December 2007. The attitude of private-equity firms toward auctions comes from “Auction Process Roundtable,”
Mergers and Acquisitions
, December 2006, pp. 31-32. Prices paid by Denver shoppers are found in Mark Aguiar and Erik Hurst, “Lifecycle Prices and Production,” Federal Reserve Bank of Boston Discussion Paper, July 2005. The price of appetizers in romantic restaurants is discussed in I. P. L. Png and Wang Hao, “Buyer Uncertainty and Two-Part Pricing of Felicitous vis-à-vis Distress Goods: Theory with Evidence from New York Restaurants,” Working Paper, April 2008. Airline ticket pricing is discussed in Severin Borenstein and Nancy L. Rose, “How Airline Markets Work . . . Or Do They? Regulatory Reform in the Airline Industry,” NBER Working Paper, September 2007; and Steven Puller, Anirban Sengupta, and Steven Wiggins, “Testing Theories of Scarcity Pricing in the Airline Industry,” NBER Working Paper, December 2009. Evidence of price discrimination in the concert industry is in Pascal Courty and Mario Pagliero, “The Impact of Price Discrimination on Revenue: Evidence from the Concert Industry,” CEPR Discussion Paper, January 2009; and Pascal Courty and Mario Pagliero, “Price Discrimination in the Concert Industry,” CEPR Discussion Paper, January 2009. Price discrimination by Coke from Constance Hays, “Variable-Price Coke Machine Being Tested,”
New York Times
, October 28, 1999. Price discrimination by Amazon from Joseph Turow, Lauren Feldman, and Kimberly Meltzer, “Open to Exploitation: American Shoppers Online and Offline,” University of Pennsylvania Annenberg Public Policy Center, June 2005 (
http://www.annenbergpublicpolicycenter.org/Downloads/Information_And_Society/Turow_APPC_Report_WEB_FINAL. pdf
. , accessed 08/01/2010). Data on airlines’ falling fares and financial problems is found in Air Transport Association, Annual Passenger Yield (
http://www.airlines.org/Economics/DataAnalysis/Pages/AnnualPassengerYieldUSAirlines.aspx
, accessed 08/13/2010); and Bureau of Transportation Statistics (
http://www.TranStats.bts.gov/Data_Elements.aspx?Data=6
, accessed 08/13/2010).
38-39 Protect Us from What We Buy:
The dubious value of presents is found in Joel Waldfogel, “Does Consumer Irrationality Trump Consumer Sovereignty?,”
Review of Economics and Statistics
, Vol. 87, No. 4, 2005, pp. 691-696. Price fans will pay for basketball tickets from Ziv Carmon and Dan Ariely, “Focusing on the Forgone: How Value Can Appear So Different to Buyers and Sellers,”
Journal of Consumer Research
, Vol. 27, December 2000, pp. 360-370; and Drazen Prelec and Duncan Simester, “Always Leave Home Without It: A Further Investigation of the Credit Card Effect on Willingness to Pay,”
Marketing Letters
, Vol. 12, 2001, pp. 5-12. The story about the invention of ninety-nine-cent stores is in Tim Arango, “Bet Your Bottom Dollar on 99 Cents,”
New York Times
, February 8, 2009. Kahneman’s opinion on paternalistic interventions is found in Daniel Kahneman, “New Challenges to the Rationality Assumption,”
Journal of Institutional and Theoretical Economics
, Vol. 150, No. 1, 1994, pp. 18-36.
40-41 The Price of Life:
The Jewish teachings are mentioned in Peter Singer, “Why We Must Ration Health Care,”
New York Times Magazine
, July 19, 2009. The various prices placed on life come from Chris Dockins, Kelly Maguire, Nathalie Simon, and Melonie Sullivan, “Value of Statistical Life Analysis and Environmental Policy,” White Paper for Presentation to Science Advisory Board—Environmental Economics Advisory Committee, U.S. Environmental Protection Agency, National Center for Environmental Economics, April 21, 2004; United Kingdom Department for Environmental, Food and Rural Affairs, “An Economic Analysis to Inform the Air Quality Strategy,” Updated Third Report of the Interdepartmental Group on Costs and Benefits, July 2007; Ramanan Laxminarayan, Eili Klein, Christopher Dye, Katherine Floyd, Sarah Darley, and Olusoji Adeyi, “Economic Benefit of Tuberculosis Control,” World Bank Policy Research Working Paper, 2007.
41-44 Paying for the Dead:
Kenneth Feinberg’s experience at the helm of the September 11th Victim Compensation Fund comes from Kenneth Feinberg, “What Is Life Worth?,”
Public Affairs
, 2005; Frances Romero, “Kenneth Feinberg: Compensation Czar,”
Time
, June 10, 2009; Kenneth Feinberg, Camille Biros, Jordana Harris Feldman, Deborah E. Greenspan, and Jacqueline Zins, “Final Report of the Special Master for the September 11th Victim Compensation Fund of 2001,” Vol. 1, p. 98 (
http://www.columbia.edu/cu/lweb/indiv/usgd/wtc.html#exec
, accessed 08/08/2010); and Benjamin Weiser, “Value of Suing Over 9/11 Deaths Is Still Unsettled,”
New York Times
, March 13, 2009.
44-47 Valuing Citizens’ Safety:
The cost-benefit analysis of flame-resistant mattresses is found in Consumer Product Safety Commission, “Final Rule: Standard for the Flammability (Open Flame) of Mattress Sets,”
Federal Register
, Vol. 71, No. 50, March 15, 2006, Rules and Regulations. The analysis of costs and benefits of seat belts in school buses is in William L. Hall, “Seat Belts on School Buses: A Review of Issues and Research,” paper for the North Carolina School Bus Safety Conference, February 29, 1996. Approaches to cost-benefit analysis by the Environmental Protection Agency and the Food and Drug Administration are discussed in Fred Kuchler and Elise Golan, “Assigning Values to Life. Comparing Methods for Valuing Health Risks,” USDA Agricultural Economic Report No. 784, November 1999. Costs and benefits of Homeland Security spending are discussed in Mark G. Stewart and John Mueller, “Assessing the Costs and Benefits of United States Homeland Security Spending,” University of Newcastle Center for Infrastructure Performance and Reliability Research Report, 2009; and Mark G. Stewart and John Mueller, “A Risk and Cost-Benefit Assessment of Australian Aviation Security,”
Security Challenges
, Vol. 4, No. 3, Spring 2008, pp. 45-61. The high cost of some government regulations in the United States is discussed in John F. Morrall III, “Saving Lives: A Review of the Record,” AEI-Brookings Joint Center for Regulatory Studies Working Paper, 2003; Government Accountability Office, “Superfund: Funding and Reported Costs of Enforcement and Administration Activities,” July 18, 2008; and W. Kip Viscusi and James Hamilton, “Cleaning Up Superfund,”
Public Interest
, Summer 1996. The costs and benefits of HO’s strategy to combat tuberculosis are laid out in Ramanan Laxminarayan, Eili Klein, Christopher Dye, Katherine Floyd, Sarah Darley, and Olusoji Adeyi, “Economic Benefit of Tuberculosis Control,” World Bank Policy Research Working Paper, 2007. The data on deaths from tuberculosis come from the United Nations Millennium Development Indicators’ data set.