Tag Archives: economics

In Praise of Scroogenomics


Yes, I fully realize I’m a bit of a killjoy, posting a review about a book called Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays

And yes, I fully realize the irony that a good many Eleventh Stack readers might very well be out doing the exact thing that economist Joel Waldfogel cautions against, instead of reading my brilliant review of this intriguing book.

To that I say, bah humbug.  Because really, it is high time that someone tells it like it is in regards to holiday gift giving.  It isn’t a secret that every year we spend way too much on gifts people don’t want, don’t need and would never buy for themselves.

Walk through a major department store in December. The aisles are blocked not just with panicked shoppers but also with tables covered with “gift items.” In the aisles near the men’s clothing department, you’ll find lots of golf-themed knickknacks — mugs festooned with golf balls, golf club mittens, brass tees, and so on. Would anyone buy this stuff for him-or-herself?  Does anybody want it? I’ll hazard a “no” on both counts. But it’s there every year, along with singing fish — and it sells — because of a confluence of reasons that together make a perfect storm for wasteful giving (6).

According to Waldfogel, we spent $66 billion dollars on this type of crap during the 2007 holiday season (and that was eight years ago!). He breaks down how he came up with this $66 billion dollar figure in great detail, including examining the retail sales for November, December and January. You’ll just have to read the book for those calculations, while trusting me that his math makes much more sense than mine ever could.

Where the wastefulness comes in is with an economic term called “deadweight loss,” which describes “losses to one person that are not offset by gains to someone else.”   The way I understand this is if you buy me a sweater for $75, that same sweater might only be worth $25 to me.  (Or, in other words, if I was to purchase said sweater for myself, $25 would be the maximum amount I would personally spend.)  Hence, the “deadweight loss” is $50.  That’s the wastefulness aspect of the holidays and when you multiply this by billions of crappy cheesy sweaters and stupid singing fish, then you’re talking some big bucks being wasted.

I think this is a concept that most of us kind of already knew, but seeing these numbers tossed around is sobering.  It makes me want to never buy another thing again, for any holiday.

One might think that the solution is to give gift cards, which is logical and reflects the increase in gift card sales in recent years.  But Waldfogel states that even gift cards (while a better alternative to yet another FORE THE BEST UNCLE! golf mug) have some negatives.  They expire.  They get lost.  Sometimes they are for stores that the recipient isn’t interested in.

Waldfogel presents (heh … pun not intended) his theories in great detail, with many supporting facts.  Scroogenomics is more wonkish than whimsy, and since I’m not a mathematician (despite sometimes playing one in my day job here at the Library) some of the number-crunching made my eyes glaze over a bit.  Waldfogel calculates and compares the United States’ holiday spending with that of other countries and with the amount spent in decades past, as a way of stating that this over-consumption of gift-buying isn’t new. It’s a valid argument and one that makes much sense.

(And cents.)

Although Scroogenomics has a bit more highfalutin math than I was expecting, I still enjoyed this book, which I borrowed from the library (naturally).  It’s an eye-opening read jam-packed with information and facts that would likely appeal to fans of Freakonomics or Malcolm Gladwell (which I am.). It’s the epitome of efficient (it’s about the size of my palm) which makes for a fast (and sobering) read.

Bah humbug.

~ Melissa F., who hasn’t bought a single holiday gift yet and is more inspired than ever to procrastinate on her shopping.


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Contingency Table Analysis What?

“There are three kinds of lies: lies, damned
lies and statistics.”
-Mark Twain*

I established in another post that I hate school. It partly stems from my dismal mathematical abilities. I wanted to understand calculus. I wanted to understand chemistry formulas. In college, I even took Basic Applied Statistics. After three minutes of lecture I wanted to puke on my shoes. I had no idea what was happening. Yet, I persist in reading books about math and physics and economics, even if I don’t always understand them.


Thankfully, the rockstar economists (Steven D. Levitt and Stephen J. Dubner) who brought you the ground-breaking Freakonomics: A Rogue Economist Explores the Hidden Side of Everything and Superfreakonomics: Global Cooling, Patriotic Prostitutes and Why Suicide Bombers Should Buy Life Insurance (as well as the movie and weekly podcast) have come out with a new book that will retrain your brain to think about economics and statistics creatively, productively, and sans math skills.


For example: remember the “Year of the Shark” in 2001? During that entire year, there were 68 shark attacks, 4 of which were fatal. Four in a world of 6 BILLION people. Elephants kill at least 200 people every year, but we never hear about the “Year of the Elephant” (International Shark Attack File  if you’re really that interested in shark attacks).

Vicious killer.

Vicious killer.

Or see the math that proves drunk walking is far more dangerous than drunk driving. In one of my favorite chapters, find out why a “street prostitute is like a department store santa” (hint: it involves spikes in demand).

Freakonomics and Superfreakonomics are about recognizing the tricks in statistics and economics. Yes, elephants kill more people yearly but elephants don’t have an image problem. Unless you consider Dumbo or Babar “too” cute. And, yes, on a per mile basis, drunk walking is more dangerous. Does that mean the next time you drink too much whiskey you should go on a joyride or become a seasonal prostitute? Probably not. So the first two books focused on the magic behind the numbers. Think Like a Freak: The Authors of Freakonomics Offer to Retrain Your Brain instead wants you to recognize your attitude toward these numbers, in a local and global context. Some advice from the book includes:

  • Think like a child.
  • Never be afraid to say “I don’t know.”
  • Be prepared for a really, really simple answer.
  • Get rid of your moral compass.
  • And, seriously, never forget incentives. Ever. It’s a thing in economics.

Along the way, you’ll learn about hot dog eating competitions (Kobayashi!) and why those pesky Nigerian scammers will never, ever give up. Learn when to break up and discover that David Lee Roth isn’t being a diva when he wants his brown M&Ms removed.

Finally, find out here why there is no such thing as a free appetizer and why Americans just aren’t into soccer (Be prepared to waste some serious time on this website. The questions are better than Dear Abby!).

happy mathing!


*Mark Twain is maybe the author. Or Benjamin Disraeli.



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The Dismal Science

It is always difficult to predict — especially the future.”– Chinese proverb

I have often associated the study of economics most closely with the scene in Ferris Bueller’s Day Off where Ben Stein’s monotone economics teacher drones on and on about something called Voodoo Economics. So imagine my surprise when a few years ago I became addicted to NPR’s Marketplace. I’m not sure how or why this happened, as I’ve never been a financially savvy individual–I couldn’t tell you the exact difference between the Dow, the NASDAQ, and the S&P 500 without looking it up, and even then, my interpretation (like most things in my life) might be a little fuzzy. But I genuinely get a kick out of listening to this show, and have been glued to my radio lately—listening for news on the Euro Crisis/Greek bailout, and stateside, for news on Occupy Wall Street. It probably doesn’t hurt that I have a voice crush on Kai Ryssdal, who I picture as a friendly surfer dude, which makes the economic theory go down a little easier.

With so much global financial instability these days, now seems as good a time as any to learn a thing or two about how economies work (or don’t), and what sort of job opportunities and industries we might have to look forward to in the future.

A couple books to get you started with the unpredictable world of economics: 

  Naked Economics: Undressing the Dismal Science by Charles Wheelan. A thoughtful guide to economics essentials. Included are clear definitions of terms like GDP and inflation. Also makes the argument that there is a role for governmental regulation, and discusses the pros and cons of taxation. Topics like productivity, trade, and globalization are covered as well.

  How Markets Fail: The Logic of Economic Calamities  by John Cassidy. A finalist for the Pulitzer Prize, this book provides an historical context for the meltdown of 2008. Cassidy also argues that the free market is not in fact self-correcting, and that federal regulators should have oversight responsibility for mortgage bankers and lenders.

If you’d like to delve further into the financial meltdown of 2008 and our current financial state, here are even more books:

The Big Squeeze: Tough Times for the American Worker by Steven Greenhouse

Examines the growing crisis confronting middle-class and working-class American workers who are dealing with shrinking wages, disappearing health & pension benefits, and non-existent job security. Also discusses unfair practices of many larger corporations.

Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis by Paul Muolo & Mathew Padilla

Chronicles the credit and mortgage crisis of 2008, including what participating institutions were doing during the crisis, and who may ultimately be responsible for what happened.

Panic: The Story of Modern Financial Insanity by Michael Lewis

Looks at five financial crises in recent history including the 1987 stock market crash, the Internet bubble, and the sub-prime mortgage crisis, and focuses on how public knowledge differed from what was actually taking place behind the scenes.

The Return of Depression Economics and the Crisis of 2008 by Paul Krugman

Paul Krugman, the recipient of the 2008 Nobel Prize in Economics, significantly updated his 1999 book to focus on the financial crisis of 2008 and its possible aftermath. Includes a discussion of what sort of financial regulations should be in place to keep the global economy from falling into deep recession, and possible depression.

The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein

An exploration of what Klein calls “disaster capitalism,” the portion of the global free market that promotes crises and wars, as well as privatization that benefits large corporations and powerful interest groups.

We also have DVDs to help make “cents” of the economy:

And here are a couple helpful web resources:

The Federal Reserve Bank of New York has two helpful interactive timelines dedicated to the 2008 U.S. financial meltdown, one domestic and one global.

Credit Crisis: The Essentials – The New York Times
The New York Times has a page devoted to resources about the credit crisis, including an overview of the crisis, an interactive media timeline, videos of interviews, and links to articles.

Global Financial Crisis – BBC News Online
BBC News has a page devoted to its articles, video resources, and analyses of the global economic crisis.

Business – Al Jazeera [English]
Provides articles about the effects of the economic crisis.

PBS Teachers: From Economic Theory to Financial Reality

A helpful guide for teachers interested in teaching lessons on globalization and the economic crisis, by focusing on current events. Includes videos and sample lesson plans.

And now, let’s do the numbers,



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