Thursday, July 31, 2014

Living wage request for actors and compensating wage differentials

Ian McKellen calls for a "living wage" for all actors.

A recent report found just one actor in 50 earned more than £20,000 a year.
“Most actors are not rich – they are very poor indeed. What keeps them going is that they just love the job,” Sir Ian told Radio Times.
He said: “I know actors who have had to turn down good roles because they just don’t pay enough. It’s hard. The one thing you can ask, I think, is that actors get paid a living wage. I would like it if all the repertory theatres that currently exist could do that. It would make a huge difference.”
The “living wage” currently stands at £8.80 an hour in London.

In labor economics, we study compensating wage differentials.  Different textbooks have slightly different formal definitions, but wikipedia's is OK.  They write that a compensating wage differential ...
is a term used in labour economics to analyze the relation between the wage rate and the unpleasantness, risk, or other undesirable attributes of a particular job. A compensating differential, which is also called a compensating wage differential or an equalizing difference, is defined as the additional amount of income that a given worker must be offered in order to motivate them to accept a given undesirable job, relative to other jobs that worker could perform. One can also speak of the compensating differential for an especially desirable job, or one that provides special benefits, but in this case the differential would be negative: that is, a given worker would be willing to accept a lower wage for an especially desirable job, relative to other jobs.

Acting is a very desirable profession.  Because of that, the wage rates will be low as actors will be receiving a negative compensating differential.  If McKellen had his way and the wage rates were made higher, more people would choose acting as a career.  This would mean even more people who wish to act being unable to find a job.

Given there is a surplus of actors, one could argue that wages for actors, as low as they are, are actually too high.  There are many subsidies in London for the theatre, which likely makes this the case.  These subsidies have led to these increased numbers of people seeking jobs as actors.

Tuesday, July 29, 2014

Price discrimination - theatre edition

I'm in Minnesota for the AAEA annual meetings - I have only missed one of these meetings since 2001, and it's been great as usual.

I'm also visiting family, and tonight my family is going to The Little Mermaid at the Chanhassen dinner theatre.

Here's the pricing

As you can see, the theatre charges different prices based on what they assess the demand will be both for different days of the week and for different groups of people, a classic case of price discrimination.

One condition that has to be met to price discriminate is that the seller must be able to prevent resale of the tickets.  For most theatres, a chart like this wouldn't work, as those students and those who are 55 and older could buy the cheaper tickets and profit by selling them to others.  But since this is a dinner theatre, they can prevent the resale of tickets.

A final note - they also have an educator's discount, that's actually more generous than any of the other prices listed.  Whereas students cost $54/ticket tonight, educators can purchase a ticket for just $45.  I'm happy about this, naturally, as I benefit, but I am surprised.  Why would educators be charged a lower price than students?

Sunday, July 27, 2014

Exorbant tax rates result in death

That could have been the headline for the story here.

Police told WCBS that 43-year-old Garner, a father of six, had a lengthy criminal history and had been previously arrested for selling untaxed cigarettes in May.
The actual headline was "New York man dies after chokehold by police".

Contraband cigarettes and other tobacco products are an issue in New York, as the tax rates are $4.35 per pack - the highest in the nation.  There is an incentive for smokers to buy from illegal vendors lower-priced (but identical) cigarettes, or non-identical but also lower-priced cigarettes from Indian Reservations.  According to public health experts I've talked to, about 1/3 of cigarettes consumed in New York state are contraband.

Sunday, July 13, 2014

Assorted Links

1. Economists make parking at Carnegie Mellon more efficient.  (Thanks to my former student Paul Tomkiel for sending me this article!)

2. Economic impact follies - convention center edition.  (H/T Jayson Lusk)

3. An old article on teacher compensation - but very good.  

So what does this tell us? I generally dislike any discussion of prices or wages being too high or too low. Individual prices or wages may be wrong for you and what you value, but rates in the market are determined by having people who are willing to both buy and sell at that rate. Unfortuantely, this is not the wage-setting system that prevails for government employees, so we are forced into trying to argue determinations of “fair.”
So here is what I see from the data — it is certainly hard to argue that teachers are grossly underpaid. A good indicator is that government teachers are paid about 8% more than private school teachers, whose compensation packages are more likley to represent a true supply-and-demand rate.

Thursday, July 10, 2014

Jon Sanders offers good critique of economic impact studies

Link hereto summary in Beaufort Observer

Original Source

Sports economist Donald A. Coffin put it this way:
Those of us who do sports economics and urban economics seriously are almost constantly having to push back against those kinds of studies. The single most disturbing aspect of the IMPLAN model for local economic analysis is the wildly unreasonable values th[ey] have for multiplier effects (compared, for example, with the BEA's Regional Input-Output Modeling System). IMPLAN is exactly what you describe it as, a "model" designed to generate large impact numbers to please a client who wants to lobby someone.

Wednesday, July 2, 2014

Heading to Las Vegas ...

It's been a while, but I'm finally heading back to Las Vegas.  On Thursday I'll be playing in World Series of Poker event 62 - the $1,111 buy in Little One for One Drop tournament.  If I don't make it to day two on Friday, I have a couple other tournaments I'll play on Friday.  Hopefully that's not a problem, but most players don't make day 2, so I've got my schedule prepared in case I'm one of them.
My brother is also getting married while I'm there, so all-in-all it should be a great trip.

If you're interested, I'll be posting occasional poker updates on my twitter account @MatthewRousu.