Saturday, August 31, 2013

Storage Wars Strategy: Vindictive Bidding?

I'm in my hometown visiting family right now, so I have access to cable TV. Watching Storage Wars on A&E, saw one of the bidders (Jarrod?) say something like the following:
Yeah, I don't want this locker. But I'm going to bid on it to spend their money!
Just sounds plain mean. Why would you want to hurt the business of your peers?

One explanation: maybe if a newcomer enters the auction and loses money, they don't come to the next one, so you get better prices in the future. But, if you believe in the Revenue Equivalence Theorem, number of bidders is not important to the final price paid.

Three possibilities: either Jarrod is ignorant about his own business (unlikely), a vindictive person (couldn't say), or some assumption of RET has not been met (highly probable). In any case, economics continues to make reality television a bit more fun!

Monday, August 19, 2013

Hugo Schwyzer and what's broken in the market for Feminist Thought

There's a schism on my Facebook: left-leaning academics and law students from my under-grad debate career, and right-leaning economists and libertarians I've met since. One advantage is that I get access to juicy drama I'd otherwise never hear about from my current circles. A recent example is the meltdown of male feminist Hugo Schwyzer, the backlash, and counter-backlash that has resulted.

I had never really heard of Schwyzer before his scandal, but what I've gathered since: he has attained online recognition in feminist circles as a man who can write about gender issues without putting a foot too far into his mouth (a rare skill), and has been awarded tenure at a California college where he taught classes on gender and history... Until recently. He has published in no scholarly journals and admittedly took only two classes on gender in college. (With my concentration in gender studies, I feel positively over-qualified -- can I have tenure too please?)

Schwyzer has a checkered past, including drug abuse and sexual relationships with students, however these flaws have been woven masterfully into a redemption story and apparently make him qualified to talk about sex from a feminist perspective... Until last week, when he had a meltdown on Twitter and cut himself off from online communication. Describing himself as sociopathic, manipulative, drug- and attention-dependent, his recent Twitter self-flagellation is like an awful car accident: disgusting and cringe-worthy, but somehow impossible to stop looking at.

If there is an "economics of feminist scholarship", Schwyzer is an interestingly perverse example of unintended consequences at work. Here are some stylized facts and the interpretation I attach to them:

1. The feminist movement has gained increasing power in academia. The need to publish has pushed feminists in increasingly radical directions. Some branches of radical feminism seem overtly hostile towards men. Learning about these theories makes many men uncomfortable, so men who are formally educated about gender issues are rare (the supply side).

2. To continue advancing the goal of gender equality, most feminists would like to see men involved. Men can broaden the scope of feminist literature, and help counter the popular perception that feminists are "anti-male." Men who are marginally capable scholars but able to discuss feminist issues therefore have augmented job opportunities (the demand side).

3. Supply of male feminists is restricted, and demand is high, so economics would predict that the price (wage) for male feminists would go up. But, in most public universities, there isn't much flexibility in salaries -- and paying men in the gender studies department more than women certainly is not going to fly. How do markets compensate? Either male feminists get non-pecuniary benefits, or they offer lower quality services to compensate for the below-market wage. Schwyzer is an embodiment of both effects.

What is the economic prediction? Male feminists are especially likely to be opportunists. Maybe, like Schwyzer, they start off in another field (history) but then realize the pickings are better if they re-brand as feminists. Male feminist scholars then end up being lower quality than the female feminist scholars. Alternately, manipulative, borderline-sociopathic men recognize they can gain non-wage benefits from working around lots of young women (something Schwyzer admits to openly). Either way, the feminist movement feels betrayed from within.

Keep in mind that I'm speaking in terms of averages, and of course not every male feminist will be like Schwyzer. But, given the forces at work in the market for feminist scholars, I don't expect much great work to be done by male feminists, and I do expect them to be more likely to have personal scandals than the average professor.

One counter to this argument is to say that learning about feminism makes men more enlightened about gender equity so they are less likely to take advantage of women. Maybe this is true. But, learning how to use the rhetoric of feminism is also a powerful tool for manipulation if that man is not so genuinely enlightened. It's a scary prospect for feminists, as this whole Schwyzer scandal illustrates.

The problem I'm highlighting boils down to selection effects in the men who take feminist courses in college (and potentially pursue graduate degrees in gender studies to become professors). I'm not sure there are any good solutions.

Given the current feminist curriculum which focuses on women's experience, men who complete the courses are often either (1) largely in agreement with feminism, but realize that they don't have much to contribute without being accused of "mansplaining" or similar, so they either write extremely bland pro-feminist articles or specialize in a non-gender field or (2) are clever opportunists, and realize they can write articles aimed at "reforming men" while having extremely shallow adherence to feminist ideas, and then capitalize on the benefits that their "scarce perspective" brings to them, i.e. the Schwyzer path.

My prediction: like any expert manipulator, Schwyzer will claim to be reformed (again) in the next few months, will return to his old ways, and functionally nothing will change except the titles of the outraged Tumblr posts.

Saturday, August 10, 2013

Diversifying eBay Accounts

I was shopping on eBay last week to buy a wrist brace (so I don't destroy my arm with repetitive clicking) and found a seller specializing in wrist braces. Yesterday, I went to buy a pack of aircraft cable key rings, and found a Hong Kong seller who retails nothing else. When I went to buy a case for my iPod headphones, there was a vendor who sold those exclusively as well.

There are plenty of all-purpose eBay sellers, but I'm noticing more and more with narrow specializations. What is the economic justification for this?

One possibility is vertical integration: the producer is a monopolist, and takes over the retail side as well. Given the low cost of online selling and the broad reach of eBay, this is believable for some small product producers, but it's hard for me to imagine this is the majority of cases. After all, there are hundreds of sellers of aircraft cable key rings, specialized or otherwise.

(This leads to an interesting tangent: why are some goods cheaper on Amazon than eBay, or vice-versa? I've found that compact, name-brand products on Amazon are often a better deal, while eBay is excellent for small and inexpensive items. I suspect this is because eBay benefits more from "informal outsourcing" i.e. Chinese sellers, while Amazon's stricter seller policy makes this impossible. But I digress.)

I think the more likely cause for specialized eBay accounts is to diversify away risk. Selling more volume on eBay has a benefit (more good reviews give a better reputation, and can move the seller closer to the top of listings) but also a cost, because even a few bad reviews can taint a seller's profile and hurt their business. Bad reviews are also somewhat hard to predict, especially if you're selling from overseas -- e.g. if some American doesn't understand that shipping from China can take a few weeks, they might leave bad feedback for uncontrollable reasons. And, bad feedback can beget more bad feedback; it's easier to trash a seller for an issue when you see others doing the same thing. With multiple accounts, if a certain product gets a lot of negative replies, it needn't taint all the others.

So why don't more sellers diversify, and why do we see general-purpose eBay sellers with many different products (I'm thinking of giants like 1SaleADay). Partly to develop a name brand, and signal that they are investing in higher customer service. Most eBay sellers give excellent service because the terms of use heavily favor buyers in disputes. In fact, the worst seller customer service I've seen was delivered by yours truly -- I tend to be a jerk and not accept returns. Bigger sellers, especially ones trying to make a name for themselves, can't afford that in the same way an anonymous, amateur seller like me can.

When I buy from a specialized eBay seller with lots of good reviews I still expect to be treated well and get the product I ordered, and it's often at a better price. However, implicit in that good price is a slightly higher margin of risk. When I'm buying 10 keychains for $3.99 that risk is not very troubling, but if I were shopping for a new laptop it might be. This helps to explain why there are relatively less specialized sellers for high-end goods, but low-price goods are often sold by single-purpose eBay accounts.

Monday, August 5, 2013

Student loan rates on the market -- a mixed blessing

Congress responded to public demand for lower student loan interest rates, and passed legislation which ties borrowing rates to T-bill prices (USAToday reports).

On the one hand, it's generally a favorable change to tie interest rates to market conditions rather than the whims of politicians. Students will benefit from lower borrowing rates, and save a bit of money on their education overall.

There are a few costs worth keeping in mind, though:

1. Student loan rates are fixed by that year, but can change in between years. Imagine a first-year student starting in 2016, who decides to borrow at 3.9% (the current rate). Then, the next year, suppose the economy picks up and interest rates jump by 10%. With one year of sunk costs, that student might decide to keep borrowing at the higher rate... Even though, knowing that in advance, he/she might have decided to avoid the cost of college altogether. Varying interest rates are risky when you might have to borrow each year of a 4-6 year education.

2. The education market is heavily state-controlled currently. Does one bit of liberalization really help that much? In particular, students cannot discharge student loan debts in bankruptcy. More students taking loans means more potential debt servitude in the future, and the Federal Government is a tough creditor to satisfy.

I can see it now: in 10 years, this policy results in many students suffering from worse debt. Then critics say "look, we tried the market solution and look what happened!" I'm cringing preemptively now....

Liberalization or privatization is often good, but not always when the rest of the relevant market is bound up in red tape. I'd call the student loan reform a potential step in the right direction, but also one fraught with future stumbling blocks. To really help students, we should be rethinking our overall education system - perhaps with a change toward vocational education, as Bryan Caplan recently suggested.