Essay About Book Landsburg And Rolling Stones Concerts

Essay On Everyday Economics/The Arm Chair Economist
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Economic theories are as wide as an economists’ vision to think. In the Steven
Landsburg book The Armchair Economist — Economics and Everyday Life, Landsburg
takes many of these economic theories and relates them to everyday type
scenarios and makes them understandable to a beginning economist. He breaks his
book into six sections each relating to different types of economics, from
personal to national theories.
Landsburg talks about the power of incentives in his first chapter. What he is
referring to is how incentives drive peoples decisions to do things in life. He
makes an analogy that Seatbelts kill. This statement refers to the added
protection one gets from wearing a seatbelt, which will entice someone to take
greater risks while driving a vehicle. We as consumers are bombarded with
incentives everyday in the market place. Incentives, come in all forms, sale
prices, free-bees, coupons. Incentives are designed to make you do something
NOW instead of putting it of until later. Incentives are not always a good
thing, such as in today’s housing market. Homebuyers were offered sub-prime and
zero percent interest rates to purchase homes. This allow buyers to buy a bit
more home than maybe they were qualified to get. Buyers made these decisions at
the time because they looked safe, but in the long run many of these buyers have
had to give up these homes due to bank foreclosure.
Landsburg also talks about maximizing our efficiencies. He relates this theory
into an idea of why Rolling Stones concerts always sell out. Is it because they
play good music? Maybe. Most likely it is because its tickets are priced
right. Pricing tickets is a theory of Supply and Demand. The demand curve
suggests that as prices go down the demand for that product will go up. So if
the concert promoters’ price their tickets too high chances are they may not
sell out and also limit the number of consumers who are capable of purchasing
these tickets. Pricing a ticket correctly can also lead to sales of more
tickets and additional products. With buying a ticket at a reduced price leaves
the fan with more money (consumer surplus) to purchase more items, possibly
cd’s, shirts, posters etc.
Although taxes are a necessity in American society Landsburg discusses how they
are bad in relation to the economy. He explains how “Deadweight loss” is costly
to both the consumer and the seller. These taxes tend to take money out of the
economy and make it less efficient. There are a number of different ways to
look at deadweight loss. Everyday we as consumers have to deal with this
Deadweight loss. When we go to buy gasoline (which by the way is ridiculously
priced right now) there are many taxes that have been imposed on each gallon.
These taxes restrict us consumers from taking that money and spending it on
something else that we would much rather have or need. Another way the economy
experiences this deadweight loss is in the mere fact that consumers may not
purchase and item due to the overall cost with the tax. A consumer may be
willing to pay 5.00 for a burger but with the tax it takes the total cost to
6.00. The consumer does not buy. This in turn takes that money out of the
economy for the moment. For this reason economist call taxes inefficient.
Landsburg talks about the differences in Smiths view and Darwin’s view. They
have no correlation on economics. Darwin’s view is basically survival of the
fittest, while Smiths view says that if we all work efficiently we will create
an efficient complete economy. Let me try to put this into something that I
truly enjoy in life. Baseball. In the last few years the biggest story to come
out of baseball, is the use of performance enhancing drugs, HGH and steroids.
In the book Landsburg give a few examples of birds, students, and cows and says
they all cheat to be number one. Well some baseball players decided they wanted
to cheat also. Allegedly. For example Allegedly Barry Bonds took steroids.
Why? He wanted to be the best, healthiest athlete and prolong his career. He
did and became holder of one of the most hallowed records in all of sports.
Number one in career home runs. Roger Clemens again allegedly used
performance-enhancing drugs to prolong his career and to make him stronger and
healthier. What did this get Roger 7 Cy Young awards and a Face