Thursday, February 14, 2019

A Special Valentine's Message On Romantic Love

The first one is Researchers at AAAS Annual Meeting Explore the Science of Kissing. The following quote gives you an idea of what it is all about: "Kissing, it turns out, unleashes chemicals that ease stress hormones in both sexes and encourage bonding in men, though not so much in women." I guess economists call this "interdependent utility functions." Meaning that what brings one person pleasure brings brings the other person pleasure, and vice-versa.

The other is Cocoa Prices Create Chocolate Dilemma. (that is from 2009) The article opens with "Soaring cocoa prices are creating a Valentine's Day dilemma for chocolate makers. They don't want to raise retail prices when recession-weary consumers are trying to limit their spending." The problem is crop diseases in Ivory Coast and Ghana. You might need to be a WSJ subscriber to read the whole article.

Here is a new article from yesterday's San Antonio Express-News (2-13-2011). Romance in bloom at workplace: Survey indicates 59% have taken the risk-filled leap. It seems like many people admit to having a romance at work and/or meeting their spouse at work. So what starts out as economic activity leads to some other needs being met.

Now the economic definition of romantic love.
 Abstract: "Romantic love is characterized by a preoccupation with a deliberately restricted set of perceived characteristics in the love object which are viewed as means to some ideal ends. In the process of selecting the set of perceived characteristics and the process of determining the ideal ends, there is also a systematic failure to assess the accuracy of the perceived characteristics and the feasibility of achieving the ideal ends given the selected set of means and other pre-existing ends.

The study of romantic love can provide insight into the general process of introducing novelty into a system of interacting variables. Novelty, however, is functional only in an open system characterized by uncertainty where the variables have not all been functionally looped and system slacks are readily available to accommodate new things. In a closed system where all the objective functions and variables must be compatible to achieve stability and viability, adjustments in the value of some variables through romantic idealization may be dysfunctional if they represent merely residual responses to the creative combination of the variables in the open sub-system."
The author was K. K. Fung of the Department of Economics, Memphis State University, Memphis. It was from a journal article in 1979. More info on it is at this link. The entire article, which is not too long, can be found at this link.

Then there was this related article: Love really is blind, U.S. study finds. Here is an exerpt:
"Love really is blind, at least when it comes to looking at others, U.S. researchers reported on Tuesday.

College students who reported they were in love were less likely to take careful notice of other attractive men or women, the team at the University of California Los Angeles and dating Web site eHarmony found.

"Feeling love for your romantic partner appears to make everybody else less attractive, and the emotion appears to work in very specific ways in enabling you to push thoughts of that tempting other out of your mind," said Gian Gonzaga of eHarmony, whose study is published in the journal Evolution and Human Behavior.

"It's almost like love puts blinders on people," added Martie Haselton, an associate professor of psychology and communication studies at UCLA."
More links:

How to Be a Better Valentine, Through Economics by economist Paul Oyer.

Here’s what science says is the secret ingredient to making your love spark 

Can Giving Up Money And Material Things Lead To More Love?

What Do Men In China Need To Get A Bride?

Adam Smith, Marriage Counselor

A Special Valentine's Message On Romantic Love

Can You Put A Price Tag On Love?

Do Opposites Attract? Not Usually, Except Maybe When It Comes To Money

Return of the Love Headhunters

eHarmony To Provide Personal Counselors To Help You Find Mr. Or Ms. Right

Economist Paul Zak, aka Dr. Love (he studies the brain with "neuroeconomics")

This is your brain on love   (brain scans and biology seem to confirm the economic definition given above)

Dollars & Sex: The Blog of Economist Marina Adshade

Do Women Really Value Income over Looks in a Mate? by Marina Adshade

Wednesday, February 06, 2019

Toxic Smoke Is Africa’s Quiet Killer. An Entrepreneur Says His Fix Can Make a Fortune

By Peter S. Goodman of The NY Times.

Eric Reynolds decided to give away stoves that burn clean wood pellets which he would sell (much cleaner than what people use now). That reminds me of the razor-razorblade model and "freemiums." He also needs very high sales to take advantage of "economies of scale." More on each of these later.

Excerpts:

"Philanthropic efforts were focused on distributing cleaner-burning stoves. For-profit ventures were developing models for sale. But all of these undertakings were bedeviled by the same problem. The high-tech stoves that limited toxic smoke were as much as $150 each — preposterously expensive for African villagers, many of whom lived on less than 50 cents a day. The cheaper models were useless. 
Most manufacturers were obsessed with keeping costs low, given that customers were poor. But the stoves still produced smoke, or took too long to cook, or required that the wood be chopped into little pieces — an extra burden. The women doing the cooking (and it was overwhelmingly women) were not inclined to use them. As Mr. Reynolds returned to Rwanda for research, he saw many of these models stuck behind houses or propped up by the cooking fire as stools.
To succeed, a stove had to be so convenient and clean burning that women preferred it over their existing cooking method.
Mr. Reynolds began testing stoves made in Italy, India, the United States and China. He tried making his own."
"He settled on a Dutch-made stove that reduces wood down to clean-burning gases. Using pellets reduced the need for wood by 90 percent compared with charcoal. But those stoves cost more than $75.
Then came the epiphany: Inyenyeri could supply the stoves for free while collecting revenue from subscriptions for pellets. Rwanda was urbanizing rapidly, and city dwellers rely on charcoal. They would be eager to switch to pellets, which were 30 to 50 percent cheaper.
“If you sell fuel every day rather than selling a stove every two years,” Mr. Reynolds says, “that’s a business.”
Customers in rural areas could not afford to buy pellets, but Inyenyeri could serve them with a barter system. People could gather sticks, though less than they needed for cooking, and exchange them for pellets. Inyenyeri would use the sticks to make more pellets.
In this way, Inyenyeri would effectively become a utility providing clean cooking fuel. It would construct a network of factories to produce pellets. The bigger the business grew, the cheaper the cost of making them. As charcoal rose in price — a trend propelled by growing numbers of people flocking to cities and needing the product — the more appealing pellets would look."
But one crucial element is still missing — scale.
In every company projection, a steep increase in customer numbers is required for the business to become profitable. Inyenyeri now needs to persuade investors to deliver the cash to buy hundreds of thousands of stoves and erect new pellet plants."
Economies of scale-That is when average cost falls as quantity increases (think of a factory that produces thousands of cars compared to producing only one car-the average cost is lower the more cars you produce, up to a point, since you spread the fixed cost of the factory over more cars).

Razor-Razorblade Model by Will Kenton of Investopedia. Excerpt:
"The razor-razorblade model is a pricing tactic in which a dependent good is sold at a loss (or at cost) and a paired consumable good generates the profits. Also known as a "razor and blades business model," the pricing and marketing strategy is designed to generate reliable, recurring income by locking a consumer onto a platform or proprietary tool for a long period. It is often employed with consumable goods, such as razors and their proprietary blades. The concept is similar to the "freemium," in which digital products and services (such as email, games or messaging) are given away for free with the expectation of making money later on upgraded services or added features.

If you've ever purchased razors and their matching replacement blades, you know this business method well. The razor handles are practically free, but the replacement blades are expensive. The strategy has been erroneously attributed to King Camp Gillette, who invented the disposable safety razor and founded the company that bears his name. Today, Gillette (and its parent Procter & Gamble) employs the strategy to great profit."