Wednesday, January 31, 2024

"Independent education consultants" help high school students and their parents navigate the competitive college-admissions process (creative destruction and how the economy just keeps creating new types of occupations & professions)

See Inventing the Perfect College Applicant: For $120,000 a year, Christopher Rim promises to turn any student into Ivy bait by Caitlin Moscatello. This is a fascinating article, even beyond the issue I focus on. Excerpts:

"For the past nine years, Rim, 28, has been working as an “independent education consultant,” helping the one percent navigate the increasingly competitive college-admissions process — the current round of which ends in February. He started by editing college essays from his Yale dorm room for $50 an hour but now charges the parents of his company’s 190 clients — mostly private-school kids, many of them in New York — $120,000 a year to help them create a narrative he believes will appeal to college-admissions officers. That company, Command Education, currently has 41 full-time staffers, most of whom are recent graduates of top-tier colleges and universities. The pitch is crafted to appeal to the wealthy clients Rim courts: a “personalized, white glove” service, through which Command employees do everything from curating students’ extracurriculars to helping them land summer internships, craft essays, and manage their course loads with the single goal of getting them in."

"Business is good. The Independent Educational Consultants Association estimates that up to 25,000 full- and part-time IECs will be working in the U.S. this year, and the market-research firm IBISWorld estimates it to be a $2.9 billion industry — up from $400 million just a decade ago. Most consultants charge in the ballpark of $4,000 to $7,500 for helping students with typical application prep, including making their college list and looking over their essays, but Rim operates in the uppermost echelon. In certain circles in Manhattan and Brooklyn, “everyone is charging six figures,” says a parent who hired Command for her teen. In a recent survey, one-third of Horace Mann high-schoolers copped to working with a private consultant, but multiple parents with kids in city private schools estimate that number to be much higher. Rim says he has a waiting list."

"In a survey of Harvard’s class of 2027, 23 percent of respondents said they had worked with a private college consultant. The gap widens once income is considered: About 30 percent of respondents from families earning half a million dollars or more per year hired a consultant, compared with just 6 to 7 percent of respondents from homes with incomes of $125,000 or less."

"Command offers tutoring, but the real selling point is its “mentors” — 20-somethings who earn $100,000 to $200,000 a year by being on call for their teenage mentees at all hours. (The base salary is $55,000 to $72,000, but Rim says mentors receive bonuses for getting clients into one of their top-choice schools as well as for retaining clients year after year.)"

"Once parents sign a contract (“‘Our services are strictly advisory.’ We say that 100 times in the contract. It’s like you’re hiring McKinsey,” says Rim), there’s an initial consultation, and after that, a client typically meets with a mentor one hour a week over Zoom. “Then if we need to go to two, three, four hours a week, we need to have half-hour meetings two times a week, three times a week — we’re fully able and willing to do that,” says Gabe Cramer, who oversees the company’s mentors. Those mentors assign their clients weekly tasks, he explains, which can vary in intensity depending on how close that student is to the application process. Mentors are expected to be available to their clients from 10 a.m. to 5 p.m. each day and a minimum of six additional hours a week outside that window."

"The base of its formula is what Command calls the “passion project” — the specialty it helps students develop so they become what counselors call “pointy” kids rather than well-rounded ones. Rim and other college counselors push the message that being captain of the debate team, a varsity soccer goalie, and class president is the kind of gold star that isn’t that special. Schools, they say, are looking for highly specialized students who demonstrate a specific talent or passion. (The oft-repeated quote is that colleges don’t want well-rounded students so much as “a well-rounded class.”)

The theme of the passion project becomes what Cramer calls the “hook” that hangs their essays and lists of extracurriculars together. “You don’t have to play the violin, be the first chair in your state, and rescue the whales. You can just pick one and be so good at it that you want to dare the admissions officers not to accept you and that they will regret it,” says Rim. No matter what, “we will find the story.”"

Related posts: 

Who wrote your potential love's online dating profile? (maybe they outsourced it to a professional who specializes in that) (2016)

New Profession Of "Wedding Hashtag Helper" Might Be An Example Of Creative Destruction At Work (2022)

Are dating coaches who help you with texting modern Cyrano de Bergeracs? (2023)

Do You Need a Fixer for Your Disney Vacation? Third-party companies tout advanced knowledge for private tours of complex amusement parks that can cost $1,000 and up (2023)

Parents Hire $4,000 Sorority Consultants to Help Daughters Dress and Impress During Rush (creative destruction and how the economy just keeps creating new types of occupations & professions) (2023)

Creative Destruction

See Creative Destruction by Richard Alm and W. Michael Cox. Excerpt:

"Joseph Schumpeter
(1883–1950) coined the seemingly paradoxical term “creative destruction,” and generations of economists have adopted it as a shorthand description of the free market’s messy way of delivering progress. In Capitalism, Socialism, and Democracy (1942), the Austrian economist wrote:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. (p. 83)

Although Schumpeter devoted a mere six-page chapter to “The Process of Creative Destruction,” in which he described capitalism as “the perennial gale of creative destruction,” it has become the centerpiece for modern thinking on how economies evolve."

But also see this link which suggests that the idea goes back even before Schumpeter to other scholars: Creative Destruction in Economics: Nietzsche, Sombart, Schumpeter by Hugo Reinert and Erik S. Reinert.


This paper argues that the idea of ‘creative destruction’ enters the social sciences by way of Friedrich Nietzsche. The term itself is first used by German economist Werner Sombart, who openly acknowledges the influence of Nietzsche on his own economic theory. The roots of creative destruction are traced back to Indian philosophy, from where the idea entered the German literary and philosophical tradition. Understanding the origins and evolution of this key concept in evolutionary economics helps clarifying the contrasts between today’s standard mainstream economics and the Schumpeterian and evolutionary alternative."

Tuesday, January 30, 2024

Are Monkeys More Rational Than Humans?

See The Hard Science of Monkey Business by AMY DOCKSER MARCUS of The Wall Street Journal. It is about the research that Yale professor Laurie Santos and the economic experiments she does with primates (Capuchin monkeys). Excerpts:

"The primate lab is home to 10 "shockingly smart" brown Capuchin monkeys trained to trade tokens for food. It was a short leap for Dr. Santos and her team to decide to study how monkeys make decisions about money."

"In one experiment, they gave each monkey a wallet filled with 12 flat aluminum tokens, monkey money that the animals could trade for food. Right away, the scientists saw the similarities to human behavior. When researchers slashed the price on certain foods, the monkeys sought out the best deal. They also typically spent all their cash at once and didn't bother to save.

Then researchers decided to test a more complex economic theory which shows that people do not judge price in a vacuum. Sitting with the team at the coffee shop, Dr. Santos could see how the concept worked in her own life. Many days, she feels guilty about spending $2.20 on a cup of coffee. But when she looks up at the chalk board listing drink prices, the Nutella Latte goes for $3.85 and the Ginger Snap is $4.15. "My $2 cup doesn't seem as expensive anymore," she said.

Monkeys make similar assessments. In one experiment, a researcher showed a monkey two pieces of apple but handed over one in exchange for a token. A second researcher showed one piece of apple and gave the slice to the monkey for the token. The monkeys strongly preferred to trade with the second researcher. They did not like being offered two apple pieces and then only getting one."

"Researchers wondered whether monkeys, like humans, desire an expensive item more. For the same number of tokens, the monkeys could choose whether they got a tiny square of blue Jell-O or a big chunk of red Jell-O. Later, the monkeys were allowed to choose which kind they wanted. If the monkeys were like humans, they would have gone for the blue Jell-O, the more "expensive" choice. But the monkeys gorged happily on both.

The researchers are still gathering and analyzing the data. One possibility: Human taste preferences are based on many factors, whereas the monkeys' are not. Some might argue that human economic behavior is more advanced since it includes "culture and meta-awareness" in decision-making, said Dr. Santos. There's another, less flattering possibility too. "The monkeys," she said, "are more rational.""

See also Chimpanzees are rational maximizers in an ultimatum game by Keith Jensen, Josep Call & Michael Tomasello of The Max Planck Institute for Evolutionary Anthropology.


Traditional models of economic decision-making assume that people are self-interested rational maximizers. Empirical research has demonstrated, however, that people will take into account the interests of others and are sensitive to norms of cooperation and fairness. In one of the most robust tests of this finding, the ultimatum game, individuals will reject a proposed division of a monetary windfall, at a cost to themselves, if they perceive it as unfair. Here we show that in an ultimatum game, humans' closest living relatives, chimpanzees (Pan troglodytes), are rational maximizers and are not sensitive to fairness. These results support the hypothesis that other-regarding preferences and aversion to inequitable outcomes, which play key roles in human social organization, distinguish us from our closest living relatives."

Related posts:

Monkeys seem to be selfish and rational (Monkeys in Bali know the most valuable items to steal from tourists to get them to trade food to get the items back)

Are Chimps More Rational Than Humans? 

It reminds me of research that was done at Texas A & M some years ago. They found that rats and pigeons act rationally. If they had to press a lever so many times to get a drop something to drink or a pellet of food, they "bought" less of either one if the scientists raised the number lever pushes it took to get one. This was like raising the price. More lever pushes to get either food or drink, the less they tried to get of it. So they followed the law of demand. This was reported in Steven Landsburg's book The Armchair Economist.

Sunday, January 28, 2024

The Real Reason You’re Paying for So Many Subscriptions

It’s one of the hidden forces behind the subscription economy: Americans are spending billions on stuff they forget to cancel

By Ben Cohen of The WSJ. Excerpts:

"The consulting firm West Monroe surveyed thousands of Americans in 2021, asking them to guess how much they spent each month on subscriptions. Their average response was $62. When they were given more time to guess again, they increased their estimate to $96. They were still way off. The correct answer was $273.

But now Americans are paying more attention to their growing pile of subscriptions and canceling the ones they no longer need, don’t want or can’t afford."

"If you pay for Netflix and Disney+ every month, but cancel other services and subscribe again when they release new seasons of your favorite shows, you’re not alone. Americans are getting more strategic about how they manage their streaming portfolios. In fact, nearly 25% of U.S. subscribers to streamers like Apple TV+, Disney+, Hulu, Max, Netflix and Peacock have canceled at least three services in the past two years"

"Neale Mahoney is a soccer fan who bought a Peacock subscription at the beginning of an English Premier League season intending to cancel at the end of the season in May. But when the next season began in August, the Stanford University economist remembered that he’d forgotten to cancel. Which is how he learned that the only thing more painful than paying to watch Arsenal is paying to not watch Arsenal.

His co-authors at Stanford and Texas A&M University had their own cases of subscription regret. Liran Einav’s teenage daughter thought she had paid $5 for a test-prep service before getting her driver’s permit. She had actually paid for a $5 monthly subscription. Ben Klopack signed up for a free trial of Peacock and realized he was still being charged six months later without ever having watched Peacock."

"Sometimes you intentionally subscribe and forget to cancel. Sometimes you forget to cancel because you unintentionally subscribed. Either way, you’re paying for something you don’t value"

"what happens when credit cards expire, are lost or stolen and have to be replaced."

"getting a new card is one of the rare times you must actively renew your automatically renewing subscriptions, since you have to update the payment information on file with those companies. The economists analyzed millions of transactions from a large payment network and found a clear pattern in the months when credit cards are replaced: There is “a sharp, abnormal drop” in subscription retention."

"In the average month, the services lost 2% of those customers. But in the months of card replacement, they lost 8%."

"there are plenty of industries that have long relied on customers who never use the product. You buy a gym membership in January, stop going in February but keep paying because you want to believe that one day you’ll wake up and get back on the elliptical."

"They studied big subscription services across entertainment, security, retail goods and, yes, newspapers. They say that every single one benefited from subscriber inattention."

"The Federal Trade Commission recently proposed a new rule that would require most companies to provide annual subscription reminders."

Friday, January 26, 2024

Robots Are Looking Better to Detroit as Labor Costs Rise

Expensive new union contracts spark more interest in assembly-line automation for vehicles, but risks exist

By Nora Eckert of The WSJ. Excerpts:

"While automakers have been moving to automation for some time, rising labor costs are poised to accelerate the adoption of such technologies, said Laurie Harbour, president of Michigan manufacturing consulting firm Harbour Results."

"A spokesman for GM said the company will continue to use technology to help its team members increase productivity, and make work environments safer."

"The auto industry is a top consumer of robots, according to the International Federation of Robotics. The global automotive industry installed 136,000 new industrial robotic units in 2022, the federation found, second only to the electronics industry."

"Dozens of new battery factories and electric-vehicle plants in the works will also open the door to broader use of high-tech systems, analysts say. It is easier and less costly to install robots in a new facility versus retrofitting an existing one."

"Automakers are likely to introduce more robots and other forms of automation over time, replacing workers as they retire, rather than displacing swaths of their current workforce."

"There are varying views on how extensive auto-industry automation will become in the next decade, and many analysts point out that other strategies—such as streamlining the production process by offering fewer vehicle options—can have larger cost savings. 

Additionally, whatever machines gain in terms of productivity can be zeroed out by the needed personnel to fix or program robots, some academics say. Humans are sometimes better at completing precise tasks that require visual judgment and the ability to nimbly adjust equipment."

Related posts:
Rent a robot for Christmas? Makes sense if you are a logistics company (2022)

Walgreens Turns to Prescription-Filling Robots to Free Up Pharmacists (2022)

Answering the Call of Automation: How the Labor Market Adjusted to the Mechanization of Telephone Operation (2022)

Many Jobs Lost During the Coronavirus Pandemic Just Aren’t Coming Back (2021)

Can computers write poetry?Could they replace poets? (2020)

Will computer programs replace newspaper columnists?  (2020)

McDonald’s Tests Robot Fryers and Voice-Activated Drive-Throughs: Burger giant wants to speed service as competition for fast-food diners mounts (2019)

Is Walmart adding robots to replace workers or because it is hard to find workers? (2019)

Robot Journalists-A Case Of Structural Unemployment? (2010)

Structural Unemployment In The News-Computers Can Now Tell Jokes  (2013)

WHAT do you get when you cross a fragrance with an actor?

Answer: a smell Gibson.

Robot jockeys in camel races (2014)

Are Computer Programs Replacing Journalists? (2015)

Automation Can Actually Create More Jobs  (2016)

The Robots Are Coming And It Might Not Be A Case of Structural Unemployment  (2018)

Broncos to debut beer-pouring robot at upcoming game (2018)

Robots Are Ready to Shake (and Stir) Up Bars (2018)

Is Covid causing some structural unemployment? (2020)

Is Covid causing some structural unemployment? (Part 2)

Warehouses Look to Robots to Fill Labor Gaps, Speed Deliveries  (2021)

Is unemployment still high because of structural unemployment?    (2021)

The Pizza Delivery Guy Will Be a Robot at Many Campuses This Fall  (2021)

Wednesday, January 24, 2024

Flying in America Has Actually Never Been Safer

U.S. airlines have gone nearly 15 years without a fatal crash—and it’s not just luck. The revolution in the skies began with an innovative program that has become a model for the rest of the world.

By Ben Cohen of The WSJ

I used the book The Economics of Public Issues in my micro classes. It had a chapter on the safety of air travel. It mentioned that flying was 15 times safer than driving in terms of deaths per mile traveled.

Although I think things might not be that bad. If you are thinking of going to Dallas from San Antonio even if you fly you still probably need to ride in a car going to and from airports. That is often in heavy city traffic that might be dangerous. If you drive all the way to Dallas and don't speed, wear you seat belt and drive in the day during good weather, you probably improve your safety quite a bit. Also if you are not drinking and driving.

Anyway, here excerpts from the article:

"The biggest U.S. commercial airlines have now gone nearly 15 years without a fatal crash, which is something of a miracle itself, as there have been more than 100 million flights and 10 billion passengers since then."

"flying across the sky is safer than walking across the street. Airplanes produce fewer deaths per mile than cars, ferries, trains, subways or buses—and the chances of dying in a crash are roughly the same as getting struck by lightning while reading this sentence. 

The country’s safety record would have sounded not just incredible or inconceivable 15 years ago, but completely insane.

“I never would’ve believed it,” said William Voss, the former head of the Flight Safety Foundation, a nonprofit advocacy group."

"The Federal Aviation Administration’s self-reporting programs that encourage airline operators to come forward without fear of retribution helped slash the rate of fatal accidents on U.S. airlines by such large percentages that the industry had to figure out new ways to measure safety."

"The last fatal crash involving a U.S. carrier was in February 2009, when a Colgan Air commuter flight went down outside Buffalo and killed all 49 people on board."

"Since that crash 15 years ago next month, large U.S. airlines have suffered two fatal accidents that killed two people. Not two fatal accidents a year, like the 2000s, or two per million flights, like the 1960s. Just two."

Monday, January 22, 2024

The Unexpected Ways a Big Raise Affects Your Happiness

Getting more money often leads to immediate satisfaction. The good feelings might not last.

By Joe Pinsker of The WSJ. Excerpts:

"And people with higher incomes do tend to be happier, many studies show. Research looking at lotteries and random cash giveaways indicates that additional money can make people happier for months or even years. 

But moving up the income scale, it takes more money to generate the same good feelings, said Jan-Emmanuel De Neve, an economics professor at Saïd Business School at the University of Oxford who studies well-being. The proportion of the increase matters.

“If an employer moves somebody from $15,000 to $30,000, that will have an impact on people’s life satisfaction that is the equivalent of them moving somebody from, say, $60,000 to $120,000,” De Neve said. 

A pay increase that takes someone from financially stressed to financially stable often leads to more happiness. At the low end of the earnings spectrum, a higher income is associated more with squashing negative feelings than producing positive ones, according to a 2021 paper in the journal Proceedings of the National Academy of Sciences."

If you get a raise, don’t just spend it, said Neela Hummel, a financial planner and the co-CEO of Abacus Wealth Partners. 

“The worst thing that can happen with a raise is that that money gets immediately folded into cash flow and a client doesn’t even notice it,” she said. 

Many people also jump ahead to how nice a car or how big a house they could afford with a new paycheck. Instead, Hummel advises, take the raise as an opportunity to up your savings or pay down debt."

"People’s happiness with their pay is strongly tied to how it compares with the pay of others around them, say researchers who study compensation. Sometimes, those comparisons rankle."

"Executives are more likely to leave their companies if their pay is low compared with other top bosses, according to a 2017 study in the journal Human Resource Management

Comparisons matter closer to home, too. Living in an area where people tend to make more money than you is linked to being less happy, according to a 2005 paper in The Quarterly Journal of Economics."

Related posts: 

The Fun Things in Life Are Giving Us Buyer’s Remorse (2023)

How Happy Can a Windfall Make You? (2022)

Happiness Is Not What We Think It Is (2022)

Psychologists uncover new details about how money influences the frequency and intensity of happiness.  (2021)

More On The Economics Of Gift Giving. (2018)

What Brings More Happiness, More Time Or More Money? (2017, this study found that people that chose more free time over more money tended to be happier) 

Do income and happiness tend to go together? Yes, both within and across countries . (2017)

Science proves it: Money really can buy happiness . (2017)

Dagwood Bumpstead Explains The Hedonic Treadmill  (2015)

Does Money Buy Happiness? (2011)

Does Wealth Make Us Happier? (2010, maybe wealth buys freedom that makes us happier)

Does Or Can Money Buy Happiness?  (2008)

Interesting Book: Stumbling on Happiness  (2007)

Does Money Make You Mean?  (2007)

Related articles:

Money buys happiness after all  (By William Easterly and Laura Freschi, 2011)

The happiness wars (From The Lancet, 2011)