Archive for the ‘NYC’ Category

The number of economic choices the average New Yorker has is staggering

August 31, 2007

“The number of economic choices the average New Yorker has is staggering. The Wal-Mart near JFK Airport has over 100,000 different items in stock, there are over 200 television channels offered on cable TV, Barnes & Noble lists over 8 million titles, the local supermarket has 275 varieties of breakfast cereal, the typical department store offers 150 types of lipstick, and there are over 50,000 restaurants in New York City alone.”

“Retailers have a measure, known as stock keeping units, or SKUs, that is used to count the number of types of products sold by their stores. For example, five types of blue jeans would be five SKUs.”

“The number of SKUs in the New Yorker’s economy is not precisely known, but using a variety of data sources, I very roughly estimate that it is on the order of tens of billions. To put this enormous number in perspective, estimates of the total number of species on earth range from several million to several hundred million.”

The Origin of Wealth by Eric D. Beinhocker

Congestion Pricing

August 8, 2007

Definition: Congestion pricing is increasing the price on something during peak usage.

Examples:

  • long-distance calls are more expensive during the day
  • airplane tickets are more expensive during the summer
  • in NYC the tolls on certain bridges and tunnels are increased during rush hour
  • in London people who drive their car into town between 7am and 6:30pm are charged a toll of £5

All of these are examples of price responding to demand: when demand for a resource is high, the price goes up, and when it’s low, the price goes down.

The telephone line, the seat on a plane, the bridge, the tunnel, and the road space are “resources”. They are not unlimited. When demand for a limited resource is high, the persons who are willing to pay the most get the resource.

Individuals weigh the cost of using the resource against its benefit. If the cost is too high, they find alternatives (such as calling during a non-peak time, or taking public transportation).

The goal of congestion pricing is to make the costs obvious to people. The hope is that when people are clearly aware of the costs they will make individual decisions that produce a collectively smart result, i.e. congestion is decreased.

— extracted from The Wisdom of Crowds by James Suroweicki