100 Economics Question of the Day: An Intermittent Blog: November 2005

Sunday, November 20, 2005

Gedankenexperiment I: What is the Economic Value of Cassandra?

It is well known that perfect correlation is ideal, even if it is perfect negative correlation. (If Jim Cramer really were wrong all of the time, it would be worth watching his current show--well, maybe not, but it could be justified then.)

But what of the legendary Cassandra, who always tells the truth (perfect correlation) but is never believed?

Thursday, November 17, 2005

What they lose in price they make up in volume

For those wondering about the value of "social cost," here is a clear example. Compare the second paragraph:
[S]everal companies and organizations were unveiling their plans to bring the world closer and, in a sense, narrow the digital divide, by providing laptops that cost just US$100 (euro85)

and its later elaboration
Late Wednesday, a text-book sized laptop boasting wireless network access and a hand-crank to provide electricity was unveiled by Nicholas Negroponte, Chairman of MIT Media Lab.

The machines will sell for $100, making them accessible to millions of school-aged children worldwide, he said.

[Nicholas] Negroponte said he expects 1 million of them to be sold to those countries. He did not say who would build the machine, which will cost $110 to make, but at least five are considering bids to do so.[emphasis mine]