Archive for February 8th, 2011

When it snows … unemployment goes down … huh?

February 8, 2011

Last Friday’s jobs report indicated that virtually no jobs were added (a paltry 36,000 to be precise), yet the unemployment rate dropped from 9.4% to 9.0%

How can that be?

Well first, January is the month when major revisions are made to the factors used to project ‘sample numbers’ to the ‘population numbers’. In other words, the metrics go from apples-to-apples to apples-to-who knows what. 

Most often, when the unemployment rate dips without a surge in jobs, it’s attributed to a LOT of unemployed folks getting discouraged and suspending their efforts to find jobs.  When they throw in the towel, they’re no longer counted as unemployed.

This January’s unemployment report had an extra twist: the snow storms that hit much of the country.

According to some analysts, a million or more people reported that they stopped looking for work in January because the weather was too bad. So, they were no longer counted as unemployed.

So, if the weather warms – or at least the snowfalls stop – these folks are likely to re-start their job searches, will be counted again as unemployeds, and the unemployment rate will go back up.

That is, unless it gets too hot to look for work.

This is a great country …

Posted in Employment - Jobs, Unemployment | Leave a Comment »

Oh, just pay whatever you feel is fair …

February 8, 2011

TakeAway: Pay-what-you-want experiments have yielded some interesting results.

When consumers pay what they feel is fair for the benefits received, there is no excess value ceded to them.

However, consumers are probably less likely to take advantage of this arrangement when the stakes are low, like in the study below.

* * * * *

Excerpted from NPR, “  Can Allowing Customers to Pay as They Wish Increase Profits?” by Jess Jiang, January 19, 2011

Do you pay more when you can pay what you want? Yes, according to a recent study published in the journal Science.

… a group of researchers from the University of California wanted to test how letting people pay what they want could work for other businesses. The researchers took photos of over 100,000 people on a roller coaster ride at an amusement park. Then they split people into two groups. Group A could buy the photo for a fixed price, and Group B could pay what they wanted.

The results — people who paid what they wished bought more photos— 8 times more, and these same people also spent more money per photo.

Then, the researchers added a second-dimension, charity. Half of the participants in each group were told that some of the revenue would go to charity. Although the number of sales in both group A and B remained roughly the same, purchasers who paid as they wished spent much more money when they were told charity was involved.

As for what they want people to take away from the study, the researchers point to company ethics, “our study suggests a method in which the pursuit of social good does not undermine the pursuit of profit.”

Edit by DMG

* * * * *

Posted in Behavioral Economics, Mktg - Pricing | Leave a Comment »