News and notes from around the interweb:
- Nomadic Matt is giving one person $18,250 so enter! Since his book is How to Travel the World on $50 a Day the idea is $18,250 would cover a year of travel. And the third edition of his book is out…
- A thumb drive with London Heathrow security files was found on the street. Sounds about right. (HT: Jonathan W.)
- Just as American Airlines CEO Doug Parker declares his airline will never lose money again Wall Street analysts are beginning to feel that the fat years for airlines are coming to an end because of rising costs and falling fares. (While the piece notes mergers didn’t help airlines control costs, they did spread traffic across fewer carriers, load factors are way up.)
- Amtrak has apologized
I was just told I had to remove my political button before boarding my @Amtrak train because it’s “federally funded” #America #facisism 🇺🇸 pic.twitter.com/8o30Eq4Z9h
— Melissa (@feytwee) October 27, 2017
- Use Apple Pay or Android Pay in lieu of chip and PIN
- National Car Rental is offering elite status matches and they are matching airline, hotel, and even online travel agency status. (HT: Loyalty Lobby)
- Financial Times: New American Express chief prepares for battle in rewards war really the claim is just that the premium credit card market has become super-competitive. Arguing that other products may be more rewarding than American Express’ is also saying those products may ultimately be unprofitable.
It’s the same issue Amex faced when trying to renew their Costco deal – keep the business and lose money, or let the business go and lose market share. They may have made the best choice under the circumstances, but in so doing revealed weakness in the business.
- The supply of labor into Uber is highly elastic (.pdf) Tyler Cowen adds “If true, that means trying to raise the wages for Uber drivers won’t work.”
Link for Bloomberg article “fat years are coming to an end” has an extra quote in the link and gives a 404. Correct link: https://www.bloomberg.com/news/articles/2017-10-30/the-fat-years-for-u-s-airlines-are-coming-to-an-end
It’s not a prize worth $18,250. Since you have to submit a journal of your travels to get paid in monthly installments to unlock the next $1500, it’s a $50/day job that you win.
Still would be fun if you’re young, unemployed and like blogging.
“Circumventing Chip & Pen” – quite a misleading title since the article is about an alternative to using Chip & Sign when overseas as few US credit cards are chip & pin enabled.
The Uber study (underwritten by Uber) is bizarre, like so much economic theory that has been debunked over the past 40 years.
I certainly don’t get how Tyler Cowan reaches his conclusion: “If true, that means trying to raise the wages for Uber drivers won’t work.”
Won’t work for what? Or for whom?
And if the supply of drivers to Uber is elastic, why is there surge pricing? Wasn’t that the whole point of it – to bring more drivers out on the street? Either way, the conclusion that I reach from this research is that surge pricing is pointless, and not much else.
In any case, I thought the authors’ conclusion was that “it would be interesting to consider driver micro labor supply decisions”, but most non-economists could have told them that in the first place.
FT firewalled. Please send me your password.
“And if the supply of drivers to Uber is elastic, why is there surge pricing? Wasn’t that the whole point of it – to bring more drivers out on the street? Either way, the conclusion that I reach from this research is that surge pricing is pointless, and not much else”
There is a distinction between short-term and long-term price elasticity of demand. Surge-pricing is designed to induce an immediate (within minutes) increase in supply of drivers. This clearly works. In fact, it is a brilliant and much needed innovation in car hire pricing that was simply “too complicated” for old tech. taxi drivers to introduce. Notice how it is being copied by other suppliers, and in other industries too.
Hiring for driver demand weeks or months out is perfectly elastic, apparently. Exactly as one would expect.
continuing…
thus no surge pricing for a month out from the current time.
Thanks, Achalk – that makes sense.
But is there evidence that surge pricing “clearly works” to put more supply on the streets? I can see how it might be designed to do that, theoretically, but in most industries the same pricing structure is designed to simply reduce demand.
Also, if you’ve read the study, what is Cowan implying “won’t work”? I couldn’t really make sense of his point.
Adding – that it seems to me that surge pricing is simply dynamic pricing. If too many drivers go out on the street, then the price should go down. But surge pricing is artificially inflating prices.
On Tyler Cowan’s comments. I have not found his explanation for his comment.
“But is there evidence that surge pricing “clearly works” to put more supply on the streets? I can see how it might be designed to do that, theoretically, but in most industries the same pricing structure is designed to simply reduce demand.”
“Adding – that it seems to me that surge pricing is simply dynamic pricing. If too many drivers go out on the street, then the price should go down. But surge pricing is artificially inflating prices.”
It is indeed dynamic pricing. The increase and subsequent decrease in price reflects an increase in demand, followed in time by an increase in driver supply.
adding..
if it did not work then prces would stay high.
But – correct me if I am wrong – Uber’s surge pricing does not go down, even with increased supply, right? Is it not based on expected demand, set for certain time-frames, in advance?
If surge pricing comes on, then when the supply increases, or demand recedes, they revert to pre-surge levels. Uber will not publish their algorithm (as you would expect) but it is based on real-time data rather than an “almanack” approach.
Gotta buy the book to enter the contest. No thanks.