Archive for July, 2011

David Cay Johnston at Reuters recently took a look at the economics behind state lotteries in the United States. Some of the findings include:

  • Lotteries pay out about 62% of their revenue in winnings. That means lottery tickets are taxed at a rate of 38%.
  • Americans spent $50.4 billion on lottery tickets in 2009
  • Lottery winnings are taxed…further increasing the tax burden placed upon lottery tickets
  • In 11 states the lottery provides more revenue than the state’s income tax

You can read more over here.

Source: Reuters

Via: Gerry Canavan

The latest US census has shown a dramatic drop in the percentage of children who make up the population of the United States. At the same time the percentage of senior citizens in the population has risen dramatically. While there might be a percentage decrease, in the United States as a whole there has been a 1.9 million increase in the number of children. But the number of old people are rising even faster. And in certain states such as Vermont, the absolute number of children has actually fallen. Read more about the consequences that this could have over here.

Source: Time

Foreign Policy featured an article that took a look at “how food explains the world.” Some of the interesting points include:

  • China keeps a strategic pork reserve in case there’s ever a shortage.
  • Investor Anthony Ward is sometimes called “Willy Wonka” because he controls 7% of the world’s production of cocoa beans. He believes that continued problems in Africa will drive up the price of the key ingredient behind chocolate.
  • Israel and Lebanon are locked in a battle that has raged for several years with no end in sight. The battle is for the record for the biggest batch of hummus.
  • In South Korea the prime minister was forced to intervene as a threatening financial crisis loomed. Did the government have to bail out the banks? The insurance companies? The auto manufacturers? Nope, in South Korea the government had to bail out the cabbage industry. A dish made with those cabbages is so important that the South Korean space agency thought it was worth their time to launch it into space.

Click here to read more about the role that mobile phones play in the distribution of food aid, the newest diet recommended by the U.N.’s Food and Agriculture Organization, and the (alleged) role that KFC played in the Egyptian uprisings.

Source: Foreign Policy

Via: World’s Strangest

According to InTrade, a prediction market, there’s a 14.9% chance that the US debt ceiling will be raised before the end of July. To put things in perspective, people think there’s a greater chance that scientists will figure out nuclear fusion. A potentially limitless source of energy.

Renny McPherson was part of a team that analysed Al Qaeda documents to understand the financial underpinnings of the shadowy terror network. In an article posted in Boston, he wrote about some of his findings:

  • Al Qaeda is run as a “well-organized franchise structure” where existing local terror groups from around the world take on the Al Qaeda name (with Al Qaeda’s permission), and are given the flexibility to adapt Al Qaeda’s goals to local conditions. Unlike a traditional franchise though, there were no payment transfers between the ‘parent’ organization and its subsidiary.
  • Al Qaeda in Iraq was not reliant on international donors. In fact, its local fund raising infrastructure was so strong that they were able to send funds to other terrorist organizations.
  • Launching a terrorist attack has several costs associated with it including: salaries, safe houses, transportation, weapons, and even life insurance for those who would be carrying out the attack.

There are several other fascinating points of information from a man who has had a long career studying this issue. Read more over here.

Source: Boston

Via: Marginal Revolution

This is an interesting chart that tracks the average college GPA by year. It also gives a breakdown of the differences between the average GPA at private and public colleges. The average GPA, as you can see, is much higher at private colleges than at public ones. So, why have GPAs been rising, and why does it seem easier to earn an A at a private college than at a public one?

Source: FlowingData

Via: Freakonomics Blog

Borders recently announced that it would be shutting down as no potential buyers were willing to take over the company and keep the bookselling chain afloat. So what caused one of the largest booksellers to close? An article on Slate gave a good summary of the major causes. It cited four major problems:

1. It did not adapt well to the internet or properly adopt it into its business strategy.

2. Borders did not cash in on e-books, which have become increasingly popular.

3. Borders lacked diversification – sales of books declined as DVD and CD sales declined, which also made up a large portion of Borders sales. Barnes & Noble diversified by bringing Starbucks to its stores, while Borders eventually brought in Seattle’s Best.

4. Borders opened too many stores, many of which were unprofitable. Many of these stores were too large leading to high overhead costs and they also locked themselves into many long-term leases making it impossible for them to shut-down specific, unprofitable locations.

Will Barnes & Noble be next, or will they be able to compete against Amazon in the future? Only time will tell.

Source: Slate

It’s looking like the NFL lockout is about to come to an end, which raises the question: what will the effects of it be? In an article posted on Freakonomics, that very topic is addressed. The sports economist interviewed believes that demand for the sport by fans will be unaffected and that they will be happy to see the season start up. He also believes that in the new collective bargaining agreement, the owners are getting the better deal. Their share of the revenue will increase as the salary cap each team faces decreases; the rookie pay scale will also face a decline but veterans will be voting on the deal which could help explain why the players seem poised to accept the offer.

Source: Freakonomics Blog

Personality tests are an increasingly popular tool used by businesses and governments alike. A new weapon in the arsenal of tests might be a review of your Facebook profile. Researchers are looking for conclusions they can make about you based on your online page. Some of them include:

  • Extroverts have more Facebook friends than introverts but their networks are more likely to be “sparse”
  • People with longer last names have more neurotic traits.
  • People who often use words such as “pizza”, “dish” and, “eat” are also more likely to be neurotic.

Read the article to find out more about the other correlations that researchers have found in Facebook profiles.

Source: The Washington Post

Via: Know the World

It’s a simple question. How many people in the world are poor? Yet the answer isn’t as straightforward as it would seem. In 2005 The World Bank estimated that there were 1.37 billion people who live on less than $1.25 a day but since then emerging economies have expanded by 50%. The Brookings Institution updated that number for 2010 and estimated that the number of poor had fallen by half to 900 million. Other interesting points in the report include:

  • The fall in the poverty rate is unparalleled in the entirety of human history
  • By 2015 they estimate that fewer than 600 million people will be below the poverty threshold
  • The First Millenium Development Goal (to half global poverty levels) was probably met in 2007, 8 years ahead of schedule.

Read the (exceedingly short) two page summary over here and find out where the poor will be concentrated and the strategies that aid donors must now pursue.

Source: Brookings