Link Banana

Though I’m wary of most new organization playing with economics or statistics, this Reuters story qualifies for being both modestly interesting and completely plausible:

At U.S. warehouse club stores, a growing number of shoppers are giving up steak for cheaper chicken. Coffee sales are soaring at McDonald’s, while higher-priced Starbucks slows. Restaurants are serving fewer customers because more people are eating at home.

Stung by the housing slump, tightening credit terms, and rising inflation, U.S. households are finding ways to cut back, putting a damper on the consumer spending that is the driving force behind the economy.

Elizabeth Kolbert offers a solid review of two recent books in the fascinating field of behavioral economics. I thought this anectdote, among others, was interesting:

This effect is called “anchoring,” and, as Ariely points out, it punches a pretty big hole in microeconomics. When you walk into Starbucks, the prices on the board are supposed to have been determined by the supply of, say, Double Chocolaty Frappuccinos, on the one hand, and the demand for them, on the other. But what if the numbers on the board are influencing your sense of what a Double Chocolaty Frappuccino is worth? In that case, price is not being determined by the interplay of supply and demand; price is, in a sense, determining itself.

Slate’s Taylor Clark had some interesting news recently (which I’ve decided was interesting enough to drudge up even as its getting stale on the shelf): in many cases the conventional wisdom that Starbucks is bad for mom-and-pop coffee shops is wrong. There are a couple reasons discussed, but the most interesting and likely is that Starbucks is a great and friendly way to recruit new coffee addicts. In the drug trade that logic sounds sinister, in coffee it’s a good business model.