Sunday, July 27, 2008

Advertising Gun-Free Zones

Last week I was in St. Paul visiting my mother, who lives in a retirement home. On the main door, the door that visitors use, is a sign that says, “Marian Home bans guns on these premises.” Perhaps that sign was supposed to make me feel that my mother was safe. I did not feel that. On the contrary, the sign made me worry that my mother might be in danger.

What is the benefit of that sign? It would not affect the residents who might have accidents with guns, because a no-gun rule can be a condition of admittance. It would affect visitors. Who would bring a gun into the building that might be a danger and who also would be deterred by that sign? I can think of no one. On the other hand, it seems to me that the sign is advertising to potential criminals that here is a population that is easy pickings and that will offer no resistance.

What do you think? Does the sign make my mother safer or less safe?

Saturday, July 26, 2008

No Way to Run a Promotion

Last week the “Pepsi Small Throw” became available again in the PepsiPoints promotion. What was rather remarkable about it was the average rating given this product: one star of a possible five. One person had given it three stars, two had given it two stars, and fourteen had panned it with 1 star, the lowest rating possible. If you are running a promotion, do you really want to be giving away products that people hate?

However, this problem is overshadowed by a much bigger problem. The promotion has been exploited, apparently in a number of ways. The big one seems to have taken place in May when Pepsi offered five free points, enough to buy an MP3 song from All one had to do was click on the banner and enter an e-mail address. I clicked and got five points. They were not sent to my e-mail account, they just appeared on the computer screen. I thought about entering another e-mail address and seeing what would happen, but decided I did not need Pepsi spam filling up my mailboxes.

Others did try, and here is what one discovered:
about the 5 free point/MP3 thing. I just wound up getting 680 free points on the site.

It’s easy to do. Open up you Internet Browser go to and log in.

Click on the link for the free 5points/mp3 and enter your e-mail address and their security code for the 5 free points. Wirte or copy the code they give you and put it in your code space for 5 free point.

Then (stay logged on to, don’t log out), exit Internet Browser and then reopen you Internet Browser again and go back to the website and click on the link for the 5 free point/mp3 again.

Enter another e-mail address and their security code for another 5 free points.

As of now you can keep doing this as long as you want to.

Best of all any e-mail string works since they give you the code on the site and it’s not e-mailed to you.

That means that would also be considered a working e-mail adress to, though you can only enter each e-mail address only 1 time each (so you can easily make up tons of others that WILL work and get you the free 5 points).

Hopefully this glitch will continues for a few more days or even the duration of the promotion.

I’ve alrady enter in 300+ points into 1 of the sweepstakes (hopefully, I can win this time) and STILL HAVE ENOUGH for 5 DVDs.

I hope this glitch will help everyone out like it has for me.

Comment by Tim — May 1, 2008 @ 10:56 pm
Source: (retrieved July 26, 2008)

Here is a comment from another forum:
What were they thinking with that? …. The lack of safeguards is mindboggling. Did they really expect people to stick to getting a single code when there was nothing to prevent them from getting as many as they wanted? Pepsi's own incompetance with that promo screwed over their loyal consumers.

Having said that, I wish I could go back to the first week of May and exploit it alot more than I did. I only managed to get a few hundred points.
Source: (retrieved July 26, 2008)

Here is another account of the exploit:
About 2 months ago I was on eBay. I searched for Pepsi Stuff and saw several auctions for Pepsi Stuff points. The seller was auctioning 600 Pepsi Stuff codes, each code was worth 5 points. The Buy It Now price was $80 (pretty cheap considering what you can get with 3,000 points). Anyway, I thought the auction was a scam because the same seller had listed three separate auctions of 3,000 points. I thought how could one person obtain 9,000 points in such as short period of time. Secondly, how did this seller get 5-point codes. If you look on the Pepsi Stuff website, under the rules section, there are no 5-point codes. The largest point total is 4 points for a 24 pack. So anyway, I emailed the seller and asked him how he got so many points and why those codes were in 5-point increments. The seller responded with exactly what I posted. Basically, a couple months back, Pepsi had run a promotion where you could receive a free 5-point code for entering your email address. The auction actually stated "Enter your email address and receive a free music download." Pepsi then gave you a 5-point code; the same as what's needed for a music download. The seller I emailed related that he found out about the promotion and had entered thousands of fake emails addresses, and accumulated close to 60,000 points in 18 or 19 different Pepsi Stuff accounts. He related that he ordered close to 300 DVDs (duplicates of some), dozens of shirts and towels, and was now trying to sell the remaining points on ebay. He further related that he was selling the points for such a low price because he knew ebay would shut his auction down quickly (because it's illegal to sell Pepsi points). He was hoping that someone would recognize the great deal and buy the auction quickly.

Anyway, like I said, while I don't codone the actions of people like the one I described above, you gotta admit that what they did was genius. Now they have enough DVDs to last them for a few years and they got it all for free!
(retrieved July 26, 2008)

I am not surprised when I see incompetence and stupidity around me; I see too much to be surprised. I am not surprised when I see incompetence and stupidity in government; economic theory leads me to expect that. I am not surprised that people try to game the system; that seems to be simple human nature. For some reason, though, I am surprised when I see incompetence and stupidity in large corporations, and maybe I should not be. It is astonishing that they did not put in some simple checks, things like sending the codes to the e-mail address entered, or checking to see that the promotion was used only one time in an account. Also, for some reason I find it comforting and reassuring that a big company can screw up on such a grand scale.

Then there is the ethical question. Is it right to exploit a situation like this? If so, why? If not, why not?

Friday, July 18, 2008


I usually have a lot of football players in class. They might find this post interesting:

Thursday, July 17, 2008

Squash Opportunity Cost

When I was a graduate student living in the Eagle Heights Apartments at the University of Wisconsin, I planted my first garden, and every summer since then I have continued to garden. This summer I have been worrying about the costs involved in my garden.

The most obvious cost is the time of gardening itself. Is it really worth doing? When I came to Rensselaer 30 plus years ago, the college had recently started allowing faculty and staff to have gardens on a two-acre plot of land west of the college. In those early years the entire two acres was divided up and planted in plots that were as large as 100 feet by 25 feet. But over the years the number of gardeners dropped, and gradually the only a small part of the area was being planted. In the summer of 2006 I was the only one left. In the summer of 2007 the physical plant people just ignored my requests for garden space, so I moved my garden to my back yard. Did the rest of the people decide that their time was better spent doing something else? They did not even know that a herd of deer had made gardening much more difficult than it had been in the past.

In the spring when the garden looks empty, I have a tendency to over plant. This spring some animal kept nipping the pea plants as they emerged, so I thought I should put something in the emptiness that resulted. I put in a couple of squash. Now two months later the squash are trying to take over everything. I have not had good luck in the past with squash. I have always had problems with squash vine borers, which are moths that as adults look like bees, but as larvae live in the vines of squash plants, and if they are too numerous, kill them.

If my huge squash plants do not get killed by the squash vine borers (and I know they are there, because I have killed three adults and been unable to catch several others), I will have a bumper crop of acorn squash. But if the plants do get killed, I have sacrificed the chance to use that space for things that are pretty sure to produce, like beans and beats. I guess life is good when that is the sort of thing you are worrying about.

My other space allocation decision that I wonder about is my decision to plant potatoes. My colleague Brian offered potatoes to anyone who wanted them this spring. Brian belongs to a seed saver exchange that I think tries to preserve old varieties of plants. One of the varieties of potatoes he offered was Carola and I took a few. However, I wonder whether, given the limited space I cultivate and the very low cost of potatoes in the store, I should be growing potatoes at all. I know that I should not grow sweet corn. The yield is too low (and uncertain given the raccoons who stroll by at night), and most years I am given plenty by my friend Marge whose husband farms.

So a garden is not really free food. I justify spending the time there by telling myself that it is a hobby. A hobby is something that you cannot justify on a simple cost-benefit tabulation. You have to include the benefits of enjoyment, and that enjoyment often seems a bit strange to people who do not share the hobby, to make the benefits exceed the costs.

Update, Oct 4, 2008

I got lucky this summer. The bugs did not kill the squash and they spread out to cover much of the back yard.
The end result was a decent harvest of squash. Here a a few of them. If I plant them next year, I will put them some place else, where they can interfere with the grass, not other garden plants.

Sunday, July 13, 2008

Saving Money on Parade

Parade Magazine had an article in this week's issue entitled "Secrets of Thrifty Families."

The sentence that caught my eye was: "It took one week of vacation time and a $4000 tax rebate (Brett and Sue purposely overcontribute to get a yearly windfall), but they saved at least $6000 on the bathroom renovation alone."

If you are trying to tell people how to manage money, you should not be telling them to give the government an interest-free loan. Instead, you should tell them to take an interest-free loan from the government. You want to underpay taxes by just a little under $1000. (If you go over $1000 you may face penalties. The government likes it when you give them an interest-free loan, but does not want to give you one.)

If you have a rebate of $4000, you have on average lent the government $2000 for the year. If you could get 4% interest, that is $80 you could have earned but did not.

Why do people do overpay? Mostly because they cannot control spending, and this is a way to force themselves to save. In fact, the tax preparation people have figured out that people who overpay in this way have big signs on them saying, "I have a hard time controlling my urge to spend." So they advertise that they will give them a loan when they file their taxes. That way they will not have to wait the two or three weeks, even though they have waited months and months up to now. They can have an instant refund. It is almost cruel to take advantage of weakness in this way. But where there is weakness, someone will take advantage of it.

Parade also had a piece by Tim Harford, "Bargains that Aren't." Harford is one of the major economics bloggers and his blog is at Harford and Dan Ariely have had an interesting discussion about rationality at

Who says economics is hard?

Saturday, July 12, 2008


The financial sector is hurting nationally, with the second largest bank failure ever being announced this weekend. But while IndyMac, which has nothing to do with Indiana as far as I can tell, will be shutting up offices, a new bank office is under construction in Rensselaer.

We have five banks, and this will not add to the five. Rather one of the five is relocating. The Kentland Bank presently has offices in a building shared with a bowling alley.

Why put a bank in a bowling alley? Not that many years ago, there were strict rules on entry into banking. One of the conclusions drawn from the many bank failures of the Great Depression was that banks could be too competitive. So the government decided that they should not compete so much. And banks probably were quite happy to support the legislation. But then when the opportunities arose, they found ways to evade the rules. And that is what happened here. Legally the bank, which I think was the State Bank of Remington, could not locate in Rensselaer. But the bowling alley was just south of the city limits, in an area that had had a post-office identity of Collegeville. So they claimed that they were moving in to serve not Rensselaer but Collegeville. The case when to court and the State Bank of Remington won.

But the victory was short-lived. The bank loaned extensively to farmers buying land that was rising in value. When the bubble burst, the land was often worth less than the loan, and the farmers defaulted. (Sound familiar?) One day I rode by and saw a sign saying that the FDIC had closed the bank. The next business day it was re-opened as a branch of Lafayette National. And when Lafayette bought the old Farmers and Merchants Bank, it left the space, which was then occupied by the present resident, the Kentland Bank.

When I moved to Rensselaer there were two banks and one savings and loan. One of the banks, State Bank of Rensselaer, is now a branch of National City.

The Farmers and Merchants Bank was bought out by Lafayette National. It is the only bank that does not have its drive up attached to the main office. It is a block away.
Indiana Federal Savings and Loan has gone through so many different owners that I cannot remember them all. It was a case of a big fish swallowing a little fish, and then the big fish got swallowed by a still bigger fish. The current big fish is 5/3rd Bank, which started in Cincinnati. Among previous owners were Pinnacle and Civitas.

After the barriers to entry came down, two additional banks moved to Rensselaer. The first, the Peoples State Bank of Francesville, after a few years merged with another small bank, I think in Kentland, and now is Alliance Bank.

The other seems to be unmerged, the Demotte State Bank, which has only been here about a year. I suspect its nice new office may have been an incentive for the Kentland Bank to build its own new structure.

So we have five banks in a little town of about 5000 people. You might think there would be no need for any other financial institutions. But we also have an office of the Farm Credit Services. I really do not know what it does.

And we have two payday loan places that make loans to people who do not have credit cards

If you think we have a lot of banks, you should see how many churches we have. Maybe another time.

(I may have gotten a few names wrong--there have been so many different mergers and acquisitions.)


Forbes has an article about which majors pay a lot:

Economics does extremely well, coming in at number two. (See the link "In Pictures: Most Lucrative College Majors.")

Economics is the most popular major at Harvard and some of the other elite liberal arts schools. It is not even offered at many low-ranked schools. The results may reflect the quality of students who choose to enter the field more than anything else.

Saturday, July 5, 2008

Cruise Night

This posting is now at

Economics Podcasts

I have been spending considerable time updating CyberEconomics this summer.

As I have been updating the links in the alternative-and-substitute pages, I realized that I do not have links to interesting video and audio material. Of course, there may not be much of it. However, I had some boring tasks recently and spent time listening to two podcasts that relate to economics. One was an interview of Joseph Heath and Andrew Potter who have written a book called Rebel Sell. It was an excellent interview and the book sounded very interesting. They were using an idea that Robert Frank has argued in several books, that much of our consumption spending is for status, to argue that the counter-cultural left is not outside the consumer mentality, but very much in the middle of it.

The other podcast was an interview with Allan Meltzer, who is one of the mainline monetarists. It was long and the interview wandered a bit, but I have long been interested in monetary history. In fact, I reviewed the first volume of Meltzer’s A History of the Fed for Choice magazine. This one was part of the EconTalk series, which interviews many important economists.

Friday, July 4, 2008

Something odd

A couple weeks ago I was in Indianapolis and visited a park on the southeast side of town. There were some geese, and they had a little family. But something was not quite right. Click on the picture to enlarge it, and you should see what was odd about this family.