U.S: Predicting voter trends through supermarket preferences

From the Economist:

Some years ago David Wasserman, an analyst with the Cook Political Report, spotted a way to predict the political leanings of any given county: check whether it is home to a Whole Foods supermarket, purveyor of heirloom tomatoes and gluten-free dog biscuits to the Subaru-owning classes; or to a Cracker Barrel Old Country Store, a restaurant chain that offers chicken and dumplings and other comfort foods to mostly rural, often southern customers. Mr Trump won 76% of Cracker Barrel counties and 22% of Whole Foods counties, the Cook Political Report calculates. That 54 percentage-point gap is the widest ever: when George W. Bush was elected in 2000 it was 31 points. Eight years later when Barack Obama took office, it was 43.

This is super interesting. I wonder if similar preferences are revealed by supermarket choice in Australia. In the U.S, the differences between Wholefoods and Cracker Barrel - and their respective markets/ target consumers - are pretty stark. The former markets itself as a clean, organic, niche (yet pricey) alternative. On the other hand, Cracker Barrel is the supermarket of the 'old American' consumer. Therefore, voter preferences between their consumers are likely to be more distinct.

In Australia, the two dominant supermarkets, Coles and Woolworths (combined market share of 69.8%, according to recent research by Roy Morgan) have few noticeable differences. In fact, their  marketing and pricing strategies tend to mimic each other. So perhaps it would be unlikely that there is any political preference between Coles and Woolies. Aldi, on the other hand, could reveal voter preferences-  the emerging discount retailer is thus far the biggest competitor to the Coles/Woolies duopoly with a distinctly different brand.

I wonder if certain groups of Australian voters have any particular supermarket allegiances. Do One Nation voters swear by Coles/Woolies due to their distinctly 'Aussie brand'? Are Liberals secretly discount shoppers? Are Greens' preferences not revealed in the data at all, because they grow their own food?

I will research this and update. Watch this space.

Links - 22/01/17

1. High blood pressure isn't the "disease of affluence" after all. 

2. Trump's rule and Berlusconi. The similarities between Trump and Berlusconi, relative to their leadership, really is striking. This article also helps shed some light on what I call the "Berlusconi Boggler" - why Berlusconi was in power for so long and why people continued to vote for him dispute his numerous corruptive and illegal scandals. (If Ronald Reagan was known as "Teflon Ron", this man was platinum - encased bullet-proof glass.) Everything I have read so far relies on the idea of an entirely forgiving and traditional Italian culture, but 'anecdotal' research is hard to measure.

3. Challenging the 'Edward Snowden as defiant revolutionary narrative.' Article (from the Economist) explores the perspective of both sides: Snowden's fans and foes.

4. Italy's tax on shadows. This really is desperate bureaucracy at its finest. It seems as if a shadow is being considered some sort of negative externality,  and those who choose to cast a shadow must pay a tangible price for the cost the shadow places on others. Desperate times:

The best thing about this policy (if you’re the government) is that taken to its logical extreme, you could charge everyone a fee on sunny days as unless you’re a vampire, you probably are using public land by casting a shadow.

5. How Iceland drastically reduced rates of drinking and drug intake in teens.

Mexico's card in the Trump v. Mexico debacle

From the Economist:

In 2009, after America blocked Mexican lorries from operating north of the border—to protect the jobs of American drivers—Mexico imposed tariffs on nearly 100 American products, from Christmas trees to felt-tipped pens, choosing industries with clout in congressional districts whose representatives had a say in the dispute. The American block was eventually lifted.

 A good thing to remember here is that Mexico isn't completely hopeless against Trump-style strongman policy. Yes, they are heavily reliant on America - to put it simply, bilateral trade between the Mexico and the U.S is responsible for half of the former's GDP.

But geographical and geopolitical closeness means that the two countries are inevitably tied. It would be impossible to hurt one without hurting the other. According to the Economist, the "design, manufacture, and servicing of everything from appliances to medical equipment is spread across both borders" - approx. 5 million American jobs depend on trade between America and Mexico.

Despite Mr. Trump's proposed policies, it is impossible to erase the fact that the two countries are literally; physically connected. They're literally on the same expanse of land. With this comes  a symbiotic interdependence, spanning over two centuries, and no "impenetrable physical wall" is going to change this.

Creative Employee Incentives

Recently I travelled overseas and made a stopover at Kuala Lumpur International Airport. I've travelled there a few times and visited the same little circle of restaurants. This time I noticed signs at the front of each restaurant:

"If no receipt is provided with your order, your order is free."

What an innovative way to ensure that your employees aren't shortchanging the customers (or the business)! One technique used by thieving employees is to not ring up the order and pocket all the money.  In another scenario, the employee rings up the order on the register for less than the real price and instead pockets the difference.

Say you order a hamburger for $5 and a soft drink for $3. Said thieving employee, in the first scenario, doesn't ring up the full order by providing a receipt and pockets the $8. In the second scenario, the employee could 'forget' to ring up the soft drink and only ring up for the $5 hamburger, thus pocketing $3 change. Bear in mind that, particularly with older registers, it can be difficult to track inventories of goods.

By providing free meals when no receipt is given, businesses are creating an incentive for customers to monitor their purchases and act as a check against the employee.

I live in Australia and this system is news to me. I believe that there is a newer type of cash register - generally widespread in Australia - that have a more efficient monitoring system and thus there is no use for this technique. But when I'm in Kuala Lumpur, I always hope that the employee forgets my receipt... but they never do.

Links - 15/01/17

1. "The 70-Year Sticky Price." (podcast)

2. The perils of practicing yoga in Russia.

3. Bernie Madoff dominates the hot chocolate market in prison. A natural businessman.

4. The Krispy Kreme black market. Just goes to show that if there's a demand for something, that demand will eventually be satisfied by the market:

"The business, whose name calls to mind notorious Mexican drug cartels such as La Familia Michoacana, survives because of the obsession many Mexicans have developed with Krispy Kreme’s signature recipes."

5. "Why hasn't the politics of immigration in Australia gone feral?" The most concise and thorough analysis of Australian political discourse of immigration I've read to date.

The economics of football: the $89 million dollar question

With all this hoo-ha about Diego Costa's transfer drama, it got me thinking about Carlos Tevez. About a month ago, the famed Argentinian footballer - who once graced the pitches of Manchester United, Manchester City and Juventus - joined slightly less famed club Shanghai Shenhua for $89 million US dollars. It makes him, a 32 year old with at most 5 years left of playing time, the 6th most expensive player in the world.

From the Guardian:

That hefty price tag would make Tevez the world’s sixth most expensive player, behind Paul Pogba, Gareth Bale, Cristiano Ronaldo, Gonzalo Higuaín and Neymar.

Tevez is also in line to become the sport’s highest paid player with the striker reportedly earning around £615,000 per week on a two-year contract with Shanghai Shenhua.

The fact that an aged (by football standards) 32 year old with at most 5 years left of playing time was sold for such an exorbitant fee, even considering today's footballer prices, boggles me.

Basic economics 101: price is determined by demand and supply. Competition and thus higher demand drives up the price. Similarly, constricted or lack of supply has the same effect. This is why top level players like Messi in their prime are worth so much - there is a high demand for their services, and a very small supply of people with his skill set, age, ability and commercial potential.

Footballer prices also share similarities with stock prices: their value is partly based on future valuations in terms of increasing 'returns'. Thus the $116.4 million price tag of Paul Pogba, the most expensive player in the world: he displays the potential to be one of the best players, and the return on investment is likely to be high.

The case of Tevez seems to completely defy all of the above.

For one, demand for Tevez cannot be that high. The transfers of players at his price point are often accompanied by flurries of commentary and price wars between clubs, feeding journalistic fervour for weeks. While journalistic interest doesn't result in higher demand, it is an indicator of high demand. Tevez's transfer came entirely out of the blue.

To compare, below is a graph detailing the interest over time of Paul Pogba, measured by the number of google searches.

Paul Pogba's search interest over time

Numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. Likewise a score of 0 means the term was less than 1% as popular as the peak.

As the above graph shows, preceding Pogba's eventual sale on August 9th, there was a significant upward trend in search interest.

Compare this to Tevez's search interest:

Carlos Tevez's search interest over time

 Tevez's search interest was sudden and steep within only a few days. Even then, interest at its peak was only 63 whereas Pogba's peak was 100. 

A more striking visualisation is depicted below. Pogba's interest is in red, while Tevez's is in blue. 

Tevez vs. Pogba Search Interest

So demand and competition between clubs for Tevez was seemingly very low. Moreover, Tevez, at 32 years old, is a declining player. He has very few years left of prime playing time. Perhaps there is a shortage of quality strikers in the market - but not that many. His value will only decrease, so why spend all that money? 

I think the answer to this question lies in examining the situation of the buyer, Shanghai Shenhua. They belong to an emerging league that is attempting to attract high-profile players in order to increase the commercial viability, recognition and quality of the league. 

From their perspective, Tevez is highly appealing. Though he may be ageing and past his prime, there are few players with his commercial value. To Shanghai Shenhua, he is a valuable asset. 

Moreover, Tevez was only in the early stages of his contract, meaning that his 'release clause' was likely very high. In order to sign him, Shanghai Shenhua would pay a premium. Add in agent, club and other assorted fees and the price becomes only higher. 

It's difficult to entice a player like Tevez to the Chinese league that Shanghai Shenhua belongs to, given the poor reputation, reputed corruption and playing quality of the Chinese Super League. The incentive must be particularly high for Tevez to be tempted, hence the €615,000 weekly wage (before tax). 

The real winner of the situation (although Tevez is no doubt satisfied) is Boca Juniors. Indeed, they sold an ageing (but beloved) player for a record fee. In a statement announcing his departure, they said: "Good luck Carlitos. You will always be in our hearts." And our wallets, no doubt...

Another weird case study of soccernomics!

The importance of social values within productivity

This is from a recent article from Thomas Piketty's blog on Le Monde:

"...it does appear to be clear that one of the aims of the growth in productivity in the long term is to enable the benefit of more time for private and family life, and cultural and recreational activities, and that the trajectories of France and Germany seem to give more consideration to this aim than those of the United States and the United Kingdom."

This section is interesting to me, in that it suggests that allowing for the consideration of social values  (through shorter working days/hours) can significantly enhance productivity. I thought it was very much the opposite - that shorter working hours are an obvious lag on productivity, because shorter hours = make less. Turns out 'intangible' social benefits such as more family time can actually make you work harder. Who would've thought...

An explanation, if anybody is interested, is below. The article (a good read) goes into much further depth.