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The Baumol Effect and Jevons paradox are related

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Re: The Baumol Effect and Jevons paradox are related

#61

Post by TekMol »

nocoiner wrote: post #10
TekMol wrote: post #4

you accidentally knock a hole in your wall, it’s probably cheaper to buy a flatscreen TV and stick it in front of the hole What I recently did is that I 3D-printed an object with PLA that exactly fit the whole and just glued that in with assembly glue. What does the HN panel say? Is it a solution? Or does it have any downside?

I commend you for your imagination. Can I ask how you crafted the object to match the dimensions? I’m brand new to 3D printing and currently climbing the learning curve of printing itself but will want to start learning about doing my own modeling soon. The only criticism I’d make is that patching drywall is dead simple and cheap and so your solution seems possibly a bit overengineered (and, while I’m at it, that And…

The hole was of simple enough shape that I could just design it manually. I used SCAD, which is kind of a programming language supported by some tools that can convert it to STL.

Re: The Baumol Effect and Jevons paradox are related

#62

Post by AndrewDucker »

parpfish wrote: post #57
missedthecue wrote: post #52

Earlier quoted context omitted.

Daycare economics are just brutal. It's insanely expensive to pay for, the caregivers make peanuts, and the owners are always at breakeven if they're not explicitly non-profit.

so... where does the money go? is it insurance or have duplo block prices just gotten really out of hand?

Let's say 4 kids per carer, 10 hours per day, minimum wage of £12/hour, an overhead multiplier of 3 (to cover rent, maintenance, insurance, taxes, sickness cover, etc), and you get to £72 per day per child.

Or about £1,500 per month.

Now, you can increase that to 8 kids per carer with older kids, but that's really stretching things if you want to run at all smoothly.

Re: The Baumol Effect and Jevons paradox are related

#63

Post by imtringued »

meken wrote: post #9

> If you can make $30 an hour as a digital freelance marketer (a job that did not exist a generation ago), then you won’t accept less than that from working in food service. And if you can make $150 an hour installing HVAC for data centers, you’re not going to accept less from doing home AC service. Plenty of people work jobs for less money because they enjoy the work more. I’m not sure if it’s worth reading what fol…

I would have made a different argument. Often the "instantaneous" wage is high, but you're never told the volume. The data center HVAC job will be done one day and you'll have to wait for another data center to be built and possibly even move there.

Re: The Baumol Effect and Jevons paradox are related

#64

Post by BobaFloutist »

mushufasa wrote: post #45
huevosabio wrote: post #24

``` Each of these phenomena have a name: there’s Jevons Paradox, which means, “We’ll spend more on what gets more productive”, and there’s the Baumol Effect, which means, “We’ll spend more on what doesn’t get more productive.” ``` I don't think that's exactly right. Jevons says "we consume more on what gets more productive" and Baumol says "the unit cost increases for that which is less productive". The typical examp…

Another way to think of this intuitively is simple economies of scale. Or volume discounts if you work in sales. When you buy 10,000 handbags you pay the wholesale price whereas buying a single handbag can be quite expensive. If there is way lower hose demand (volume of sales), the horse producers will have to charge a higher price per horse. Thus, society in aggregate spends way less on horses while the price of a h…

Which interacts strangely with supply and demand and production costs, in a way that makes it often difficult to predict the final unit cost until you actually go out and try to buy something.

Chopped vegetables take slightly more labor to prepare and are worth slightly more to most people, because they're easier to use, despite usually having slightly worse flavor, so they're usually sold at a slight premium. I don't know, but if I had to guess, I'd assume they're a more popular product.

Unflavored whey protein is strictly cheaper to produce than flavored, but it's a less popular product, and usually the people looking to buy it are slightly more informed and higher income, so it's priced at a premium.

Neither of these violates the laws of supply and demand or volume discounts or anything, but you could reasonably predict any result for either of them and be wrong.

Re: The Baumol Effect and Jevons paradox are related

#65

Post by mushufasa »

BobaFloutist wrote: post #64
mushufasa wrote: post #45

Earlier quoted context omitted.

Another way to think of this intuitively is simple economies of scale. Or volume discounts if you work in sales. When you buy 10,000 handbags you pay the wholesale price whereas buying a single handbag can be quite expensive. If there is way lower hose demand (volume of sales), the horse producers will have to charge a higher price per horse. Thus, society in aggregate spends way less on horses while the price of a h…

Which interacts strangely with supply and demand and production costs, in a way that makes it often difficult to predict the final unit cost until you actually go out and try to buy something. Chopped vegetables take slightly more labor to prepare and are worth slightly more to most people, because they're easier to use, despite usually having slightly worse flavor, so they're usually sold at a slight premium. I don'…

The key concept here is that the demand is mostly exogenous changes; people demand fewer horses because horses are no longer as good of a product. The whole supply/demand curve for horses shifts.

Re: The Baumol Effect and Jevons paradox are related

#66

Post by seg_lol »

missedthecue wrote: post #52
nocoiner wrote: post #32

Earlier quoted context omitted.

The modern day example that really made Baumol click for me is child care, particularly day care. It’s a highly labor intensive with basically minimal opportunities for productivity enhancements (due both to regulation and parental preferences, as well as just baseline sheer human decency). As the rest of the economy becomes more productive, the relative cost of child care goes up and up and up - which is why we now…

Daycare economics are just brutal. It's insanely expensive to pay for, the caregivers make peanuts, and the owners are always at breakeven if they're not explicitly non-profit.

Can you explain those numbers? How is it that everyone has it lousy?

Re: The Baumol Effect and Jevons paradox are related

#67

Post by missedthecue »

seg_lol wrote: post #66
missedthecue wrote: post #52

Earlier quoted context omitted.

Daycare economics are just brutal. It's insanely expensive to pay for, the caregivers make peanuts, and the owners are always at breakeven if they're not explicitly non-profit.

Can you explain those numbers? How is it that everyone has it lousy?

US Big City numbers. I'm generalizing, but these are broadly accurate.

- employees all-in-cost is ~$5000 per month paying $20-something an hour (they will be hitting OT as well, because they arrive before dropoff and stay after pickup). Typical maximum legal ratio might be 5 to 1 kids to carers depending on age. This means just for basic labor, every parent is paying $1000 a month.

- Next there is commercial rent. In a metro area, easily $5-$10k a month. Amortize that across 50 kids and that's another $200 a month.

- 2 meals + snacks daily. Adds in another $250 a month per kid assuming $11 per day per kid. More if you're prioritizing healthy fresh foods and not prepackaged garbage.

- Liability insurance which is very costly (insurers dont love cases involving dead or injured 3 year olds!)

- Utilities in a building that houses 50 people for 200+ hours a month.

- Throw in all the other costs. You have the admin costs of running a business like accounting and billing, and you've got to buy diapers, replace worn-out toys, and purchase endless crayons, and so on.

By the end of it all, you're looking at very slim margins working 55-hour weeks, your employees are paid barely more than a barista, and the parents are taking on a second mortgage with every kid.

Re: The Baumol Effect and Jevons paradox are related

#68

Post by CGMthrowaway »

huevosabio wrote: post #60
CGMthrowaway wrote: post #48

Earlier quoted context omitted.

Going back to econ 101 & supply/demand curves: Jevons describes the supply curve moving out, resulting in increased quantity Baumol describes the supply curve moving back, resulting in higher prices

Yes, and in while Jevons is obvious why (efficiency changes the supply curve), Baumol is less apparent because the cause is more indirect.

Indirect only if you think opportunity cost is "hidden" (which it often is the way people prefer to look at things)

Getting to Yes, BATNA, Etc. In an efficient market the price of Thing A is exactly equal to what you'd pay for your best alternative Thing B (assuming you can find an offer for your bid)

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