Gunnar Nelson, Chapter 2, Question #6

Like in Nicks post, a passage that struck me as interesting was Wheelans fact of adverse selection. Wheelan's example of adverse selection was with teachers. Teachers in America do not receive pay that correlates with their merit. Instead, pay is determined by experience and years of schooling. First of all this can surface issues regarding the qualilty of education that American students are receiving. But first, Wheelan describes the astounding data. His data states that the brightest individuals "shun the teaching profession at every juncture" subsequently the "brightest individuals" are least likely to choose a major in education. This seems contradictory, wouldn't we want the brightest individuals teaching are students? 

Tieing this into the overall theme of the chapter, incentives are important. As shown in the example above, those who deserve to have the role of a teacher are being paid the same amount as those who do not deserve the position. This absensce of incentive (perverse incentives) leads to those teachers who are qualified to either not consider teaching as an option, or do very poorly or "the minimum" amount of work. 

"Human beings are complex creatures who are going to do whatever it takes to make themselves as well off as possible." Most of us as humans are going to do what is best for us or our natural inclination, before caring for the consequences on others. regardless of the consequences upon others. With the teaching example, lower incentives lead to lower work requirement/ ethic, which can further lead to a lowering of work ethic by their students, and can allow for a lesser quality of education.

Jonathan Webb, Chapter 2, Question 6

    The passage or passages that stood out to me was how incentives matter. It's common sense that the higher the price is the less people will buy or like he said, if someone works on commission, most likely they'll work harder. But him giving many different examples of the subject really helped me understand it a lot more and made it more interesting. The examples he gave about "perverse incentives" were very interesting. Just the fact that how simple you might think fixing one problem can be, can turn out hurting many people that you did not think could happen. The Mexico example he gave, just have a day where you can't drive that certain car. Well people responded totally different to what they thought would happen and it turned into a bad incentive. That's crazy. Knowing how important it is to go in depth with solving certain problems (that might seem simple) can have have a dramatic change on that certain outcome.

Olivia Barr, Chapter 2, Question 5

The issue of how to make the pay of teachers work as incentive to be a teacher is rather controversial. I think the pay of teachers is important, and thus a subject of controversy, because good teachers, and education are paramount in the future success of our nation, which leads to people having very strong opinions about the solution to the problem. The pay of teachers is often low, and generally unrelated to the skill of the teacher, thus there is very low incentive to be a teacher, outside of altruism, or an obligatory feeling about neutering the minds of youth for the future success of your nation. This is a tricky topic, because it has been found that the smartest students do not tend to major in education, and those who go against the tendency, and decide to major in education most often are the ones who actually never go on to be teachers. This is because top students often are interested in making a lot of money, because if you could be an anesthesiologist and make about $350k a year, or be a teacher making an average of less than $60k per year, it would be outside your rational self interest to be a teacher. Furthermore, once someone becomes a teacher, there is little incentive to continue being a teacher because there is little relation between teacher quality and pay; this leads to the good teachers quitting to earn more money, and the bad teachers, continuing to be bad teachers, and make the same amount of money. I think the government needs to create, and implement, a solution to this problem because quality education is one of the most important building blocks for the continued success of the United States, as well as the rest of the world.

Question 6 chapter 2 Nick Terlizzi

In the second chapter of Naked Economics a passage that stuck out to me was american education systems and how teachers are payed. I think the idea that school districts or teachers don't get payed based on productivity doesn't logically make sense. Why should a teacher who has lower teaching capabilities or skills get payed as much as someone who does? In my old school district, districts actually were funded based on productivity. Each public school in the state took a tests called the MCA. These tests measured the intelligence of each school and how much a student was learning at their school. This gave the state an idea of who they should be funding due to the schools productivity on enhancing and improving the quality of education the students are receiving therefore gaining more intelligence. Overall the standardized pay for teachers around America is leading skilled teachers to switch job fields because they feel they aren't receiving what they deserve while unskilled teachers think opposite and stay at the position. Lastly personal incentives lead to educational systems suffering.

Darby Quast, Chapter 2, Question 6

The thing that stood out to me the most while reading chapter two was the issue of trying to move money from the wealthy too the poor.  There are many ways this is trying to be accomplished and none seem to be working. Having high taxes on corporations lower their incentive to invest in plants, research and other things that would produce economic growth.  While the tax could give more benefits to disadvantaged people, it discourages the kinds of investments that could make them better off.  Another example would be programs like welfare.  By giving people generous benefits while unemployed, it lowers the incentives to find a job.  The earned income tax credit was an idea created to try and solve this problem.  Subsidize low- wage workers so that their total income is raised above the poverty line.  Doing this it raises the incentive to work immensely but offers no aid to people who cannot find a job at all.  Not all government benefits go to the poor either.  Social Security and Medicare are given to all Americans, even the very wealthy.  One problem that is cause by these programs, is by giving a guarantee of benefits in old age, people may be less likely to save their money.  The wealth gap is a complicated issue that may never be solved.  Like Wheelan said, we live in a country that is able to send a man to the moon yet still has people living in the streets.

Sophie Gunderson, Chapter 2, Question 6

I've always known that behind everything we do, we have motives. Whether they are good or bad, they are present with every action we take no matter how small. In chapter 2 of Naked Economics, Charles Wheelan addresses this fact precisely. The motives, or incentives, he discusses affect our everyday thinking and acting. 

This chapter begins with an example of the value of a black rhinoceros horn and how as the species becomes more endangered, the price of the horn goes up therefore more hunters will slaughter them. In other words, as the price of something goes up, the incentives of a person tends to grow as well. Short and sweet, "Incentives matter (p.34)". As this phrase stuck in my head as I continued to read, I could not help but start to compare us humans to dogs. When dogs learn that when they sit, they get a treat, they will sit. When they learn that barking will get them to come inside and thus get a treat, they will bark. I kept thinking that humans essentially have the same base for motives as dogs. We do things that benefit us as do dogs. 

With this thought it mind, I found it humorous to read Wheelan saying, "Human beings are complex creatures who are going to do whatever it takes to make themselves as well off as possible (p.36)". Out of this entire chapter, it was this quote that struck me the most because of the train of thought I obtained previous to reading it. Although humans do have a bagillion times more brain power than dogs, at the core of it all I can't help but wonder if it all boils down to the same natural instinct of the best incentives for yourself.  

Zach Du, Chapter 2, Question 6

In Chapter 2, Wheelan talks about how incentives affect the economy: people often have "similar but not identical incentives, the distinction between similar and identical can make all the difference"(43). For example, on the sell side of an real-estate agency, the ideal scenario is: the higher the price you sell your house, the more money the agency will make. But in real life, the incentive does not always match the case. Suppose you want to sell the house for $100,000, your agent can easily sell for $80,000 in a day; on the other hand, your agency can sell the for $120,000 to get both of you a better price in a month. Though the second option can bring both of you more money, selling at a higher price means the agent has to work twice as hard as the first one, which is definitely not the best choice for your agent. This example illustrates that people's incentives are important, and always be aware of the difference between your incentives and others, since it might affect you in many different ways in real life.

Angela Scharf, Chapter 2, Q.4

The author stresses the use of incentives to fix problems. Whether we address it or not, self-interests run the economy; people are more likely to work harder and do a better job if they're benefiting more.
One problem that desperately begs for incentives is the job market in education. Teacher's salaries, or at least for public schools, are for the most part determined by factors that are irrelevant to the performance of the teacher in the classroom. This is a problem because those students who have the potential to be great teacher take other jobs because they're following the higher pay. The brightest students don't always go into education because they most likely excel at other things, and teachers don't get paid enough for the work that they do. Incentives could fix this. If students had a more persuasive reason to become teachers, they would. This could potentially create better schools, generate better test scores and produce more intellectual students in general.
The problem with incentives though is "the law of unintended consequences". With the example of the smog over Mexico City, detailed analysis must be performed before enacting a law such as the driving day limitation. When human behavior is manipulated, sometimes an unpredictable factor comes into play and skews the incentives towards an unpredictable outcome. Similarly, sometimes people act in a  way that is completely rational, and they're incentives are legitimate, yet they're worse off.
The prime example of this is the "prisoner's dilemma". The two men who were arrested for murder are both given the same incentive: if one rats the other out, the confessing prisoner will only have a three year sentence. The catch is however, if both men confess to each other's crime, then they're both sentenced to twenty some year in prison. And if neither of them talk, they'll both be out of jail within five years. Both weight the options and both act in rational self interest and rat each other out, so they're both sentenced for twenty-five years, yet they could've been better off if they kept their mouths shut.
Incentive is a powerful tool that can be utilized to manipulate positive outcomes and control behaviors in markets.

Griffin Pontius chapter 2 question 7

       Of the things discussed about in chapter 2,  the ideas relative to poaching and the preservation of rain forests really stuck out to me.  I've always been someone who has loved wiled life and nature, I never understood the incentive to destroy the rainforests.  After reading this chapter, that has changed, it makes sense to clear the rain forests for the sake of your survival.  That does not mean I condone it, but it does validate it in a sort of strange way.  I say this is strange because the very act of destroying the rainforest kills many more creatures than it does save.  But in the end, it's all about the incentives, everyone, by nature wants to live, and if the rainforests aren't attracting enough tourism to keep you alive, then the incentive without a doubt is to clear it for farmland.
       On the other hand, poaching I can understand a little better.  While again, I do not condone it, poaching can earn big money for ones family, that money could very well be the best way to keep poachers and there families alive.  Simply put, it's all about survival, and while it is a shame to see such majestic, and beautiful wild animals die, it should be understood that poachers are just trying to survive.

Maddie Binning, Chapter 2, Question #7

The analysis of incentives and how they can often be misused was very enlightening to me. While it seems obvious that offering benefits or restrictions on an act or product could persuade a person to do something, the complexities of how humans may respond are often overlooked. It seems that this is one of the primary reasons that economists are still essential to the functioning of a country. If requiring car seats for young children on planes could cause more deaths, that is a determination that must be made. It has introduced the deep analysis of human motive to me. As formerly mentioned, while it's obvious that humans react to incentives, the economic thought process brings in a new element in the consideration of alternatives, evasions and the like.

Elena Gutierrez, Chpater 2, Question 6

In chapter two Wheelan talks about incentives, and how they can impact an economic system. Incentives can be anything from implementing high taxes on cigarettes to promising a free 3rd good when you buy two. There can be both positive and negative incentives. A positive incentive rewards people finically for their choices And behavior, while negative incentives punish people finically. In chapter two Wheelan talks about how countries implement good policies by introducing positive or negative incentives. Wheelan gives the example of how London's government chose to deal with their traffic, and pollution problems. The city of London starting charging drivers for driving in certain areas at certain times. Year after year the city raised the fees and fines for not paying driving fees. Less and less people chose to drive and more and more people used public modes of transportation. This is an example of how negative incentives (driving fees) can influence behavior and the economy. 

Madison Webster, Chapter 2, Question 6

A main point that everyone seems to be reiterating is Incentives. The example that specifically stood out to me was the one regarding Burger King. Each BK restaurant as a small sign by the cashier that says, "Your meal is free if you don't get a receipt. Please see a manager". By doing tnis, Burger King wipes the burden off their chest of having to worry about their employees making undocumented transaction and pocketing the cash. Burger King is the principal in the situation while the cashier is the agent. The cashier, "...has an incentive to do a lot things not necessarily in the best interest if the firm". Burger King could potentially use a lot of money trying to monitor their employees for dishonesty. I think that a lot of time, people will act in their own self interest when making decisions and comitting actions rather than focusing on their overarching control. I chose this topic to discuss just because I believe it is very relevant to our day in age. I am at an age where I am starting to look towards the future and what I want to do for the rest of my life. There are incentives that sway me one way or another (one being money) and I will act in my own self interest.

Slightly off topic, but related to the chapter as a whole, I think that the NFL should pay their players with an incentive of money. I know that each player is under contract for a certain team, but the value of money displayed to the player should be the maximum amount they can recieve. However, only if they work hard will they recieve this maximum amount. If they don't perform to their expected ability, they should get less money. This idea came to me when I was watching the Packer game last Sunday against the Bears. Sam Shields had a mis-tackle on Martellus Bennett and didn't do anything to recover. Shields simply laid on the field and didn't get back up and run after him. Even though Bennett is 6'6, Shields still should have gotten up and tried to tackle him again. I believe if players had an incentive to strive for, they would play at a higher level and at the entirety of their ability.

Miriam Scheel, Chapter 2, Question 4

A main point of this chapter is to solve problems of market failure by getting the "insentives right". When a third party benefits from it without contributing to it, or the other way around, that third party pays the cost, a market doesn't work as it is supposed to. Some individuals may take higher risks because if they fail it is not them who will carry the entire cost; some may not do what would be considered best because their own benefit would be too low. In manny of these cases a solution could be reached by giving these indivuals insentives to do what would be best for society. If doing the best for society is also doing the best for yourself why wouldn't you do the best for society? 

An example Wheelan gives is the fish market: right now the fish is public property and every fisher wants to fish as mutch as they can because it is neither helping themselfs (less fish means less money) nor helping the fish population (if they don't kill the fish the fisherman after them is going to). The fishermen have no reason to care for the preservation of the fish. The result is overfishing the sea and reduction of the population. (And the government is not helping the case by keeping the fishermen in their business who would have to quit without the subsidies)

 

But a solution does exist. In the lobstering community of Port Lincoln licenses where sold: one license per trap that can be layed out. That does not only limit the amount of traps that are in use, but also provides the lobstermen with the right insentives to take care of the lobster population by enabling them to resell their licenses. That works because the value of the license is directly connected to the profit that can be made by using the traps. If you can make a lot of money selling the manny lobsters you caught, you pay more money to get the license to do so; if the lobster population in this area is so small that not manny lobsters can be caught with one trap, you are less likely to make a lot of money in that business, and therefor less likely to pay a lot of money to go into that business. The lobstermen now want to preserve the lobster so that the licenses they have now will be worth as much as possible when they want to sell them in the future.  

Julia Carle, Chapter 2, Question 6

One passage of the chapter that really stuck out to me was when Wheelan was explaining "perverse incentives" and gave an example about boarding commercial airlines and driving cars with young children aboard. I learned that a "perverse incentive" is an incentive to get people to do something, but it totally results in the opposite way they wanted it to. This idea of "perverse incentive" and the example Wheelan gave readers really stuck out to me because then I started thinking about other examples in the world that had gotten a "perverse incentive". Wheelan was talking about how during the Clinton administration, an administrator tried to require car seats for children on planes. It sounded like a good idea to me, because then the children would be safer. But Wheelan went on to say that it could do the opposite effect and make children less safe, due to the fact that a car seat on a plane forces the family to buy an extra seat. Because the family would have to pay for the equivalent of an extra seat for the car seat, many families would opt to the cheaper alternative and just drive to their destination. By doing this, it endangers the children much more. Driving a car is much more dangerous than flying on an airplane, therefore having more families driving versus flying could result in a deadly result. It stood out to me most because it changed my mind about the issue. At first I was like, "yeah, let's get car seats in planes" but as Wheelan spoke more of the problems this would result in, I began to reconsider.

Max Hobrough, Chapter 2, Question 6

   In chapter 2 the idea of incentives that is given is to change somebody's reasoning for doing something by providing them with a solution in a way that benefits them and everything as a whole. By doing this you can actually create a completely new idea and concept that has potential to save anything from Black Rhinos to Russia from famine, which were some of the examples that the author gave us in this chapter.

   The most intriguing example the author gave in my opinion was the theory to save the population of the Black Rhinos. In the poor countries of Southern Africa there was once a population of  65,000 black rhinos and now there are less than 4,000, and this is all thanks to poachers killing them and selling them into the black market. What allows this to happen is the governments that are poor and full of corruption so there are scandals between the poachers and politicians, and the poachers in a way have power over the politicians. The reason all of these animals getting poached is because the residents of villages crops are getting damaged by the elephants so the solution is to kill them I guess. This was really sad because you could sit down and think of a large quantity of ways to solve this issue that are much more humane. The economists although want to keep everything the same but promote tourism in these areas because tourists would want to be able to see these rare animals in their natural environment. Then there would also be a way to get some of the profits from this tourism to end up in the residents hands, so they would be given money to protect their "investment" which is the rhinos. This idea is just awesome because everybody can benefit from this, except the poachers, because of the tourism idea can come a safari inspired hotel type of thing. Nothing even changes in the whole operation except the reverse of what was happening to the rhinos, they now have protectors with them. The whole of incentives could be a whole game changer for a lot of things if people would just take the time to work out a solution that could be properly executed and is possible.

Jonathan Webb, Chapter 7, Question 2

     On topic of investing and towards the end of the chapter where he mentions "Save. Invest. Repeat" and "Take risk, earn reward" defenitly affect your life. Saving and then investing have big affects on your life and if you just try to spend uncontrollably then you're going to have a hard time managing your money then and in the future. Also taking risk, if you play it safe your whole life, yea you might make money, but then comes the opportunity cost. What bigger stuff are you missing out on? That's why these two topics of a direct affect on you and your future. Both can also be on a daily basis and generally. By doing the two in a daily basis can determine what habits you create for yourself which can eventually affect your future.

Nathalie Heidema, Chapter 2, Question #7

What I learned in this chapter is why incentives matter and how you can use them to channel people's behavior towards a desired outcome. It's like from the law of demand- the more expensive something gets, the less likely people are to buy it and vice versa. We know that everybody wants to make himself better off, so we behave in our own (rational) self interest. So people respond to incentives in various ways, sometimes it is predictable and sometimes not. Wheelan talked about the "prisoner's dilemma" - They both got 25 years sentence by confessing the crime instead of 5 if kept silent. But as they thought about their own best interest and thought that the other would rat him out and so get a life sentence, 25 years seemed a better deal for them. They both behaved rationally but made themselves worse off. Also the government can get the incentives wrong. An example was Mexico City, which with its car regulation tried to fight pollution. But what happened is that people bought new cars or kept their old ones to avoid the limitations. Economics is therefore important so we can get the incentives right and that helps the system work better. Incentives simply matter.

Jona Bakke, Chapter 2, Question #6

One very interesting passage from this chapter that stuck me was, "In America, where much of our revenue comes from the income tax, high taxes discourage... income? Will people really stop or start working based on tax rates? Yes- especially when the worker involved is the family's second earner" (Wheelan 49). A New York Times columnist, Virginia Postrel, states that tax rates have become an issue of feminism because a family's second earner is often a woman. She explains a study that shows that when marginal tax rates of high income women dropped, their employment levels rose significantly.

This passage fascinates me because I had no idea that tax rates are playing such a large role in deciding whether someone, usually a high-class wife, has the opportunity to participate and find enjoyment in the work force. It seems wrong to deprive someone of this free choice, and it seems backwards that a family with two working parents might end up being worse off due to high taxes than if only one was working. This information is interesting to me and it broadens my knowledge of the effects of income tax rates.

Rita Hammer, chapter 2, question 4

I was particularly interested when the author talked about incentives. One example that creates significant issues was the incentives of teachers when considering their salaries. The amount to which teachers get paid is based off of experience and years of schooling, rather than performance. Wheelan says "this uniform pay scale creates a set of incentives that economists refer to as adverse selection." The teachers with the most talent are often times suitable for other areas of work, offering more pay. "The brightest of students are the least likely to choose education as a college major." Because of this, the people who educate future innovators are becoming people who weren't smart enough to do something else. Do we want these people teaching children who are someday going to have to solve global issues? This is where Wheelan points out the issue of paying all teachers the same amount of money. Not to mention, that it screws over well performing teachers who stay in the field simply because they love what they do. Wheelan says, "None of this proves that America's teachers are being paid enough." People are opting out on a necessary career in our society due to the lack of pay. Overall, the issue is that teachers are not being paid enough, and they shouldn't all be paid the same amount of money because essentially some are way more valuable than others when considering performance.

Griffin Pontius chapter 7 question 3

      Chapter 7, titled Financial markets, has one major idea that is identified throughout the chapter. If things are to good to be true, it probably is.  Right at the beginning the author talks about how some college girls tried a diet of ice cream and grapefruit in hopes of losing weight.  While that does sound to good to be true, it was.  While the consequences are not immediate or extremely detrimental to ones life (presuming they realize that the diet won't work.) 

       A less radical example would be insurance, while it is not required to have, it is a safety net for when things go wrong and should be utilized.  In the novel, the author gives an example of trees falling on people's houses.  The novel also says how one might lose his or her money to natural disaster, illness, disability, fraud, or theft, and it is human nature to attempt to minimize such things.  Our way of minimizing such things is insurance, while this can cost a lot of money, in the long term, say a tree falls on your house, you will be prepared.  While this is a frightening idea, it could very well happen. 

       Lastly the author gives an example of real estate where a 500,000 dollar house is for sale for only 250,000 dollars.  Immediately your impulse should be to contact your agent and find out what's wrong with it, if nothing is, it's to good to be true.  Why would someone sell a house for so little? More importantly, why would the agent tell you the house is fine, the real estate agent could easily buy the house and flip it for an easy 250,000 thousand dollars. The moral of the story is, if it sounds to good to be true, it most likely always is.  

Peter Webster, Chapter 7, Question 6

A passage that stuck out to me in Chapter 7 was "Invest for the long run." Wheelan's example about the casino operators who have to patiently sit through their customers winning the jackpot was great. The operators may have to sit through a couple painful pictures holding big checks they are giving up, but if they are patient enough, the operators will be the ones getting the big checks. This is the same deal as investing; patience is key. If you are smart with your investments and are sure you made the right move you just need to wait.

Madison Webster, Chapter 7, Question #7

After reading chapter 7, I realized how stupid I am. Insurance never crosses my mind. However, it is necessary. It's funny that this chapter was assigned for homework because just this morning I had a conversation about car insurance with my dad. He mentioned how much of a waste of cars were. You have them for about 8 years and spend a bunch of money regarding upkeep, insurance, gas, etc, and then it all simply goes down the drain when you get rid of the car. Public transportation just seems like a way smarter route. My dad informed me about the different prices my family has to pay for car insurance for each driver. This relates to what Wheelan says about the risk factor involved with insurance. The highest insurance is actually mine because I am a teenage girl driver so therefore it is more likely to get in a crash. I learned the reality that insurance really does save your butt when a risk overcomes your life.

Another aspect of the chapter that affected me was the section titled Save. Invest. Repeat.. I learned that is important to spend less than you earn to generate spare capital and therefore gain money in the long run. I save most of the money I recieve now by putting it away in the bank, but I could do a better job with investing. I bought a C.D. at the bank which was a safe investment to gain a minimal amount of money without the possibility of loosing any. The advice Wheelan gives is important to remember in the future.

Gunnar Nelson, Chapter 7, Question #6

Before reading this chapter, I never defined the word "borrowing" as a virtue. However, even after the first few pages of this chapter, I can see how it can be a useful resource. A passage that struck me as interesting and astounding is about Raising Capital. As a nation, America has been shaped on the idea of using money that is not ours to use, and sometimes money that we do not have. "... Visa and MasteCard indulge our eagerness to consume today what we cannot afford until next year (if then)..." After reading this I could not possibly see how borrowing money could be a good economic choice. However Wheelan goes on to explain in that same paragraph that borrowing makes all sorts of possible investments. Now this has really peaked my interest...how can he say in the same paragraph that borrowing money can either cause our ship to sink, or float.

"Modern economies cannot survive without credit." Wheelan goes on to a passage that I find to be his best support. He describes a woman, Esther Gelabuzi who is a widowed mid wife in Uganda with six children. Esther used a tiny loan (by Western Standards) to set up a clinic. And since the creation of the clinic, she has delivered fourteen hundred babies. This example proves to me that borrowing and using the borrowed money for legitament purposes can help to strengthen an economy. 

Elena Gutierrez, Chapter 7, Question 6

In chapter seven Wheelan makes it clear that this chapter is not a guide to making money in the stock market, but a guide on how the higher finical system of the stock market works. First off Wheelan writes about how capital is a necessity in finical systems. Wheelan also writes about how investment bankers invest in different stocks based on four rules. One of these rules is speculation. Wheelan made the point that most people analyze and make "investments" based on fluctuations and patterns. Sadly Wheelan also writes that the stock market doesn't always follow patters, and can sometimes be random. An investment a person makes based on recent data could still end up being a loss. Wheelan Proposes another rule that aids investment banker's in deciding what to invest in. The rule of diversity. Wheelan purposes that if a person invests in multiple stocks then there is a higher potential for finical gain, than if they invest in a single stock. 

Olivia Barr, Chapter 7, Question 7

After reading this chapter I have a greater understanding of how people fall victim to preposterous scams that promise high returns on very risky investments. Also, I have a broadened understanding for why things like insurance can justify being so expensive. Car insurance can be very expensive but that is because it is (most often) required by law, and it is also a reasonable and predictable cost to pay to protect yourself from (often unreasonably priced) unpredictable occurrences like when you rear end someone in an intersection going through a green light, and the person who intentionally caused the accident turns around and tries to file suit for damages. Insurance protects you from chance occurrences, that can not be predicted, but the price of protecting yourself is relatively low to the potential cost of the chance occurrence. That actually did happen to me, which is how this chapter relates to me. Because my parents pay for my insurance, we did not have to go through the court system, because our insurance would have settled for the cost of the damages. Although I understood how insurance worked, I never really had a clear description given to me, my understanding was mostly based on deductive reasoning (if I pay every month but nothing happens, then the money I've been paying is used to insure that when something bad does happen, I will be protected.) Before reading this I also didn't know that you could insure things other than health care, homes, vehicles, and kidnappings. Yes, kidnapping insurance is a real thing.

Chapter 7 Question 4 Nick Terlizzi

Some of the problems the author addresses he has a realistic and reasonable solution for them. The first problem is the issue of risky investments and how they can be great at times and leave you empty handed other times. He uses a story to parallel to the risky investments. He shares the story of the eating grapes and ice cream diet. He talks about how sweet it sounds and how unreasonable it really is. The problem is the people who joined didn't have any information that this diet was healthy and accurate. Many investors don't speculate or take further investigation in what they are going to risk. Although taking risky investments may one day pay off, there are many examples it does not and that is why the author also says invest for the long run and take things slow and easy and to not always be risky as much cause those risks may one day hurt you and you would have wished you went the safer way approaching investments. Another story about an issue is the story of pirates over seas. Many boats and trade ships are hi jacked or stolen or destroyed by pirates. This leaves the companies losing a lot of money. But a solution is insurance and backing up what you possibly could lose. The author uses the story of the oil company who took the safe way out and spent money on insurance and was in the end very grateful for that decision due to their ship being destroyed. The insurance company wrote the oil company a check for $70 million, a huge claim.

Harris Worthman, Chapter 7, Question 6

A couple years ago I told my mom that I wanted to go base jumping when I grow up to see what she would say. I just really suck as a person but that's besides the point. She looked at me, smiled, and said "well have fun paying for your insurance." I hadn't even considered that. Insurance costs more for those who partake in "risky" behavior. I was joking at the time, but I have since found the idea interesting and maybe someday I might take that leap of faith. After doing my research on the subject there is a common theme; that it's one experience you will never forget and the high you get from the adrenaline stays with you for a good week. That is as long as you live to see another day. Many base jumpers don't have a family to worry about and don't pay for insurance because of how incredibly high the cost is. The reason I brought this subject up is because chapter 7 talks about insurance and I noticed that this is an extreme case of a quick reward with a long term disadvantage. Which, in a way, resembles these passages from the chapter "...a new diet swept through one of the sororities...one could lose weight by eating large amounts of grapefruit and ice cream...I was fascinated that a very smart group of women had tossed aside common sense to embrace a diet that could not possibly work." I mean who doesn't want to lose weight by eating ice cream? The same goes for base jumping. Well... in a different way. Why would someone voluntarily put themselves in a certain death situation only to (hopefully) save themselves from it? Simple. They do it for the instant adrenaline rush they get from not only escaping death, but doing it with style. Changing the outcome from a worst nightmare to a greatest dream. This instant reward does not come without cost as I have already stated. As a matter of fact it costs A LOT. That's why so many jumpers don't buy life insurance. Insurance companies look at everything a person does to determine the price of the life insurance for that person. The "riskier" the behavior the person has, the higher the chance of death, death results in the company writing a check they don't want to and so insurance companies are well aware that base jumper's lives are hanging by threads... literally.

Angela Scharf, Chapter 7, Q.6

In reading this chapter, I found the parallel between "miracle weight-loss" diets and "get-rich-quick" schemes to be interesting. Like the new diet, people disregard everything they know about the basic principles of economics (nutrition) and fall for the scams that don't work. This raises the question however, how does one get rich in the markets? The answer lies somewhere in the correct investment predictions. The analogy of the grocery store checkout line reiterated the fact that people see the same data (a lady with coupons, or a man hoarding two carts) yet the shortest line may not be the fastest moving, and the coupon lady may be walking out of the store before you because of a cash register malfunction. Predictions are essential.
Another way to look at this issue is through the experiment testing investment decisions made by those with damage to the area of the brain that controls emotion, and a control group. The ones with brain-damage finished with 13% more money because of their inability to shy away at fear and anxiety over investments. This test shows that in a market controlled by humans, anticipating human mistakes can prove to be beneficial.
Essentially, the trick to getting rich in the markets is to analyze and predict the mistakes that humans will make in the market, then plan accordingly to put one's investment's ahead.

Darby Quast, Chapter 7, Question 6

One passage that I found very interesting in this chapter was about how people deal with risk.  From natural disasters to price of ground beef, people are willing to pay for certainty.  An example would be the health, life, and auto insurance industry.  Because people are worried about the worst possible outcome, they are willing to pay more than they will probably ever receive or need.  On average the chances of a tree falling on your car are pretty low, but what if?  By having the insurance it eliminates the "what if" factor and the person will know without fail, that he or she will be able to get their car fixed.  Having this certainty outweighs the cost of the insurance for many people.  An example on a much bigger scale would be when a French oil tanker was hit by a suicide bomber speed boat.  The insurance company ended up giving up 70 million dollars to cover the damages.  Again, the chances of this event happening were probably fairly low, but the risk was still too high to not buy insurance.

Zach Du, Chapter 7, Question 6

In Chapter 7, Wheelan explains the idea of get-rich-quick is impossible in real life scenario by illustrating an example of buying a brownstone in the Lincoln Park neighborhood of Chicago. If you've been searching for a brownstone house in this neighborhood for couple weeks, and the price range of these houses all between $450,000 to $600,000. Suddenly, you find one brownstone which has the price of $250,000, and it satisfies all your requirements including location, size and structural integrity. But the fact is you will never find a house like this in real life: 1. nobody would sell their house for half price when they are aware of the average price range in their neighborhood; 2. If the house actually this perfect, why won't the agency buy it for himself; 3. people will begin a bidding war for getting this house, which would cause the price rising and eventually match the average market price. So the example tell us that "the most basic idea in economics: you are trying to maximize your utility-- and so is everybody else."

Maddie Binning, Chapter 7, Question #4

The problems presented in this chapter revolve around the idea of accumulating funds. While get-rich-quick schemes have proven to fail, Wheelan offers many ways to positively impact your wallet. By raising capital and investing it well through diverse and in many cases risky investments, a person can significantly increase their wealth. However, anxiety and fear often keep people from making risky investments meaning they may very well come out with a profit but it will be a significantly reduced profit relative to the possible outcome. Additionally, because the same information is generally known by all, be wary of surprisingly fast and easy sources of cash -- they often are borne of misinformation and misconceptions.

Kiera Ziegler, Chapter 7, Question #7

    While reading this chapter I learned a few rules to investing. The first is, do not put all your money in one place. By doing this you never lose all your money at once; however the other side to this is that you do not really gain that much money all at once either. Another rule is that if you are willing, taking risks pays off in the long run. Non risky investments may not cause you to lose much money but you also will not gain that much either. Also investing your money for long periods of time and letting the market play out tends to have more successful result.
    This chapter helped me to understand what my grandparents do. We have a cabin on Lake Huron and my grandparents have our taxes attached to safe investments. This allows the taxes to be payed on a consistent basis by the investments. They are making money consistently but not large sums of money, they just need to make enough to pay off the taxes. With other money, my grandpa is on a board of trusties for a charity, he listens to what they invest their money in and why and then goes home and tells my grandmother to invest in that stock. They follows the rules that Wheelan brings up in this chapter. They have their money spread out and they take risks because they have been investing their money for over twenty years. This chapter gave me a deeper understanding of my grandparents investing.

Sophie Gunderson, Chapter 7, Question #2

It is scary to truely imagine how little young adolescents are taught about the nature of investing and the financial markets themselves. Throughout Chapter 7 of Naked Economics, I was able to learn more about these topics precisely. Although it seems like it will take many years to somewhat master and understand, Charles Wheelan makes many points of how relevant this information is to my life now and for the rest of it. Investments are occurring daily yet many of the investments that are made aren't necessarily the best decisions if they're made under uneducated reasonings.

The teachings of this chapter were portrayed through many examples. However, The example that stuck out to me most was of Havard's investment strategies versus his mother's. His mother saved. She saved most, if not all, of her money in the bank and got the same interest rate every year. Harvard on the other hand, invested. The university would either gain a large rate if the year was successful or would have a bad year and lose some of their investment. Overall, both scenarios were not completely ideal. Wheelan makes a point for us to save (like his mother), invest (like Harvard), and then repeat this cycle. When we take risks in investing, there is a strong possibility we could gain a reward.

Overall as I find myself rapidly growing up and entering what many refer to as the 'real world', I see the importance of understanding economics and investments more and more. Although Wall Street seems like a far off idea, I now realize how beneficial it could be in my life if I make wise investments and fully understand the nature of financial markets. 

Julia Carle, Chapter 7, Question #7

After reading chapter seven of Naked Economics, I learned many new approaches of financial markets. Raising capital, storing and making profitable use of excess capital, insuring against risk, and speculation all are new ideas. Raising capital, to me sounds like raising the price of stuff we use to make consumer goods. When the capital rises, the individual needs to borrow money in order to pay for the capital that will make the consumer goods. Another new aspect of the financial market to me was the idea of storing and making profitable use of excess capital. I knew what inflation was before this, but Wheelan gave a good example about the sultan of Brunei sleeping with billions of dollars under his pillow, and one billion dollars in 1970 is worth 180 million dollars now. Insuring against risk is another new aspect of the financial market that I was unfamiliar with. I learned that financial markets help us to minimize the chances of us facing financial ruin.

Taylor Bye, Chapter 2, Question #7

In the first week of this class, if not the first day, we explored the idea of rational self-interest which can so easily be confused with just plain selfishness. This chapter of Naked Economics addresses this issue of incentives and the idea that if we're paid more, we will work harder.
Wheelan quotes Adam Smith in The Wealth of Nations, in which he writes "it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."
This kind of logic makes me reexamine my actions and our actions as a society. In the Bible, it claims that money is the root of all evil and while I'm not sure working for one's own interest is evil, you could make an argument that it is not exactly the most moral.Why do we do our homework and why do we study? So we get good grades. Why do we want good grades? So we can go to a good school and college. Why do we want to go to a good college? So we can get a good job. Why do we want a good job? So we can get paid well. Society as a whole does come down to money but the important issue is what we do with that money when we get it? Are we going to be wise, so we can better ourselves AND others? Or are we going to be selfish?

Taylor Bye, Chapter 7, Question #4

In the 2009 film, The Blind Side, you hear Sandra Bullock's voice over as Leigh Anne Tuohy states this: "As any good housewife knows, you pay the mortgage first and then the insurance." She applied this metaphor to the wages of the quarterback and the linebacker. This anecdote is going somewhere, I promise.
Wheelan explores the risks that are taken when investing in any financial market. It's the idea that yes, you have to spend money to make money but you also have to be smart. Use some common sense! Always prepare for the freaky and unfortunate. Your mortgage is one very big investment that can be devalued very easily, as some investments made in the financial market. But even if your house does get greatly damaged or totally ripped apart, you have insurance that can help compensate. The problem of risk is solved by always making sure you have a back-up plan...insurance.

Nathalie Heidema, Chapter 7, Question #7

What I learned in this chapter is how the financial markets work. The financial instruments must be of some value so that buyer and seller found themselves better off after making the trade/deal. It's divided into four needs. The first one is raising capital. It means that we can borrow money in order to make investments. I found out that very little loans that can be provided to people in developing countries can actually fight poverty and help people start or create something of their own (like the birth clinic of the African woman). Secondly, use excess capital efficiently- make a profit of it by renting it to other individuals or companies. Next, risks are everywhere and we need to protect ourselves from them by insurances. Fourth is the speculation, in other words "betting on short-term price movements".

The basics of investments were pretty clear to me, the only thing that made me think more was the point "diversify". Wheelan suggests that the outcomes of the investments we make should be independent from each other (uses the example of flipping coin in this part).

A new idea I was brought to was the one with standing in the checkout line in a grocery store. I am always looking for the line which seems to be the quickest, but so do all of the other people. Everybody is looking for the same thing and so we allocate and act accordingly. "everyone else has access to the same information..."

Max Hobrough, chapter 7, question 6

      In chapter 7 Charles Wheelan really focuses on investing and how to be a smart investor. One of the most interesting examples he gave was the Harvard endowment and how that has become so large because of the risks they took when investing. Then the economy crashed in 2008 and Harvard lost approximately one third of the total endowment investment in the market. The author makes a personal comparison to the risky investing compared to his moms low risk investing which is done in a checking account. The colleges like Harvard can do these kind of investments because they do not need a quick turn around, they can keep the money in the market for years upon years. Some people may question the judgement for a college to just put all of their endowment money into the rapidly changing stock market, but when you look at is deeper it is not about the short term gain but the long term gain. Overtime this practice has lead Harvard to have one of the largest endowments for any college, and today this amount is around 36.4 billion dollars. This is just really interesting because of how smart these colleges are to figure out all of the economics behind this investing of enormous quantities of money and the market turn around. This practice is in a way only seen with colleges and instutions because they can afford to have short term losses and wait for the real pay day over time. That is because many people are very careful with their money and don't want to just risk putting it up into the air and waiting to see how much will come down.

Jona Bakke, Chapter 7, Question #7

In Chapter 7, I learned more about the nature of investing. Previously, I did not know much about the subject or what steps someone takes to become a good investor. At the end of chapter, Wheelan gives a few points of investment advice, although he promises to leave the more complex investment explanations to other sources.

The first piece of advice Wheelan gives is to save. If one saves his money, he can be the one to command rent from others. However, if he spends more money than he earns, he has to rent from others. Wheelan also explains risk and says, "Riskier investments must offer a higher expected return in order to attract capital. Those who take part in these investments are being paid more for the dangerous nature of the endeavor and therefore it may appear worth the risk. Wheelan also advises a diverse portfolio of investments so that if one plummets, all money is not lost. The final suggestion made by the author is to invest for the long run. He states that, "The odds are stacked in your favor if you are patient and willing to endure the occasional setback."If one quits he investment at the first downfall, he will never see the benefits.

This chapter introduced me to a new way of thinking about investing, which I did not know very much about before. I was not aware of these simple guidelines that make sense and seem very essential for success.

Rita Hammer, chapter 7, question #2

In chapter 7, the author focuses mainly on what economics says about getting rich quickly. Wheelan discussed an extremely important lesson about how to be successful when investing. He talked about how not opting out when the fear of losing money hits us. When investing in the stock market, something I know very little about, Wheelan suggests that it is key to stay put, and not sell immediately when something goes wrong. He provided several examples and analogys to back up the fact that one can earn more money by not making decisions based off emotions. The example that stood out most to me was the analogy of standing in line at the grocery store. Eventually the amount of time you wait every shopping trip averages out, and by remaining put you usually get through faster.
Another tip Wheelan stresses as important is taking risks. I always thought that by taking risks it was considered poor money management; however, the author proceeds to encourage his readers to take risks because "riskier investments must offer a higher expected return in orde to attract capital." For me this is challenging now, and will be in the future. It's hard to trust that eventually the risks will pay off. According to Wheelan, "you will be compensated for taking more risk. Thus, the more risky your portfolio, the higher your return - on average."  All these ideas/facts are important lessons, especially for the future when most of us are trying to become successful investors/money managers.

Griffin Pontius chapter 5, question 7

       Chapter 5 is titled economic information, and that's precisely what it talks about. However, while reading this chapter I drew a parallel with the examples that the author wrote about.  First, the author writes about a scenario in which two recent Harvard law school graduates are interviewing for the same job, one male, one female. The author argues that the male candidate should be hired over the female candidate because there is a lesser chance of the male leaving to start a family.   The overall story itself is not as important as one of the details within the story itself.  The fact is, both students are from Harvard, whoever doesn't get the job should acquire other oppritunity with relative ease.  That's because Harvard students have a reputation of being very good at what they do.  That's not to say other schools such as the U of M are bad, but Harvads worst students are consistently, a lot better than the U of M's worst students.  

      Later in the chapter, the author talks about McDonalds and why the firm is so successful.  The firm, as well as Harvard students, are successful for the same reason. Consistency. McDonalds is consistent in the sense that it will always taste the same, it will be open 7 days a week, and it will always have a clean bathroom. So while driving through Iowa, instead of stoping at Bobs Burgers, you will stop at McDonalds because you know what to expect.  The same assumption is made about Harvard students, it doesn't matter if they were top of their class at Harvard, the bottom line is they graduated from Harvard. Chances are you'll pick a Harvard student over a Westminster college student.

       In the end, reading this chapter has shown me how big how big of an impact consistency can have on a market, as well as economic success. Being someone who has an interest in being an entrepreneur, this chapter and the parallel I drew between these two topics has been implanted in my brain.  Especially in the case of McDonalds, personally I hate the food, consistently, but the fact of the matter is, that the consistency of the food those Golden Arches make, have the potential to make real arches, of solid gold.  

Kiera Ziegler, Chapter 5, Question 1

    The issues in this chapter greatly affect my life and especially my future. I very easily could be discriminated against in the future due to someone being afraid to hire me because I may chose to have a child. This fact frustrates me very much, because my employer is assuming what my future plans because that is what most women will want to do. It is a hard pill to swallow that it is possible that even if I am just as qualified for a job if the employer doesn't want to take a risk and trust me, I may not get the job. This issue, however, does not affect us only when applying for our job but it affects us daily. In the book BLINK, by Malcolm Gladwell, he talks about a car dealer that sells double the amount of cars then the average car sales man. His secret? He never profiles based on appearance and treats everyone the same with that same prices. He uses the idea like health care systems do, the money he loses with costumers that waste his time he gains back from the people who unexpectedly may be a serious buyer. For example the teen that walks in that mot people would dismiss may later come in again with his parents a buy a car.  
  Another issue in this chapter that will affect me in the future is the health care system. Heart problems of every kind run in my family. I would hate to be discriminated against by the health care system because of in issue that I had no say over, it is not something I can change. However, it does seem reasonable to me if I know about this condition in my family and do nothing to stay healthy to be discriminated against. In the future I know the issues of health insurance wanting our DNA and genes will be an issue that we will have to face and sort out. In my opinion I am fine with insurance companies having that information if it is used responsibly, it could help us all live healthier lives. For example if your family has a history of heart disease the company that you are insured by could require you to work out and maintain your heart health to the best of your ability. I know that my parents get a discount on the health insurance if they exercise and keep themselves healthy to the best of their ability.  

Maddie Binning, Chapter 5, Question #6

"We are so luxurious, we are arctic." This particular line struck me because of the peculiarity of it as well as the implications. In their culture, air-conditioning indicates quality in a way, just as ambiance and amenities indicate quality for us here. It goes hand in hand with branding. Even for Mcdonalds, the recent trend has been an increase in the quality of the fast-food locations themselves. Mcdonalds does not sell nice booths or modern decorative ambiance. At least not directly. However, the increasing quality of their locations helps to improve the branding of their already reliable company. If you not only know you're going to get a relatively good quality product, it can only improve the brand to make it feel less like a last resort, fast-food option. Seemingly unnecessary costs can often improve branding and in turn, sales.

Madison Webster, Chapter 5, Question #2

Wheelan discusses gender discrimination when it comes to being hired for a job. This affects my life directly mostly in the future when I will start looking for jobs. I believe that it depends on what job a woman is applying to. This past summer, I worked at the Minnehaha Summer Camps working with kids. I would argue that if it were between me and a boy, the director would pick me because females are associated with being good with kids. Later in life is when the real discrimination kicks in. This happens around the time of having kids. Companies don't necessarily seek out to hire women because they know that they are gonna have kids and then leave. I don't believe this is fair. Think about it, having a child is a gift and an action that involves both a man and a woman. Why should a woman get discriminated against just because she has to bear the child? A major example of where women are ignored, is at the position of the head of the United States, president. There has never been a woman president. Is it because they are not good enough for the position? no people will vote for them? people would feel insecure with a woman at the head? I don't know. I believe that woman are starting rising to their challenges and are acting with confidence when it comes to discrimination. All woman should be able to advocate for themselves, now and in the future. 

Scott Stewart, Chapter 5, Question 2

The Issue at hand, profiling, comes into our lives very regularly. As a white male I typically don't need to worry about people racially profiling me, however others in this country are discriminated against because of the color of their skin. However, the author of the book also talked about profiling stores, which I do all the time. Stores brand themselves so I will be more willing to pick them because I have a lot of information on the store. I am more likely to go to Wendy's than McDonald's because I know that I like Wendy's burgers more than McDonald's. Because all Wendy's burgers are the same I know that information is always true, even in another country. Another example of this is when I buy Gatorade over Powerade. I know that they are the exact same thing in my mind, but I associate Gatorade with being what the professionals drink, and what the victors dump over their coach after a big win. These companies brand themselves because that allows me to make a better informed decision about what I am about to get. Every time I go shopping I use branding to help me make my decisions (i.e. I know Febreze will get rid of that smell, but this off-brand stuff might not). Because I dont shop that often this doesn't affect me as much as others, but it still has a regular affect on me, now and every time i go shopping in the future.

Taylor Bye, Chapter 5, Question 2

The future. That dark unknown. That adventurous flight. That terrifying reality. And on top of that sits a mound of green paper slowly being sucked away from my reach. That's right....student loans.

As soon as I opened up to this particular chapter of Naked Economics, I was again faced with that horrific reality. The cost of an education is rising rapidly while the income of the common American, the one who is going to be attending these colleges, is staying stagnant or going down. It's like this week's lesson on supply in demand: demand increases...so does cost.

As I approached senior year and the prospect of college, I began to watch my plans and dreams morph with price resting it's ugly head above it all. This issue of the unknown most certainly directly affects me. The unknown is scary not just because we don't know if there's a step to land on as we fumble through the darkness but also because it can hurt you.

This chapter of Naked Economics encourages me still to find out every possible thing about what I want to do in the future because man, is it coming fast and hard. If the unknown can hurt me, then I want to make sure I charge into it with full armor.

Jonathan Webb, Chapter 5, Question 7

         After reading this chapter I have learned a lot more about Statistical Discrimination or "racial discrimination" as it says in the book. "Statistical discrimination is likely to be wrong in the specific case at hand and has discrimitory affect on a group" (107).  I learned for people with criminal backgrounds are better off having employers see there background information rather than seeing that their race is black and Hispanic and judging soully off of race. Think this was a great piece of information that can be useful in the future. And what he says towards the end about information being important, " Economist study what we do with it, and, sometimes, more important, what we do without it" (125).

      The other example he used with "how we use information" was insurance companies, mainly health insurance. He gave an example that happened to him how they made him do all these test to see if he's likely to be sick in the future and his family's health history. It was just interesting to read how insurance companies deal with cost by gathering as much information on people as possible. In money saving workd that makes sense, but I don't think that's right at all for these insurance companies to try to dodge people who they know will become very sick in the furture. It's that question of "when  is it too much information being collected", where do you draw the line?

Gunnar Nelson, Chapter 5, Question #5

The arguments and facts relayed in this chapter are very controversial. The topic that the author announces in the first paragraph is the Economics of Discrimination. Included in the argument are two main topics, racially discriminating as well as gender discrimination (specifically against females). Wheelan describes the thought process of a firm or companies view. If a young female is applying for the job, there are risks that would have to be taken where there would not be risks in hiring a male. The same can be said for race, Wheelan describes that minority races usually have a higher chance of having a criminal record. Like I said before economic discrimination is very controversal (and illegal), however it still happens. There are many people who stand against it and say that it is unfair for someone to be "judged by their cover." I personally think that it is a very difficult situation to be in. I also believe that it depends on the situation, you could take a chance and hire sombody who is a minority, who you would not usually hire, you are putting yourself, business, and reputation on the line. I think that it is up to the firm or business to decide who they hire. If them deciding who they hire leads to them not hiring you, then that is there opinion if they see you as a risk.

I was shocked at Wheelan's realization of advertising. The author uncovered the facts about the success at McDonalds, and the real life scenario. If somebody is driving away from their home and are looking for a place to eat, they are going to be looking for a place that they know and can personally trust to have "safe" food. McDonalds offers safe food, low prices, and every McDonalds is generally the same. My opinion on advertising is also cloudy. McDonalds, a widely known enterprise, has an extremely wide range of customers, and very many people know of McDonalds. However, the business going to McDonalds, is being taken away from privately owned, small food companies in the same general area. I see this as smaller companies being forced to close because of McDonalds widespread popularity. In my opinion this could also lead to Americans dependance of fast, cheap, and slightly less quality and unnappreciating the time and cost that smaller food companies provide. 

Olivia Barr, Chapter 5, Question 6

I though the section on branding was very interesting. It was relatable for me on many levels. For example, I would never eat McDonald's if I were somewhere familiar, where I could make a different dining choice knowing that the food would be of good quality, however, when I am traveling I sometimes find myself getting McDonald's or any other well known fast food chain, because I know that even if it isn't up to my nutritional standards, it will be safely prepared, and not awful tasting. Outside of the novel, I thought about applying the branding concept to brands like Lulu Lemon, and Nike. In the case of lulu lemon, people are willing to pay $14 for a headband, of similar quality to any other head band, just because of the fact that it is from lulu lemon. Additionally, in the case of Nike people will pay upwards of $120 for tennis shoes, a baseline price of $24.97 for running shorts, and up to $50 for a single pair of socks-- all because Nike is a popular brand, and has business agreements with many famous athletes, and athletic institutions. All in all, the section led to me taking a step back and realizing how ridiculous the costs of brand loyalty are.

Zach Du, Chapter 5, Question #6

“Indeed, we all profile in our own way. We are taught from a young age that one should never judge a book its cover. But we must; it is often all we got to see”(Wheelan 124). The writer proposed an interesting point: though people should not judge others just by their sex, race,clothing or age, everybody tends to do so. For example, the reader once was on a westbound bus. After couple stops, he was the only white guy on the bus. One African American old lady asked the writer if he was going to the Bulls game; People might say that the old lady made her assumption too hasty, she drew conclusion just by looking how did the writer dress and skin color. The amusing part is that the old lady actually got the right answer: Wheelan really was on his way to the basketball stadium. This example demonstrates that judging people by the stereotypes would not be the most accurate way to get to know a person, but sometimes it could be the only best way, since we only see limited things at once.

Harris Worthman, Chapter 5, Question 7

Can you put a price tag on a human life? The economists in charge of the doctors at many hospitals would say "Yes" despite how morbid it sounds. According to Naked Economics this happens all the time and many cruel and unethical decisions have been made to save money. Wheelan's first example portrayed a patient complaining about a headache, dizziness, and ear bleeding. The doctor prescribes aspirin after talking to his higher ups. This in itself frustrates me because if a parent acted the same way to his/her child it would be considered neglect and ignorance, but since it's a bunch of economists acting in this manner it's just considered business. Wheelan, in his second example, paints an even more horrific picture. He states that many stories exist of economists deciding to not allow life-saving operations to occur because of money. This means that those in charge of our health think of us as mere investments. If there is a low chance of "their" money being payed back they make a decision that only the patient, patient's family, or God himself can make–whether or not the patient should enjoy another day. $$$$$=EVIL

Darby Quast, Chapter 5, Question 2

The issue that was primarily discussed in chapter 5 was information, how much we have and how much we lack.  This issue is the source of many problems that have a major affect on society.  One example would be within the health care system.  When the average person goes to the doctor, they are at an extreme disadvantage information wise.  Because people know so little, it leaves them essentially at the mercy of the doctors decisions.  A person could receive too many tests, or to little with out realizing it.  The problem of information also comes up with insurance companies.  The amount of personal information should be able to have is an issue.  Should someone with a fatal disease in their family history not be given coverage? Do insurance companies have the right to that information? Another instance where information is causing problems is with employment.  With too little, it can cause problems like racial discrimination.   For example if criminal records are not required, African American men are less likely to be hired.  Whether it is the issue of too much information like with insurance companies, or with too little like with doctors and employers, it is something that is greatly affecting society both now and in the future.

Chapter 5 Q-7 Nick T

In Naked Economics chapter five the author spoke a lot about information and how useful it is to economists and overall society. The first example he brought up was background information on job candidates for women and black men. The job firm without taking any info will assume a woman wants to have a family therefore leaves or takes off time from work due to maternity leave. This leaves the job firm thinking the woman is not as profitable worker as a man due to them having to leave and possibly leave for good. Next was the discrimination on black men. 28% of black men have been sent to prison while only 4% of white men. Without doing a background check on the black man who is applying for a position, the firm can only suspect him of having a criminal background so they hire the white man. The last point he addresses that opened my mind about info was of insurance companies background checks and health checks on people applying for insurance. When receiving the info the insurance company charge according to the clients health, background, and history of accidents. This opened my mind to how important information really is to our world and to economists. Economists study and analyze information and use it to help shape the economy and  better the world around us.

Angela Scharf, Chapter 5, Q. 6

One passage that I found to be interesting was the section discussing health insurance and the distinction between providing an accurate insurance plan and giving up too much information. Technology is increase at such a rapid rate that a single strand of hair can completely expose the most detrimental information about oneself for example if one is predisposed to heart disease, cancer, and other various health issues (more detailed results to come with more advanced technology). If insurance companies gain access to this kind of information, they can determine whether a potential client is at risk for a significant disease even before the client, themselves know. I also found it shocking that with this information, these companies could turn away the clients at risk in order dodge paying a great deal of money, although I get why they would. Somehow the people that need health insurance the most are remaining uncovered, and the most healthy people get the best insurance, although they most likely won't need it.
Another concept that i found intriguing was the concept of branding. It's interesting to see that two products, despite the fact that they're exactly the same, will get completely different consumer results based on the familiarity with one over the other. People want familiar, predictable products. One product is not necessarily better than the other, but one of these can spark a multimillion dollar industry riding on good branding or the persuasion that their product is unlike anything else.

Nathalie Heidema, Chapter 5, Question #2

The issues raised in this chapter affect my life a lot. We all lack information is some way. I don't know if the cashier in Target has some criminal background, a fact that isn't important for me at all (except if he would commit a terrorist attack or something else severe). But I also don't know if my doctor is really prescribing me what is necessary or he does it merely because of the profit (or he doesn't prescribe me what I need in order to get money from the insurance company). In this case the issue of information affects me directly. However, what I'm not concerned about and what doesnt affect me directly is someone's genetic predisposition to develop Alzheimer's (outside of the people that I know of course), something that is essential for an insurance company though. 

The issue will affect me in the future. The chapter talked about discrimination on workplace, something that I could be dealing with in the next ten years. Wheelan explained it on an example of a man and woman applying for the same position, both being very good candidates. The firm chose the man because he is more likely to make the firm more money. Firm therefore rationally decided that women tend to go on a maternity leave, costing firm more money (to find a replacement, training) and with the risk that the woman will not return afterwards. I am a woman and I do not want to be judged according to my sex, but economics is not always fair. And what Wheelan suggests: we need to judge the book by its cover because that's the only thing we get to see.

Sophie Gunderson, Chapter 5, Question #7

Throughout my life, I have continually been taught not to judge a book by it's cover. In Chapter 5 of Naked Economics, Charles Wheelan introduces the logic that judging books by their covers is inevitable for us to do by bringing up the fact that we only obtain limited information about the 'book' itself therefore we automatically form an opinion. I have always attempted not to be quick to judge due to the teachings cemented in me as a child. This teaching sprung from the observation that judging books or others by just a glance generally does not work to be beneficial.

The only information we can go by on a quick glance is the cover of a book precisely. As he pointed out, we don't get to read an entire book before we buy it, therefore we must judge it's worth on the cover. This basic information is the base of almost every move we make and that fact in itself rocked my world. The cemented teachings I underwent as a child have been forever altered as I now realize the subconscious decisions I make on various things daily based on the little information I have. This thinking is portrayed in interviews, health insurance, where we want to eat dinner, and even about the stranger that is following us in a parking garage.

Overall, this chapter changed my way of thinking from being quick not to judge a book by its cover but rather to being quick to understand the information my brain processes as I see the book's cover.

Elena Gutierrez, Chapter 5, Question 4

One of the first issues that Charles Wheelan proposes in chapter five are economical forms of discrimination. I had heard (even in Mr. Hofffner's Into to Economics class) of different ways that companies discriminate against prospective employes or clients. Whether it's a company choosing to hire a white man over a black man, or an insurance company choosing to cover a person based on their occupation, these are both forms of economical discrimination. In chapter five Wheelan writes about how a company will hire a white man over a black man (even if they are both equally qualified for the job) based on the statistical information indicating that black men are 24% more likely to have been an ex-convict than a white man. This form of economic discrimination is "rational discrimination." An employer can make the argument that he wasn't entirely in the wrong in hiring a white man over a black man, because he has "defensible" reason based on "broad statistical patterns." (Naked Economics 107)  

Wheelan also writes about the hiring process at law firms. Employers are more likely to hire a male applicant over a female applicant (again even if both male and female applicants are both equally competent.) Based on demographics, employers can infer that the female applicant has a higher chance of having children, taking a paid maternity leave, and eventually cutting her hours or leaving the firm. In this case the law firm would not only suffer the cost of paying one of their employes while she is    not working, but the cost of re-hiring and training a new employe. Wheelan shared a solution that businesses' and law firms' have come up with to keep female employes around after their maternity leave; employers will add a maternity bonus to a women's salary. Wheelan writes that working mother's with a package can "Keep it if they come back, and return it if they don't." (Naked Economics.107) This maternity package could work, because women are more likely to get back to work earlier, and stay with a firm that offers a generous maternity package.    

Rita Hammer, chapter 5, question 6

In chapter five, the author discusses the concept of "branding." He discusses how capitalism creates a "deathly spiral of competition," forcing producers to come up with a plan that will convince consumers that their product, essentially the same as everyon else's, is in someway different, or better. By paying large amounts of money, producers make their brand recognizable, or rather appear to be the better product. Companies do this in several different ways, but one obvious example is by paying a famous person a lot of money to use their product in a commercial or during a sporting event, leading buyers to believe that that specific brand is the best. Overall, the concept of branding is necesarry, in that it provides people assurance that they aren't being ripped off.
Growing up in a househould where generic brands are purchased on a regular basis, the idea of branding interests me. To me, it seems obvious that you would by the generic, or cheaper gallon of milk at the grocery store, rather than the brand name, costing $1.50 extra; however, wheeler did a good job explaining why the idea is necessary. Wheeler says, "branding helps to provide an element of trust that is necesarry for a complex economy to function." I have an aunt who is a pharmacist, and has always been frustrated at the fact that people still demand the brand name drug, rather than the generic, because if you just take 2 seconds to flip each bottle over they contain the exact same ingredients, one is just more expensive; however pharmaceuticals are a different story compared to other products. Sometimes the generic brands don't taste as good or aren't the same quality, ultimatley having less value. The extra $1.50 for kemps milk may be worth it for some people when considering the taste; however, I've grown up drinking the generic kind, making me think the generic tastes better. In the end, it 's all about what one feels comfortable with, or trusts when deciding to respond to the idea of branding.

Jona Bakke, Chapter 5, Question #7

One thing I learned through reading this chapter is about the role a university plays in determining a student's future. Within the conversation of branding and reputations, the author states that graduates from Harvard are known to be very successful in life. He then asks the question, ".. is that because they learned things at Harvard that made them successful, or is it because Harvard finds and admits talented students who would have done extraordinarily well in life anyway?" (Wheelan 121).

The paragraph goes on to explore a study done that compares the successes of students that got into both a highly selective school and one that was not so highly selective, with some of the students choosing to go to the highly selective institution and some choosing their other option. The study's conclusion was that no matter what school each student actually attended, the average incomes of these intellectually similar students was relatively the same. "Overall, the quality of the student appears to matter more later in life than the quality of the university he or she attended... 'Don't believe that the only school worth attending is one that would not admit you'" (122).

This part of the chapter is especially relevant as we are applying to colleges, and it makes me think about the college search in a new way. Even though certain schools may have higher reputations or look especially good on a resume, each college has its own special features and it is ultimately the student who decides what will come of his or her college experience and life.

Julia Carle, Chapter 5, Question #3

In Chapter five, Wheelan discusses how much insurance companies know about you and how the more information they know about the customer, the more amount of money the customer will pay in a premium rate. This implies that the insurance companies are fighting legal to know more and more about the customer when no one, including the government is trying to restrict that. The implications for the future is that the insurance companies will want to know more about the customer, but can't because the government will restrict them. There are long-term consequences with issue of insurance companies knowing everything about you, once they know, the know, you can't take away their knowledge of you and they will keep your insurance premium at a high rate since they know so much about you. Plus another issue is that the government is trying to get involved, which will take a gradual amount of time to put into order. I think it's good that the government is trying to restrict insurance discrimination, then people won't be put at a another disadvantage for being overweight, being a smoker, etc. However, I can already tell that it won't be beneficial to the insurance companies.

Harris Worthman, Chapter 1, Question 6

If there's one thing that has sparked my interest in economics it's the idea of Opportunity Cost. In chapter 1 of Naked Economics Charles Weelan states that the most limited resource we all have is time and everything you do with what little time you are given is a lost opportunity to do something else. He portrays just a fraction of the possibilities to give the reader an idea of what opportunity cost really entails. "At the moment you are reading instead of working, playing with the dog, applying to law school, shopping for groceries, or having sex." I like how Charles writes about the reader reading his book and uses that as an example. When I read this I started getting a bit stressed because it reminded me that at any moment I could be applying to a college or preparing for my future in some way. There are so many different productive things we could be doing but we often think only of the pleasurable alternatives. So keep in mind that you are currently reading this blog post when you could be having sex.

Kiera Ziegler, Chapter One, Question #6

         While reading chapter one a certain priciple really stood out to me, price discrimination. Price discrimination is when a company chooses to sell the same product to different people for different prices. His example was airline tickets. The person next to you on a plane could have paid a completely different price then you because they are a different costomer. A businessman is going to buy the ticket regardless of the price. However, a family going on vacation could just chose to drive, and airline, being aware of this, makes a plane ticket targeted to vactioners cheaper. Price discrimination surprised me. Previous to this I did not know this happened within a company. This principle really illuminated how something is only worth as much or as little as people are willing to pay. Price discrimination cause me to question whether I give certain things too much value and worth compared to what a might if I had less money. This question lead to another, is it a bad thing if the answer to the previous question is yes?

Jonathan Webb, Chapter 1, Question 6

This chapter was related to a lot of what we had been talking about in class the last couple weeks. And I think the main thing that stuck out to me was him just emphasizing that "Life is about tradeoffs, and so is economics". He gave man examples of this and it started to make me think of all the tradeoffs that I'm doing in my daily life. But in these tradeoffs everyone acts to there own self interest. He gives a good example of why wouldn't Brad Pitt start his own insurance firm, because Hollywood is where he can add the most value and get the most paid for doing so. The last thing that stood out to me was when he said, "the market does not provide goods that we need; it provides goods that we want to buy" (20). Later gives the example on why surgical doctors provide breast enhancements and etc to Hollywood stars, Because they can afford it!

Peter Webster, Chapter 1 Question 6

A passage that stuck out to me was when Wheelan asked the question,"Is it fair for those of us who live comfortably to impose our preferences on individuals in the developing world?" His example of this was South American villagers destroying rain forests and ecosystems while he sat in Starbucks drinking his latte, disgusted by the fact that people were doing that. After he thought about it he realized that if he were in their shoes he would do the same thing. Those people are trying to get money any way they can just for their family to survive. It is tough to think about the situations of people who live in those countries that can't even drink clean water, but we cannot really argue about what they do to get money (unless it's illegal) to support their needy family. When it comes to supporting a family most people will do anything to make sure they get what they need.

Gunnar Nelson, Chapter 1, Question #6

In the first few pages of Chapter 1, Wheelan gives a quote from a nobel prize economist Gary Becker, Becker states that "economy is the art of making the most out of life" (pg. 6), Wheelan makes the claim that economics is the study of how we make the most out of life. This definition of economics makes the most sense to me. Instead of every economist being completely cut-throat looking for the absolute best deals where they can buy somthing for the least amount of money. 

A major theme that Wheelan used in chapter one was the "individuals maximization of utility." A statement that I found most interesting is "why did the Entrepreneur cross the road? Because he could make more money on the other side." Besides it's humor, this statement provides a very important fundamental of economics on the individual and eventually the nation. Each individual will have preferences, which is non-synonymous with selfishness. It is only in an effort to maximize a persons utilities. Wheelan uses two small scale examples and a larger scale example. Wheelan describes a woman in an obituary who lived in a small, "sparsely furnished house" and only had a black and white tv, Ms.Mcarthy worked as a laundress, and before her passing had given 150,000 dollars to charity. This further shows how the maximization of the individuals utilities is non-synonymous with selfish desire. 

Angela Scharf, Chapter 1, Q.2

     This chapter covers many different issues regarding future benefits. The first example, regarding the Coca-Cola, introduces the idea that short-term money loss can lead to larger markets in the long-run. Another topic covered was the idea of balancing short-term utility with the long-term consequences. For example, spending a lot now versus later, and vise versa. Constantly weighing the cost and benefit is a more specific way to show this idea of spending now or waiting and the consequences. Debating whether to take a &7 taxi versus a $1.50 bus ride if running late with a client that could withdrawal a $50,000 account is an example of weighing benefits and planning for future benefits. This chapter further references the complex choices that businesses make on the daily that will affect them in long-run. An example of this is finding a happy medium between selling more and receiving little profit, or losing customers by raising prices to gain more profit.
     These examples can produce either a positive or negative result based on the decision that is made. Weighing the costs and benefits, in both the immediate utility and the long-term consequences, can provide a more beneficial decision regarding spending.

Zachary Du, Chapter 1, Question 6

The example that Charles writes in the book gives us a explicit explanation of the opportunity cost: "My brother began his career as a management consultant with a salary that had at least one more digit than mine has now. On the other hand, he worked long and sometimes inflexible hours. One fall we both excitedly signed up for an evening film class taught by Roger Ebert. My brother proceeded to miss every single class for thirteen weeks". Though Charles' brother could bring higher level of living quality to his family, he lost the opportunity to go to the film class. This ordinary example illuminates the definition of trade-off: every time when people trying to make the best choice, they have to sacrifice the second best option in order to maximize the profit, which is extremely important in the study of economy. 

Nathalie Heidema, Chapter 1,Question 6

Merely the term "free market" symbolizes an important point- you are free to choose what kind of business you are going to set up, how you are going to produce goods or where you are going to ship them. Of course, it significantly depends on the supply and demand law, but it is capitalism that allows you to do whatever you want (legally of course) independently from the government. You can work and study whatever you want. Communistic regime plans your life so that you fit in their general development of economy. Therefore, I was mostly moved by the passages that talked about communism and their system of achieving a running economy. Living in a country where my grandparents and mother experienced this regime make me think about this a lot. For example, my grandfather was being to told to study technical high school so that he could be an electrician- something the communist pre-planned for him and millions of other people. He did it without being asked what he wants (he wanted to run a ski resort, what he eventually did and was followed by the communists). This system failed at last, fortunately, because a government is not capable of recording the demands of consumers and sending the right amount of goods to specific stores. Then I ask:"Who feeds Paris?"

Maddie Binning, Chapter 1, Question #2

The benefits and downfalls of free markets are certainly prevalent issues now and for the future. The bettering of lives for the majority of a population through free markets indicates a definite step in the correct direction. However, as the last paragraph states, the question of government involvement in the market (thus making it less free) could be beneficial to the population due to the fact that humans do not and, in my opinion, cannot always act in their own best self interest. Government involvement in the market could directly affect every citizen, especially in issues such as the current debate over healthcare. Should it be run in a similar way to the post office as the author's relative suggested, that would drastically change the consumer's involvement with pharmaceutical companies and medical services, possibly redirecting funds. This is an issue that could affect daily and general life. If the average citizen now has the option to allocate their money or resources differently due to reasons XYZ, the market and by association the population could greatly benefit, just as the assumptions behind a free market suggest it should.

Madison Webster, Chapter 1, Question #6

A passage that stuck me while reading chapter 1, was the discussion about the dog bakery. It sounds funny, I know. "Wealthy professionals pay $16 for birthday cakes for their pets. Meanwhile, the Chicago Coalition for the Homeless estimates that fifteen thousand people are homeless on any give night in that same city" (6). This sounds crazy to me. Why would people be willing to spend the money to treat a pet when there are people all around that are starving and at loss of sheltar?

I kept reading and towards the bottom of the page was statemented, "Economics starts with one very important assumption: Individuals act to make themselves as well off as possible" (6). I believe that this gives reasoning to the uncomprehendable topic above. People will do whatever it take to benefit and please themselves and those close to them. If a person has the option to make their dogs day by buying a cake for it or spending the same alloted money towards a meal for the homeless, many will chose to spend the money on their dog because it is theirs, they own it.

I believe that an important factor in Economics is happiness. I know this isn't one of the "factors of production", but I still think it is worth noting. The market system revolves money, which reloves around how much people are willing to pay for a good or service, which reloves around what people want and desire, which relates to happiness at the core. People strive to please themselves and live a happy life.

Question 5 Chapter 1

2. In chapter one the author brings up some controversial issues and how economics plays a big role in solving them. One issue is if Nike should pay its foreign workers more money since its only $600 a month(25). The author answers  "That is a pathetic amount of money. It also happens to be twice an average Vietnamese workers annual income"(25). Nike isn't actually however paying a pathetic amount but twice more than the countries average annual income. The author also addresses that sweatshops however help countries develop. I would fall on the side of saying that Nike is thinking about their rational self interest and thinking about ways that make their company better off. Although this can be a controversial topic in the sense that people think Nike is ripping off sweatshop workers you need to think about their economy and how different their lives are then ours. Lastly you need to think about the long run. What will it do for their economy in the long run and for our economy as well. 
   

Griffin Pontius Chapter 1 question 6

The first story about how the head of coca cola handed out coke through the Berlin Wall.  This stuck out to me primarily because I had no idea it had ever happened.  Also, Ivester handed out the coke for free, not demanding anything from the communist side of Berlin, and in the end, it clearly worked out extremely well for him.
"Even if you shoplifted this book, you could have stuffed a Stephan King novel in your jacket instead, which is flattering in its own kind of way" pg-10. I laughed to myself when I read this, at this point, the author is talking about how there is always an opportunity cost and that nothing is free. The author has this smart sense of comedy, meaning that thought the chapter has the little side notes that are just hilarious that he puts it in the book, for example, " that process can be as simple as selling cheap umbrellas on a busy corner in New York City when it starts to rain (where do those guys come from?) while this really does not contribute to economics, the author keeps me roped in and interested  when I read about these little side notes