Sunday, May 20, 2007

Speedlinks 05/20/07

Today's Speedlinks cover some interesting topics aboutthings such as how do we mentally calculate what's a justifiable expense or how to we internally characterize various expense types, to copyright and why it's possession is enjoyed for a limited period of time.

  • Mental Accounting - "People carry around different running tabs in their heads. You have, for example, an "entertainment account." Losing a movie ticket and having to buy a second one takes $20 out of your entertainment account when you planned to take only $10. Lost cash, on the other hand, is not charged to the entertainment account -- which is why most people don't hesitate to buy a movie ticket after they lose some cash.

    However, compartmentalizing income and spending into different mental accounts violates one of the basic rules of economics -- that money is fungible, or interchangeable. The $10 movie ticket is supposed to be worth exactly the same as $10 in cash. Supposed to be, of course, is the operative phrase. This is not the way human beings actually think, which is why economic models of human behavior often turn out to be wrong.

    "The source of the money affects how it is spent," said Suzanne Fogel, who heads the marketing department at DePaul University in Chicago."

  • A Great Idea Lives Forever. Shouldn’t Its Copyright? - WHAT if, after you had paid the taxes on earnings with which you built a house, sales taxes on the materials, real estate taxes during your life, and inheritance taxes at your death, the government would eventually commandeer it entirely? This does not happen in our society ... to houses. Or to businesses. Were you to have ushered through the many gates of taxation a flour mill, travel agency or newspaper, they would not suffer total confiscation...unless you own a copyright...Absent the government’s decree, copyright holders would have no exclusivity of right at all. Does not then the government’s giveth support its taketh? By that logic, should other classes of property not subject to total confiscation therefore be denied the protection of regulatory agencies, courts, police and the law itself lest they be subject to expropriation as payment for the considerable and necessary protections they too enjoy? Should automobile manufacturers be nationalized after 70 years because they depend on publicly financed roads? Should Goldman Sachs be impounded because of the existence of the Securities and Exchange Commission?
Now go! Check 'em out, and come back soon!
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2 comments:

Eric Schmiedl said...

Interesting article on mental accounting. I feel like it's missing a conclusion, though. Is 'accounts-style' mental accounting a good thing or a bad thing, and when is it either? It makes sense to me that I think of photography as one account (with a net profit or loss at the end of the year) since I want photography to pay for itself instead of leeching off other income sources. But the article seems to imply that this is more likely to keep me from paying my non-photography bills...

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