econlife - The Problem With Finding the Right Size by Elaine Schwartz

Serial returners were in danger of being blacklisted when the online U.K. fashion firm, ASOS,  threatened to close the accounts of the people who return too much.

They did do it gently:

Inconsistent Dress Sizes

The reason you probably returned an online purchase was the fit:

The reason you could not predict the fit?  Because you didn’t know your size.

Assume you wear a size 26. The Wall Street Journal discovered that each of seven retailers would have sent you skinny mid-rise jeans with different measurements:

In addition to the varied meaning of a single size, our shapes are exceedingly diverse. One woman can have a 28 inch waist and 32 inch hips and another, the same waist and  42 inch hips. The pants they order could be made from a stretchy fabric, a heavy linen, a light cotton, each that fit in their own unique way.

What to do?

Standardization

In the past the solution was standardization. After decades of gathering thousands of women’s measurements, an industry group came up with 27 different sizes that were compressed to a size range of 8 to 38. Commercialized by 1958, the results were used by the pattern-making industry and became a standard for modern sizing.

But then we started to get larger while sizes got smaller and less consistent. A size 14 or 16 in 1958 became the equivalent of a size 8 in 2008. Some retailers selected 000 as their smallest size or perhaps an XXXS. At the Gap you can find a range of 00 to 20 but H&M uses 2 to 32.

Now some firms have decided some of us don’t even want to hear a number that designates our size. One is using a color. Others are custom fitting. But most give us free shipping, free returning, and let us order in bulk, and send back a part of it.


Our Bottom Line: Transaction Costs

Economically defined as sacrifice, the cost of what we buy online is more than the money we pay. Called a transaction cost, it includes the try ons, the phone calls, the forms we fill out and all the hassles that relate to a purchase. Size standardization used to diminish those costs because one size had a consistent definition everywhere. Standardization helped when all railroads laid the same size tracks. Similarly, we eventually got one kind of VCR that would play a standardized DVD and of course, our weights and measures are standardized.

You can see where this is going. When something is standardized, there is less hassle, more efficiency, maybe more productivity. And when it’s not, we order multiple dresses, and jeans and shoes that increase the transaction costs of doing business online.

My sources and more: Thanks to the daily WSJ podcast for alerting me to their dress size article. Vogue also looked at the problem as did a previous econlife.

Our featured image is from Pixabay.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - A Dilemma: How Much to Pay for Our Privacy Protection by Elaine Schwartz

There is a doll whose name is Cayla. She has a pink skirt, a denim jacket, and a bluetooth connection. Like many toys, she can have a conversation with us.

While these dolls are all Caylas, their manufacturer says you can program in a new name:

But you won’t be the only one who knows her name.

Whatever we say to Cayla can be stored on a central server and then sold to anyone or any intelligence agency. The German government banned her because she violated their privacy laws.

For us also, Cayla is more than a toy. She takes us to the cost of protecting our privacy.

Privacy

Privacy History

We could say that we were concerned about privacy from people during the 19th century, from government in the 20th century, and now, from the corporation. Before the mid-19th century, privacy was not even a concern. The reason could have been that we had limited photography, no telegraph, no telephone.

The following Google Ngram search shows the word was not used very much in books until the 1960s:

Contemporary Privacy

A Google search, Amazon’s Siri, and a Facebook like all add to a data supply chain that lets corporations collect and sell data about our behavior. So too do our Smart phones, Smart cars, Smart dishwashers.

However, when told how much we share, our response to privacy protection is tepid. In a recent survey, 80% of the participants said they would want to protect themselves from their everyday technology but only 26% said they would pay for that protection. Asked if they would pay to see fewer online ads, 50% of the survey’s participants said no.

Our Bottom Line: The Cost of Privacy Protection

To understand why many of us are minimally concerned with privacy protection,  it might help to see its cost (economically defined as sacrifice) from two perspectives.

Collectively, the cost of losing our privacy is immense. Through our elections, our businesses, our personal and professional relationships, we can corrupt our basic institutions.

As individuals though, when we lose our privacy, life becomes easier. Our appliances work better, we remain in touch with our world, and toys are more fun.

So “bad” things happen as a society when we lose privacy but “good” things happen personally. You can see why we won’t pay to preserve our privacy. One by one, we cannot even fix the problem.

And perhaps that is why Germany banned Cayla. The only way we can and will pay for our privacy is together.

My sources and more: Thanks to a Crazy/Genius podcast on privacy for a good walk yesterday morning. Because of Crazy/Genius, I learned about Cayla the talking doll from the NY Times. As for the survey, it was reported by MarketWatch. And finally, you might enjoy (as did I) pondering what Justice Brandeis said about privacy.

Our featured image is from Pixabay.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - What a Government Shutdown Does to Each of Us by Elaine Schwartz

A government shutdown is again in the news. The key date is December 21. If federal agencies without funding do not get their money by then, they have to follow their shutdown rules.

I suspect most of us will be affected. These are the facts:

Shutdown Agencies

Five agencies (blue) did get their Fiscal 2019 funding while seven (gray) did not. Those seven received a temporary reprieve from a CR (Continuing Resolution) that expires on December 21. If there is a shutdown, it’s the seven agencies that will be hit. And even then, not everything. It all depends on who is “essential.”

As for the numbers, we are talking about 750,000 government employees. Estimates indicate that 400,000 would work without pay and 350,000 would be furloughed. While the “essential” unpaid employees do get paid retroactively from new funding, those who are furloughed will not necessarily receive their back pay. But in the past, Congress voted to give them the money.

This potential partial shutdown sounds less catastrophic than the actual 16-day shutdown during October, 2013. At that time, suspended services included issuing new Medicare and Social Security cards. The EPA could not inspect 1200 different sites while the FDA postponed close to 900 inspections. The National Parks lost $500 million dollars in visitor fees and the Panda Cam went dark at the National Zoo. The IRS also had to turn away 1.2 million requests related to mortgage and loan approvals.

In the aggregate, economists believe shutdowns cost billions because of lost fees and pay to employees who were sent home. Then, to that government cost we can add the private sector where hotels near national monuments lose business, realtors have transactions cancelled, loggers cannot work in National Forests. Standard & Poor’s estimated a $24 billion hit to the 2013 GDP–a .6% slice of growth that was cut out.

Our Bottom Line: The Cost

The word “shutdown” obscures the massive impact. Summarized in one term, it sounds simple. But it is not.

I am reminded of what we have said before about the British seacoast. Quoting mathematician Benoit Mandelbrot, we pointed out that when you see the shoreline from afar, it looks like a smooth curving line. But look more closely at the coast–and at government shutdowns–and you recognize the details you need to know.

My sources and more: For the current shutdown basics, Bloomberg had a good article, the Committee for a Responsible Federal Budget had some history, and The Washington Post had some interesting detail. You might also want to read more about the three-day shutdown last January.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - Everything You Might Not Know About Government Shutdowns by Elaine Schwartz

This really happened…

The September 30 to October 2 shutdown in 1982 started because the Congress and President Reagan “had other plans.” When the fiscal year ended on Thursday September 30, the House and Senate had agreed on a compromise. But because of a White House barbecue for the Congress and a Democratic $1,000 a plate fundraiser, there was no late night session. On Friday, the government shut down.

Shutdown History

The government used to remain open if the President and the Congress disagreed about the federal budget. Yes, sometimes agencies didn’t receive their yearly appropriations. But, assuming they would soon get their money, officials ignored the lapse.

It all changed with President Carter (1977-1981).

The Carter administration refused to ignore funding gaps. Their rationale was an amended version of the Antideficiency Act (1884) that said federal agencies could just spend what they were promised. If you didn’t get your allocation, then you were limited to essential activities. Only mandatory programs and those with longer term funding were not affected.

The result? Eighteen shutdowns.

For some gaps, the impact was minimal while with others we had hundreds of thousands of furloughed employees. The one constant was the huge variety of issues. Abortions, foreign aid, and the deficit were only several of the causes of a congressional impasse.

Do note that the shutdowns were caused by the “Appropriations Funding Gaps” in the following table. Also, the beginning of the government’s fiscal year is different from the calendar year:

Our Bottom Line: Shutdown Cost

The cost of a shutdown is tough to measure. Government revenue declines from closed national parks and tourism sites. Safety could be a problem when the Environmental Protection Agency and the Food and Drug Administration cancel inspections. Add to that mortgages that aren’t approved because the IRS halted income verifications. Think about the airlines, hotels, and wedding planners that lose business. And don’t forget “non-essential” government statisticians. During the 1995-1996 shutdown, the December employment report came out during mid-January.

Returning to the 2018 shutdown, you can see the cost is incalculable.

My sources and more: Vox had the perfect story of all 18 shutdowns if you want the details. Meanwhile, I found the ideal complements at CRFB’s cost discussion and from the Congress. However, if you just read one article, I recommend the NY Times story of the 1982 funding gap.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.