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The effect of inflation on loyalty schemes

Earlier today, Sainsbury’s supermarkets sent out an email informing people that they were reducing the rate at which they would earn reward points on the Nectar scheme – halving the amount, in fact, from 2 points per pound to one per pound.  They were also removing the bonus points available for reusing carrier bags. Continue reading

Can Scotland use Sterling?

A great deal of the Scottish independence referendum has centred on the question of currency and the economy – the ‘yes’ camp say they will enter a currency union with the rest of the UK, while the ‘no’ camp say that wouldn’t be in the best interests of other countries so would be blocked.

A currency union would be something similar to the euro – a common central bank, working for the benefit of all members.  It looks increasingly likely that Scotland, in the absence of a full currency union, would instead just either use Sterling as it is, or would peg its own currency to Sterling.  Some on the ‘no’ side have said that Scotland wouldn’t be allowed to do even this. Continue reading

New mobile site

With upgrades to WordPress’s standard tools, economic-truth now has a new look on mobile sites, enabling you to catch up on articles anywhere.  There area few features missing – search for one – which will be added over time.  Your comments are appreciated! Continue reading

Becoming something else

Rebranding a business costs a huge amount of money.  The cost is both direct (through ordering new stationery, relaunching a website, changing signs on doors and designing a new logo) and indirect (potential lost business from people not recognising the company, time lost through employee training on how to use a new brand). Continue reading

When the population isn’t homogenous

A recent post at the Freakonomics website set out their plans for a changed NHS.  My opinion is that the main issue with the NHS is not to do with the demand side (which in any case is pretty tightly controlled through referrals through GPs and the NHS Direct portals) but rather the supply side (with too much spent on management, administration and inefficiency).  Leaving that aside, does the Freakonomics proposal make sense? Continue reading

Is a book worth £500?

When looking to buy a copy of Newton’s Telecom Dictionary I noticed that as well as the standard page on Amazon, there was another page on which the price was set rather higher, along with a more convoluted title.  The first time I saw this second page there were in fact three booksellers, all with very high prices:

Sam Books £432.98
Greenpastures UK £598.97

Why would these sellers set such a high price for a book that is readily available?   Are they hoping that someone may not be able to find the cheaper version, and mistakenly pay £600? Continue reading

Pushing regulatory boundaries

Regulation is typically used where there is market failure, such as the natural monopolies in energy distribution, or asymmetric market power such as between banks and individual account holders.  In these instances, governments try to restore the market by restricting prices or actions. For example, in order to overcome monopolies in the postal sector, the regulator may set the price at a level that would be expected to be seen in perfect competition – price set according to a marginal cost (often calculated using a Long-Run Incremental Cost, or LRIC, model). Continue reading

How to know what didn’t happen

One of the key types of projects I work on is the economic impact study, which looks at how government expenditure, regulatory changes, public policy or commercial decisions have changed or will change the welfare of the country.  In order to carry out such an exercise, you must build a model which estimates economic activity (in terms of money spent and employment) under two scenarios – with and without the policy or commercial decision. Continue reading

Is it good business sense to reduce your customer base?

The following graph would appear to be bad news.  This shows the reach of timesonline.co.uk – that is, the proportion of daily Internet users who visit the site.  For the first half of 2011, around 0.07% of Internet users visited the site each day; while that seems small, it’s a small proportion of a very large number.  Then, in late 2011, the number of users dropped significantly, and (other than a brief temporary increase in early 2013) the site now has a userbase around a quarter of its old level. Continue reading

A progressive approach to tax

The US Congressional Budget Office has recently published some information on who pays income tax in the US (or, at least, who did so in 2010).  There’s an interesting graph included showing how effective tax rates vary by income group over time. Continue reading