Yes, I know that sounds like an oxymoron, but over at the Breaking Views blog, economist Eric Crampton has a lovely piece on why New Zealand consumers don’t get the best apples.

And as far as Orange Roughy is concerned it’s vanished from the stores a decade ago.

Comparing (export) apples with apples, rests upon the price theory analysis of an economist I’ve never heard of called Armen Alchian, and Crampton refers to his analysis as The Third Law of Demand. You can read the detail at the link but I liked these two excerpts from Alchian.

The first really sounds counter-intuitive as he pointed out that couples with kids would go out to more expensive theatre performances while childless couples went to the movies:

“If they hire baby sitters at, say, $1 an hour [remember that Alchian was writing decades ago!] and are out for four hours, it will cost $4 just to leave the house. Now, add the cost of two movie tickets at $1 each, and compare that total cost with the cost of going to the theater (at $4 per ticket). The theater costs a total of $12, and movies cost $6. The theater, then, costs twice what a movie costs. But if a couple has no children and can avoid the baby-sitter fee, the movie will cost $2 and the theater $8 – a ratio of 4 to 1: the theater is relatively more expensive. In our original question, we did not assume parents will go to the theater more than people who have no children; we said, when young parents go out, they will go to the theater a larger fraction of the time than will childless couples. QED.”

Of course you have to remember that this is about statistics not predictions for individual couples. Beloved Wife and I definitely cut down on expensive outings once the kids arrived.

The second one is funny, and yet another contribution to the idea of spying via metadata – circumstantial data about a subject:

In the early 1950s, Alchian was curious to know what secret materials were being used in America’s hydrogen bomb. Telling the story in 2000, and it really is worth watching the whole interview, Alchian explained how he worked it out by looking at stock market prices. A few companies produced materials that might be useful in the H-bomb, but only one of those saw a substantial lift in its share price after the successful nuclear tests.

He wrote up his results and distributed it to his colleagues at RAND. The paper was immediately suppressed because of its national security implications – he’d uncovered a national secret, just by tracking stock market prices.

If you’re interested in such metadata analysis this is a good one from 2013 where the writer pretends to be an intelligence analyst advising the British Army on how to keep track of things in in pre-revolutionary America with no knowledge of or recording of conversations or meeting: Using Metadata to find Paul Revere:

All I know is whether someone was a member of an organization or not. Surely this is but a small encroachment on the freedom of the Crown’s subjects. I have been asked, on the basis of this poor information, to present some names for our field agents in the Colonies to work with. It seems an unlikely task.

The short answer to the British is that they don’t have to know exactly what’s going on – just keep a close watch on that bastard Paul Revere, because he belongs to all of these clubs.