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June 25, 2007

News & Opinion: Interesting economics

By: 800-CEO-READ @ 2:12 PM – Filed under: Current Events & Public Affairs

If all economics classes had a professor like Robert Frank, economics might be a bit more hip. Professor Frank commences his classes by asking students to apply economics to real-world issues.
These questions and their answers now make up his recently published book, The Economic Naturalist. Over at another famous economics site you'll find a few excerpts including this one:
Why do fast food places promise a free meal if you aren't given a receipt at the time of purchase?
To deter theft, owners of restaurants and other retail establishments require cashiers to reconcile the total amount of cash collected during their shift with the total volume of sales rung up at their register...One way cashiers can circumvent this control is by neglecting to ring up a proportion of their transactions...Thus if a cashier failed to ring up a customer's $20 meal, he or she could pocket the $20 without creating an accounting discrepancy...By offering a complimentary meal to anyone who fails to receive a receipt, owners provide an economic incentive for customers to monitor cashiers for free.