Economists Do It With Models

Warning: “graphic” content…

Bookmark and Share
Incentives: They Work, B*tches, Apple Edition…

November 4th, 2009 · 13 Comments
Buyer Beware · Incentives

I came across the following picture yesterday with the caption “When PCs Stand Out…”

(HT to Business Pundit.) Upon seeing this, my cynical economist mind went to a different potential caption of “Incentives: They Work, B*tches.” (In fairness, monetary incentives don’t ALWAYS work, but it’s important to know when they do and when they don’t.) For those of you who aren’t familiar with the reference, it’s from xkcd:

Anyway, the point is that I didn’t really believe that this classroom situation happened because students just liked Macs SO MUCH that they all were compelled to buy them and bring them to class. So I did a little digging. First, I got a friend with much better eyesight that myself to point out that the shirts say “Mizzou.” (Sidenote: It’s kind of amusing how many students in the class are wearing school t-shirts and such. I can’t remember really doing that much, but I will admit that now I really want this MIT shirt. In looking for that image, I noticed that MIT now also has an “Athletic Beaver Collection”, which is just too funny to not look into.) I then Googled a bit for various combinations of Apple and Univeristy of Missouri. It didn’t take me very long to find an article with the headline “Missouri Students Must Buy Apple.” Heh. Well, that would explain a lot. Technically, the students only HAVE to purchase an iPod Touch, but still:

Columbia, MO – Students studying journalism at Missouri University are being told they must buy an iPhone or iPod from this fall.

According to the University’s website, “Effective Fall 2009, students majoring in Journalism at Missouri are required to have either an iPod Touch (the minimum requirement) or iPhone to allow for the delivery of freshman-orientation information as well as course material. Students will electronically download such material to either of those devices from iTunes University, a no-cost component of the iTunes Store.

Missouri School of Journalism undergraduate and graduate students are also required to have wireless laptop computers. The minimum recommended configuration is a wireless laptop computer with the Microsoft Office suite of software.

“Students are encouraged to acquire wireless laptop technology from Apple, which the School has designated as its preferred provider.”

But hang on, what if I prefer to use a Windows machine?

“That’s an option, but it’s one we do not recommend unless you plan to make a career of computer-assisted reporting. By the time you purchase photo, audio and video software for a PC, you probably will have spent more than you would if buying a comparable Apple Computer. Buy a PC if you prefer to do so, but make sure it is wireless and has Microsoft Office. Almost 100 percent of last year’s freshmen chose Apple computers.”

Naturally, these magnificent machines are available from the University’s own shop at keen prices.

The reporter, while not particularly stellar on the grammar front, seems to have a keen intuition for incentives, since the article concludes with “We can only assume that MU is run by the world’s biggest Apple fanboi. How else are we to explain the faculty’s gushing enthusiasm? Surely they’re not making money on the deal?” In this case, the discount on the Apple likely makes it a better deal for most students, so it’s not like they are completely being led to purchase a “bad” product per se. However, in the interest of full information, fairness, non-sketchiness, whatever, it stands to reason that the university, if it is receiving such consideration above and beyond the discount to students (which it may or may not be), should disclose that information*. Students could then take the recommendations from faculty and school officials with the appropriate grain of salt.

In summary, the morals of today’s story are as follows:

1. When you see a particular outcome, think about what might be incentivizing that outcome.

2. When you see a particualr outcome, think about what might be incentivizing those who are providing the incentives.

I could continue this list ad infinitum, but I think you get the point.

* The FTC recently changed its guidelines such that bloggers are required to disclose any material considerations they receive from makers of products that they talk about. Two points. 1. If I have to disclose such information, shouldn’t the university have to as well, since it is essentially advertising for Apple? 2. Apple did not provide me with any material compensation towards the creation of this article…though I wish they would have.

Tags: Buyer Beware · Incentives

13 responses so far ↓

  • 1 hh // Nov 4, 2009 at 3:22 pm

    Question about the FTC guidelines, of which I was not aware, so thanks for the tip! Do you happen to know if it only covers material considerations received “from the makers of products they talk about”, or from anyone to talk about said products? Most manufacturers outsource to marketing firms blog content creation/writing/posting/etc, which sounds like it may circumvent the requirement to disclose the considerations since the marketing firm is not the maker of the product in question. (at least given the language used above.) Thoughts?

  • 2 econgirl // Nov 4, 2009 at 3:37 pm

    I guess it’s more towards the “anyone” end of the spectrum, since otherwise your outsourcing example is one way to game the system. I think the actual guideline just says “material connection” to the product and leaves out the from part. This concept can be taken to a humorous extreme, as seen in the following footnote:

    http://kottke.org/09/10/vc-funding-for-20×200

    So I guess technically even all of my Amazon links need footnotes, even though they don’t influence my choice of material…(It’s not like I don’t respond to incentives in that way, but Amazon sells everything, so there is not really much bias to be had.)

  • 3 J's M // Nov 4, 2009 at 3:48 pm

    Being the cynical type and having experienced first-hand Apple’s generosity in “giving” 2400 laptops to Miramar High School to distribute to its students (similar to signing out text books), I would most certainly look for a major cost cut/ incentive offered to MU that would not likely be passed on to the students. I’m sure that Apple made money from its “free” computer deal.

  • 4 Mak // Nov 4, 2009 at 4:12 pm

    Wow! What an uncanny look at a classroom so full of apple logos. Great photo.

    Also just wanted you to know I adore your site and its great to see other lady economists out there. Especially ones that are funny. That is super rare.

  • 5 Bray // Nov 5, 2009 at 1:31 am

    that MIT shirt is AMAZING!!! Another reason I need to go to MIT. One other? Their a capella group known as “The Logarhythms”.

  • 6 J S // Nov 5, 2009 at 11:21 pm

    ….”By the time you purchase photo, audio and video software for a PC, you probably will have spent more than you would if buying a comparable Apple Computer. Buy a PC if you prefer to do so, but make sure it is wireless and has Microsoft Office” …

    Or they could get Linux (Ubuntu or others from Distrowatch.com) and install Open Office, Firefox, Gimp, Inkscape, Cinelara, Blender, and so on for free.

    One very useful feature of Open Office, that is not in MS Office, is the ability to directly output to .pdf format.

    Linux also runs on slower/older hardware as fast as Mac or Windows on newer hardware – improving the whole reuse environmental message. (by the way, your site runs on Linux, per netcraft.com)

    … But then the school is incentivised to hand out Apples.

  • 7 Bray // Nov 6, 2009 at 6:10 pm

    But why would they tell you that? They can’t make money off of you if you’re just getting all your software for free!

  • 8 econgirl // Nov 6, 2009 at 7:22 pm

    Re the a cappella groups at MIT: There are actually a number of them for some reason, all with imprressively nerdy names…the other ones that come to mind are The Chorollaries and Resonance… 🙂

  • 9 Bray // Nov 6, 2009 at 7:40 pm

    omg… that’s amazing! Reason #7250: The Chorollaries. Reasons #1 (There’s 2): Paul Krugman and Linux.

  • 10 cloned // Nov 7, 2009 at 9:07 pm

    “1. When you see a particular outcome, think about what might be incentivizing that outcome.”

    “. . . as associate dean Brian Brooks has stated that no one will a be punished for not buying / owning one. While noting the audio recording and playback capabilities were motivation for this decision, he explains the reason it’s classified as a requirement is because it lets students include it in their financial need estimate — wholly beneficial when you’re figuring out scholarships and loans.”

    http://www.engadget.com/2009/05/09/missouri-school-of-journalisms-iphone-requirement-a-clever-in/

    HT: Peter Klein

    ” . . . No doubt makers of rival devices are delighted by the university’s move.

    http://organizationsandmarkets.com/2009/05/12/missouri-j-school-tastes-the-apple/

  • 11 Jerry // Nov 17, 2009 at 11:29 am

    That kid is so going to fail, especially when his pc crashes.

  • 12 annag // Sep 1, 2010 at 10:42 pm

    dude.
    nifty article/post/entry.

    my first thought was remembering a Mystery Hunt a few years ago, when we noticed everyone in the room had either a IBM ThinkPad or an Apple iBook (macbooks, powerbooks, ideapads, and of course ipads were not yet out then, and no one had thought of netbooks). it amused us.

    also i need that shirt.
    ever notice how at mit almost everyone wears shirts advertising mit subcultures rather than the school itself? i wonder if that’s because it’s such an insular community…
    which is interesting, considering how welcoming they are, when someone happens to break into their little society.

    oh yeah and that’s totally lizinvt. =D

  • 13 Forskolin Extract // Aug 13, 2014 at 4:35 pm

    I blog often and I genuinely thank you for your information. The article has really peaked my interest.

    I’m going to bookmark your website and keep checking for new details
    about once a week. I subscribed to your Feed too.

Leave a Comment