Tyler Harvey

ECON H 211

Economic Naturalist 1: NFL Placekicker Salaries

According to Sports Illustrated, the average salary of kickers in the NFL is $868,005

which is second to last among all positions. However, the 25 highest scoring players of all time

are all kickers and at the end of a season it is usually the kicker that will be the highest scoring

player on the team. Why are the highest scoring assets on these teams paid so little in comparison

to their counterparts?

One possible reason may stem from the degree of specialization required by kickers.

While running backs can occasionally catch a ball and linebackers can play safety without too

much adjustment, kickers are often shorter and smaller than other players and can’t really do

much besides kicking. Because of their comparative advantage in kicking the opportunity cost of

them kicking instead of playing another position (and in turn their value) is much lower than a

more versatile player.

Another possibility is simple supply and demand. On average, kickers have the longest

careers of any players in the league and there are often only a handful of them on any roster,

since they do not experience as much injury and physical deterioration over time. This means

that the demand for new kickers is very low each new season. However, unlike professional

football, where kickers can enjoy long careers, college football kickers (the main supply for the

NFL) can only play a maximum of 4 seasons. Also, since kicking is such a specialized position,

most college kickers are on a relatively small skill spectrum. So each year there is a large supply

of relatively equally skilled kickers hoping to play professionally available for franchises to

choose from. By the law of supply and demand, this will drive salaries down. The large range of

skills for players at other positions (like quarterbacks), and their increased likelihood of injury

and shorter career leads to a small supply of elite athletes of which there is much greater demand,

accounting for the higher value of these players.

Economic Naturalist #2: Waiting in Lines

Checkout and customer service lines where multiple can operate one of two ways: a

single queue of customers as is often seen in banks and airports, or separate lines for each

register like those found at Wal-Mart and other retailers. The first fundamental welfare

theorem tells us that the latter method, which allows competition to dictate line choice,

should be equally as more efficient than the regulated queue style line. Why does the

opposite seem to be true in practice?

In theory, the theorem is actually upheld. In an ideal situation, where no cashier is

available while there are still customers in line, both methods will process all the customers in

the same amount of time, so both are equally efficient. However, the reason this breaks down in

practice is because cashiers are only continually serving customers in the queue style system. In

a store with multiple lines this may or may not happen, depending on the individual customers.

For instance, if a customer notices a line has emptied next to him he has the option of moving

over or staying. If he thinks rationally, he will always move to the empty line but perhaps he

forgets to ignore the sunk cost of the time he’s already spent waiting. There is always the

possibility that he doesn’t notice the open line, has already placed items on the conveyer belt, or

any other number of possibilities.

Another interesting question is why don’t more (or all) retail stores implement the

superior queue system that virtually all banks and airports do? The reason is likely a

completely psychological one. Customers view the single, line as a longer wait even though it

moves faster. In banks and airports, customers have to wait in this line immediately upon

arriving and the goal is to reach the end of the line. Because this is the goal, the customer is more

patient and less bothered by the wait. In retail stores, the waiting in line part comes after

navigating the store and the goal is getting items, so customers are less patient and the wait is

perceived as an additional burden since it comes after the goal has been accomplished.

Economic Naturalist 3: The Price of Calculators

Why has the price of graphing/engineering calculators stayed fairly constant, while the

price of personal computers and cell phones, which are capable of doing the same functions as

calculators, have fallen dramatically?

Our supply and demand model predicts that when the price of a substitute falls, it leads to

a negative shift in demand, lowering both the equilibrium price and quantity. Additionally, when

the costs of production decrease (which is the case here as transistors/processors have become

cheaper to manufacture) there will be a positive shift in the supply curve, lowering the

equilibrium price further while increasing the equilibrium quantity. While the magnitudes of

these effects are ambiguous, we can assume that they will be at least similar, since the cost of

other electronics fall for the same reason as calculators. This should mean that the equilibrium

quantity shouldn’t change much over time, but the price should fall drastically although it’s

observed that the price has not fallen much (if any) over the past decade.

I propose that the reason we observe this lack of price change is due in part to restrictions is on

the demand side of market. I assume that the main demanders of calculators are students. Since

high school teachers and college professors often require that their students purchase

calculators, students will buy them regardless of the price, making the curve pretty inelastic. This

restriction of calculators being required probably cancels out most of the substitution effect,

since professors don’t allow computers or smartphones to be used in place of calculators. Since

this still doesn’t account for the lower production costs, it can be concluded that Supply and

Demand is not the appropriate model to predict this situation. This indicates that there is

something of an artificial monopoly created on these high end calculators, both from there being

so few producers or from the fact that professors not only require a specific type of calculator,

but many of them also stipulate which specific brand their students must purchase.

Economic Naturalist 4: Corn Subsidies and Primary Elections

The US Energy Policy Act of 2005 mandates that billions of gallons of ethanol be

blended into vehicle fuel each year, guaranteeing demand for domestically produced corn. These

subsidy programs give farmers extra money for their crops and guarantee a price floor and have

persisted even as the price of inflation adjusted price of corn has quadrupled over the past

decade. Why do we continue to subsidize corn at 2-4 times the level of other agricultural

products if we already guarantee there will be demand for it and it is not in danger of prices

dropping too low for farmers to profit?

I believe the answer to this is due mainly to incentives. The state which produces the

most corn in the United States is Iowa whose 2,334,150,000 bushels per year make up 18.96% of

US production. Iowa is also noteworthy as being the first state to hold a primary or caucus every

election year. Because of this, political candidates eager to get an edge over competitors early in

the race and elected officials worried about maintaining control of their office have huge

incentives to support continued or increased corn subsidies, even if they are higher than they

should be.