accessibility of a good increases its value

An scholarly article in a leading economics journal recently considered “the problem of a restaurateur who has to decide whether to provide customers with a written menu, a picture-based menu, or a desert tray.”

Scientific experiments provide relevant evidence.  Laboratory tests indicate that a picture of an item does not prompt a higher valuation for the item than does a textual description.  However, if the item is accessible to the subject (the subject could grasp the item, if allowed), willingness-to-pay is 40% to 60% higher. The effect does not depend on the the smell of the (food) item, and the effect does not occur if the item is presented behind a plexiglass barrier.  The immediate accessibility of an item to a subject seems to prompt an unconscious process, which the authors call a Pavlovian process, that increases the value of the item to the subject in those circumstances.

Hence the scholars conclude:

The results in this paper suggest that dessert sales should go up significantly if the restaurant uses the dessert tray as opposed to the other two options. Furthermore, the results of the plexiglass experiment suggest that a transparent glass dome should not cover the dessert tray, as is the practice in some establishments.

These result also indicate limits of sense in mediated communication.  Real, accessible presence seems to evoke a distinctive response.

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Reference:

Benjamin Bushong, Lindsay M. King, Colin F. Camerer, and Antonio Rangel, Pavlovian Processes in Consumer Choice: The Physical Presence of a Good Increases Willingness-to-pay, American Economic Review 100 (September 2010): 1–18.  The quoted text above is from p. 13.

Joannes Lydus on media costs in late antiquity

The shift from paper to electronic media continues a long-term decline in the cost of media for writing.  Comments that a Byzantine bureaucrat Joannes Lydus made in the Byzantine capital of Constantinople about 552 GC testify to this long-term trend.  Joannes Lydus had retired from 40 years of bureaucratic service.  He was disgruntled with changes that begin about 531 GC.  Lydus complained:

members of the {Byzantine imperial bureaucracy} stoop to demand even parchment of those who transact business {with the imperial government}, while previously it was customary not only not to attempt such shabby things, but, besides, to consume even the clearest parchment of all for the transactions, with the scribes resplendent proportionally to their parchments.  Both of these things, however, vanished afterwards {after 531}, and from the lack of money they exact {as a transaction fee} an extremely modest and disgraceful copper {instead of gold coin} and issue grass instead of parchment, covered with inferior writing and redolent of poverty.[1]

Requiring a petitioner to supply the writing material for an imperial order indicates not just poverty, but the significant cost of even just a small piece of writing material.[2]  Grass here seems to mean papyrus, a writing material made from a grass-like plant. It contrasts with parchment, a more expensive writing material made from animal skins. The quality of the writing material is prominent within the more general contrast in quality. Other contrasts in quality are the scribes’ dress, the size of the transaction fee, and the form of the writing.[3]  Hence the cost of writing material ranked with other costs that were more obviously sizable.

stack of paper

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Notes:

[1] Lydus, Joannes, trans. from Greek by Anastasius C. Bandy (1983) On powers or The magistracies of the Roman state (Memoirs of the American Philosophical Society, 149) 3.14 (p.  155). The ending portion “issue … poverty.” is from the translation in Kelly, Christopher (2004), Ruling the Later Roman Empire (Belknap Press of Harvard University) p. 81.  In addition, the first two instances of “parchment” in the translation above are rendered as “paper” in Bandy’s translation.  I have changed them to parchment for consistency with the root word in the original Greek text.

[2] Cassiodorus, a senior official in the early sixth-century Ostrogothic government that ruled Italy, declared in 534 GC in a letter to a local tax collector:

Rightly did Antiquity ordain that a large store of paper should be laid in by our Bureaux (Scrinia), that litigants might receive the decision of the Judge clearly written, without delay, and without avaricious and impudent charges for the paper which bore it. … Therefore for this thirteenth Indiction pay so many solidi from the land-tax of the Tuscan Province to our Bureau, that it may be able to keep in perpetuity a faithful record of all its transactions.

Cassiodorus, Letters, 11.38, trans. Thomas Hodgkin (London, 1886) p. 483.

[3] Joannes Lydus lamented the shift from literary Latin to common Greek as the language of Byzantine government documents.  He favored verbal eloquence and rank-distinguished ceremonial dress for government bureaucrats.  The term “inferior writing” thus could refer to generic language type (Greek versus Latin), calligraphic quality, and literary quality.

proposals for financial reform

A knowledgeable correspondent sent in two proposals for financial reform:

  1. The ratio of loans to assets that a bank is allowed (that is, their leverage) could be inversely related to the size of the bank. That way, there would be a disincentive for banks to acquire other banks and become “too big to fail”.
  2. The interest rate banks pay the Fed could increase with the size of the bank or the amount they borrow, sort of like progressive income tax rates. This would also be a disincentive for banks to acquire other banks. Banks charge their customers higher interest rates for jumbo loans, so there is already a precedent for this.

These two proposals are hereby submitted for the Internet reading public to consider, deliberate, and, if so decided, endorse.