The Cruncher
Prices going up and down
The Bank of England monetary policy committee surprised the City in January with an increase in interest rates. If inflation reaches a percentage point above (or below) the target rate of 2 per cent a year, the governor of the bank is obliged to write a letter to the chancellor explaining why the committee has failed. And prices are going up faster than 2 per cent a year, hence the rise in rates to try to keep inflation in check. But which prices are going up, and in which sectors of the economy? Certainly not in retail sales, the products people buy in the shops. The average price of retail sales has fallen in every year since 1999. The average price in 2006 was 4.7 per cent lower than when Labour came to power in 1997, and virtually the same as in 1994, over a decade ago. Of course, in part the average price measures shifts in spending by consumers towards cheaper products as well as genuine price falls for the same product, but inflation in the shops has still been negative.
Prices are steaming ahead in those parts of the economy where competitive forces are weak or non-existent. For example, over one quarter of council tax bills now go not on services to the public, but on the gold-plated pensions of council officials. And council tax increases, backed by the force of law, proceed apace. Many of the former nationalised industry sectors—energy and transport—also feel few constraints in raising prices, as the rail fare increases in early January show.
Read more »
The Cruncher
Eat, drink and be merry
According to the department of health’s recent report on obesity in England, a staggering 4.3m men and 4.7m women aged over 16 were classified as obese in 2003—22 and 23 per cent respectively of the total population. Another excuse for the busybodies to lecture people on how they must behave?
A person is classed as obese if his or her body mass index (BMI) is over 30. BMI is calculated by dividing the body weight in kilos by the square of the height in metres. So a six-foot-tall person has a BMI of 30 at a weight of 15 stone 11 pounds (100 kilos for younger readers). While substantial, this is not the build of a sumo wrestler. And the formula takes no account of the composition of body weight. Keiron Cunningham, the St Helens and Great Britain rugby league star, is 5 foot 9 inches and weighs 16 stone 9 pounds, so is grossly obese according to his BMI (34.5). But fat he is not.
Read more »
The Cruncher
Inside Amazon’s rankings
Amazon updates its rankings of book sales every day, but the conversion from the Amazon rank to the actual level of sales is a closely guarded secret. Didier Sornette and colleagues at the Institute of geophysics and planetary physics at UCLA have recently carried out a detailed study of rankings on the website. They estimate that the book ranked ten in sales on amazon.com sells about 100 a day and rank number 100 around 30 a day. But sales fall away rapidly, with rank 1,000 selling some ten a day and rank 10,000 just two.
Way down in the long tail—an online retailing concept discussed elsewhere in this issue (see p65)—the book at rank 100,000 sells about one copy a week. But the unfortunates at rank 1m have total sales of just 15.
Read more »
The Cruncher
Green taxes
The shadow chancellor, George Osborne, is much taken by the concept of environmental taxes. But the idea that revenue from green taxes can substitute for other forms of tax is mistaken. There is an intrinsic conflict between the goals of raising taxes and of making people’s behaviour more eco-friendly. If people do change their behaviour in response to eco-taxes, revenues may be much less than anticipated.
The London congestion charge is a good example. Just before the charge was introduced, Transport for London estimated the net benefits over a ten-year period would be £1.3bn, an average of £130m a year. But they predicted that traffic would fall by only 15 per cent, and it actually fell by 30 per cent. With fewer people paying the charge, in the first year of operation, net revenue was only £68m.
Read more »
The Cruncher
Literary statistics
Did one person write the whole of Shakespeare? Who wrote the books of the Bible? Three researchers at the University of Adelaide have come up with a statistical approach which could help to resolve these puzzles. Matthew Berryman, Andrew Allison and Derek Abbot have published some of their findings on New Testament authorship.
Their analysis is based upon inter-word spacing, defined as the word count between a word and the next occurrence of the same word in a text. So in the previous sentence, for example, the count between the first appearance of “word” and the second is four, between the second and third three, the third and fourth seven, and so on. This is calculated for every single word throughout an entire text.
Read more »
The Cruncher
Holidays and happiness
Happiness and wellbeing are the flavour of the month. Everyone agrees that money can’t buy you love or happiness, but there is an implication that a more leisurely and less harassed life with long holidays is part of the answer. A long-view look at the data suggests, however, that time off has risen dramatically without having the desired effect.
Since 1870, GDP per head has increased by almost 600 per cent in Britain and by 1,200 per cent in America. But average annual hours worked per employee in Britain have fallen by almost half. In 1870, the figure was estimated to have been some 3,000, and now it is in the range 1,500-1,700, depending upon which estimate we take. Assuming the average person sleeps eight hours a night, a total of 5,840 waking hours a year are available. So in 1870, a worker spent half his waking life at work. Now, it is only just over a quarter. When we take into account the number of years spent in education, the big increase in holiday entitlement (even in the 1950s, most people had only two weeks a year), the retirement age and life expectancy, the increase in non-working time is even more dramatic. In 1870, virtually everyone left school at the age of 12. Now, almost half of the age cohort does not leave the education system until 21 or 22. In 1870, almost everyone either worked until they died, or died shortly after retirement. Now, average life expectancy at age 65 is almost 20 years.
Read more »
The Cruncher
The trivial game
The gap between good and bad teams at the World Cup finals has narrowed dramatically over time. One measure of this is the average number of goals scored each game. Large differences in ability will be reflected in games in which teams are defeated by many goals. The average was 3.89 in the first competition in 1930, rising to a record 5.38 in 1954. There was then a sharp fall to 2.78 in 1962, and ever since it has fluctuated around 2.5. This is despite a big expansion in the number of teams in the finals from 13 to 32. Many matches are decided by one goal, even between teams many places apart in the world rankings. This narrow gap implies a big element of randomness in success or failure. Perhaps this is part of the persistent appeal of an essentially trivial game which has few possibilities for innovation.
Lifetime offending
Read more »
The Cruncher
Sporting inequalities
Gross inequalities of income pervade professional sport. A clear example is provided by the sponsorship of team shirts in football. At present, the most lucrative deal in Europe is the annual £15m paid by Libyan energy giant Tamoil to Juventus. In Britain, Chelsea’s £10m a year from Samsung is the largest. But this has recently been surpassed by Manchester United.
After Vodafone pulled out of its £9m-a-year deal with United to sponsor the Champions League instead, the Reds came close to securing an arrangement worth twice as much with the online casino Mansion. The proposal fell through, but the club recently signed a deal worth more than £14m a year with the US insurance firm AIG.
Read more »
Post a comment »
