December, 2017


New research reveals simmering misunderstanding under the tree

IS THERE any other time of year when good intentions and materialism converge so tightly? The caring, the artistic and the diligent spend their days before Christmas wrapping gifts. Whatever lies inside, their love for the recipients will also be expressed through paper, tape, bows and ribbon. Then it all goes horribly wrong. New research* into the unwrapping of presents by two professors at the Yale School of Management and one at the University of Miami bravely applies rigour where sentimentality has long ruled. Their paper draws on a half-centuryRead More

America’s Department of Commerce imposes a tariff of 292% on Bombardier’s C-Series jets

A YEAR ago Dennis Muilenburg, the chief executive of Boeing, the American aerospace giant, had a big problem. Tweets written by Donald Trump, America’s newly elected president, were hitting Boeing’s share price. Their value was initially lifted by the new president’s promise of extra spending on defence. But in December last year Boeing’s shares fell after a tweet from Mr Trump suggested that an order for new presidential planes worth $4bn should be cancelled. The newly-elected president then picked a fight with its rival Lockheed Martin over its new fighterRead More

Ryanair stops Christmas strikes, but at a cost

AIRLINES respond to greater demand for travel around Christmas by increasing fares. But this year, Ryanair has found that it is not the only one taking advantage of the desire to be home for the holidays. To avert proposed strikes by pilots across Europe, the Dublin-based carrier offered on December 15th to recognise pilot unions for the first time in its history. The offer came just in time to avert a four-hour strike by Italian pilots scheduled that afternoon. Pilots in Ireland and Portugal also called off a strike theyRead More

Countries rarely default on their debts

VENEZUELA is an unusual country. It is home to the world’s largest reserves of oil and its highest rate of inflation. It is known for its unusual number of beauty queens and its frightening rate of murders. Its bitterest foe, America, is also its biggest customer, buying a third of its exports. In defaulting on its sovereign bonds last month (it failed to pay interest on two dollar-denominated bonds by the end of a grace period on November 13th), Venezuela is also increasingly unusual. The number of governments in defaultRead More

Russia’s dysfunctional funeral business gets a makeover

THE calls began shortly after Yulia’s grandmother died. The undertaker offered help arranging the funeral, for 47,000 roubles ($800) in cash. She then travelled to Moscow’s Khovanskoe Cemetery, where she was offered a discount on a gravesite—150,000 roubles off—if she could bring cash within three hours and sign a receipt saying she had paid half that amount. Yulia (whose name has been changed) and her family gave in. “We knew we were paying a bribe, but what else could we do?” To bury a loved one in Russia often meansRead More

Have yourself a dismal Christmas

ONLY an economist would think to ask whether Christmas is efficient. In 1993 Joel Waldfogel, then a professor at Yale University, turned a lunchtime conversation with colleagues into a paper entitled “The deadweight loss of Christmas”, which argued that, no, it is not. That gift-giving might actually be bad is the kind of opinion which breeds a deep mistrust of economists—loathing is perhaps too strong—among those not schooled in the dismal science. It is also just the sort of analytical insight on which economists pride themselves: counterintuitive, irreverent and interesting.Read More

Hard lines

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Intangible assets are changing investment

WHEN you work as an equity analyst at an investment bank, your task is clear. It is to comb all the statements made by corporate executives, to scour the industry trends and arrive at an accurate forecast of the company’s profits. Achieve this and your clients will be happy and your bonus cheque will have many digits. But is all this effort worthwhile? Not as much as it used to be, according to Feng Gu and Baruch Lev, writing in a recent issue of Financial Analysts Journal*. The authors imaginedRead More

A vote on “net neutrality” has intensified a battle over the internet’s future

A DAY before the Federal Communications Commission (FCC) voted to rescind “net neutrality” regulations designed to ensure that internet-service providers do nothing to favour some types of online content over others, Ajit Pai, its chairman, tweeted a short video reassuring Americans. “You can still post photos of cute animals,” he says in it, posing with a dog. He also wields a light sabre, which prompted Mark Hamill, the actor who portrays Luke Skywalker in the “Star Wars” films, to criticise Mr Pai on Twitter for siding with giant corporations. TedRead More

Combustible cigarettes kill millions a year. Can Big Tobacco save them?

BESIDE a serene lake in Switzerland sits a modern glass building called the Cube. Wide-leafed tobacco plants grow in the lobby. In one room machines that can “smoke” more than a dozen cigarettes at a time dutifully puff away, measuring the chemicals that consumers would inhale. The research centre is run by Philip Morris International (PMI), which sells Marlboro and other brands around the world. The facility’s purpose is not to assess the risks of smoking, but to determine whether this huge cigarette-maker might get out of selling cigarettes altogether.Read More