Economy
Discover facts about economy. Small discoveries that change the way you see familiar things.
Economy
How hiding sales tax changes what people buy
In Raj Chetty’s supermarket experiment, putting the sales tax on cosmetics’ price tags cut sales by 8%. Shoppers already knew tax would appear at checkout;…
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Facebook's $19 billion WhatsApp deal was about the network
The announced 2014 package targeted a messaging service with hundreds of millions of users and a comparatively tiny workforce. Its value was not a factory or…
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Japan crushes senior savings via financial repression
If prices rise faster than retirees’ savings earn interest, the savings buy less each year. Governments with heavy debts can benefit because inflation shrinks…
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How rent caps helped push up San Francisco housing costs
Some landlords converted apartments into luxury condos to escape rent-control rules. That took homes out of the rental pool, leaving fewer apartments…
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How traders bet on wars without finding an opponent
A trader does not need to find someone willing to take the opposite side of a war bet. An automated market maker always offers a price, then adjusts the odds…
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How Greensill's collapse disrupted global supply chains
Greensill made loans against business it expected companies to do later, not just invoices they had already earned. Insurers balked at backing those loans,…
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China keeps pork in reserve like an economic shock absorber
Officials can buy meat for storage when prices are weak and release frozen supplies when prices rise. Holding food back or putting it on sale changes the…
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Federal Reserve bleeds money for the Treasury
Higher rates created an awkward reversal: the Fed was paying banks more interest than its bonds brought in. With operating losses piling up, its regular…
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Dirty gold reached a US refinery through clean-looking paperwork
In its 2018 guilty plea, Elemetal admitted failing to maintain an adequate anti-money-laundering program. Court documents described gold moving through shell…
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How drivers make Uber surge prices spike
If drivers in an area all go offline together, fewer cars can trigger surge pricing. They can then log back in and accept rides at the higher fare.
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An unpaid invoice can pass a crisis down a supply chain
One company’s overdue invoice can become another company’s unpaid bill. Japanese suppliers extend credit by waiting months for payment, but when a major firm…
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How the Bahamas' Sand Dollar could bypass banks
A citizen could hold digital money issued directly by the Bahamas’ central bank instead of keeping that money in a commercial bank. If enough deposits move,…
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In Taiwan, an ordinary receipt can double as a lottery ticket
The uniform-invoice lottery draws winning numbers for cash prizes, giving shoppers a reason to ask for and keep receipts. That customer incentive also makes…
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How shadow banks helped bring down Lehman Brothers
Investors could pull cash from money market funds quickly, while those funds had already committed it to longer-term loans. In 2008, the rush for withdrawals…
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One hedge fund bought a year's worth of cocoa for the UK
In 2010, Anthony Ward bought enough cocoa beans to supply the UK for a year and stored them in European warehouses. One investor was sitting on a year’s worth…
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How one stockpile of copper was pledged to several banks
A warehouse receipt was supposed to stand for stored metal. In the 2014 Qingdao fraud, forged receipts let traders pledge the same copper and aluminum…
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ISIS put looted antiquities inside its revenue bureaucracy
Documents recovered in a US raid described an antiquities department linked to ISIS official Abu Sayyaf. US investigators used them in efforts to recover…
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A neighborhood built the bank that would lend to it
Residents of Conjunto Palmeiras in Brazil founded Banco Palmas in 1998 after struggling to obtain conventional credit. Its local currency, the Palma, could be…
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The journalist who saw the 1929 crash coming
Borrowers used banks’ call-money loans to buy stocks, then used the rising market to keep the speculation going. Noyes warned that if the loans were called,…
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A coin dated 1652 could have been minted decades later
Massachusetts Bay's mint continued putting 1652 on most of its silver coins long after that year. Colonial Williamsburg holds a pine-tree shilling bearing the…
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Japanese warlords put a money value on farmland
Under the kandaka system, land was assessed in monetary units associated with copper coins. That made different fields comparable on a ruler's accounts, even…
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Britain made joint-stock ventures harder to launch in 1720
The Bubble Act restricted companies operating as joint-stock ventures without legal authorization. Passed during the South Sea boom, it put a government…
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How Ottoman tax breaks weakened local businesses
A European merchant in the Ottoman Empire could get out of local taxes and answer to a European court. Local merchants still paid high taxes, leaving foreign…
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The currency designed to expire
To keep a Freigeld note valid, its holder had to buy stamps that cost money. The penalty for sitting on cash was built right onto the currency, nudging people…
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