Category: Food and Drink

I had lunch there lately, in the new and excellent Ray's the Steaks, East River edition (superb chili, fried chicken, mac and cheese; recommended).  Yet I drove around the general area for about forty minutes and hardly saw any other restaurants to speak of.  The five or six other times I've been to Anacostia I had similar impressions, even more than in other "ghetto" areas I have visited.  

What might be possible explanations?

1. Poverty: Yet there are other retail establishments and per capita income there is surely not so low.  Plenty of poor countries have plenty of restaurants.

2. Risk and crime: Yet you will see other cash-intensive retail businesses in Anacostia.  Is it so hard to hire a guard?

3. Traffic: It is easy to get in and out of Anacostia, so perhaps residents drive to eat out elsewhere.

4. Diversity:  Perhaps it is the demand for different kinds of food which increases the number of restaurants; yet Anacostia is not so ethnically diverse, as it is heavily African-American.

5. Labor supply: Cheap restaurants rely on low-wage laborers who do not have cars, and it is actually fairly hard to get to, and get around, Anacostia.

6. Proximity to business lunch demand.  Not so much.

7. Fast food: You will find McDonald's and Subway in Anacostia.  Since they serve high volumes, maybe that lowers the total number of restaurants needed.  This is related to #4.

8. Foot traffic: Not so much, although the suburbs deal with this problem just fine.

What do you think are the major factors?  What have I failed to list?

In the 12:30 to 2 lunch slot, the Ray's across the Anacostia river was never more than half full, though a Ray's elsewhere will be quite crowded during those hours.  In all fairness, this Ray's has not been around for long.

I thank Ross Douthat for a useful conversation on this topic.

Ted Frank reports on his 60k weight-loss bet with Ray Lehmann:

In late 2008, Ray Lehmann and I made an audacious bet: we would put up $60,000 that we would lose 60 pounds in nine months, and pay each other $1,000 for each pound the other lost. 

…I lost 32 pounds, Ray lost 41, and we were on pace to lose 60 each. StickK.com was offering to make us their official spokespeople.

Then things fell apart. We couldn't negotiate an appropriate contract with StickK, which wanted exclusive rights to our story without any compensation. The delay caused us to stop writing about the diet while we had false dreams of fame and glory from StickK promotion, and then we both got distracted with starting new jobs and the disappointment of shattered expectations when StickK stopped returning our calls.

Alex Tabarrok correctly predicted that the danger of the two-person bet was that we would collude not to enforce it.

And, indeed that was what happened. We started gaining weight, and started pushing back the goal-line for the end of the bet…neither of us held the other's feet to the fire….

Professor Tabarrok's solution was to create a third-party Leviathan to enforce the bet: he facetiously offered to pay us $500 to be the collector [not facetious, Ted!, AT]. Of course, that was a negative-expectation transaction for each of us, unless we thought we had a 90%+ chance of succeeding…Even the threat of public humiliation on Marginal Revolution wasn't enough to stop us from colluding.

But Ted isn't giving up.  He is looking for other people to take the bet to reduce the possibility of collusion or he would like to auction off leviathan rights.

Are there three other people out there willing to wager that they can lose 50 pounds over a reasonable amount of time? (Forty? Sixty?) Who's in, and under what conditions?

…In the alternative, how much is someone willing to pay to be Leviathan and have the opportunity to collect tens of thousands of dollars from me or Ray for failing to lose weight? I suppose I could put Leviathan rights up on eBay; if Marginal Revolution and a few other blogs publicized it, we could reach a good solid equilibrium price. What do people think?

I see this is as a good case study in the difficult of setting up an appropriate incentive scheme and also the difficulty of losing weight. When I put on my Tyler hat, however, I have to wonder whether all this effort put into clever incentive schemes is not a way of avoiding the real issues.  "Less blogging, more jogging," my friends.

What Ted and Ray are trying to do is to sail between Scylla and Charybdis by offsetting the pull of food with the pull of lost money. Carrot cake versus stick. But in this tug of war, how long will the balance last? How permanent will the weight loss be?

The real trick in weight loss, as in other areas of life, is to change wants not oppose them. Unfortunately, Seth Roberts nothwithstanding, this is a struggle with no easy solutions.

Nevertheless, I have proudly helped others to lose weight with unusual incentives, and my $500 bid for leviathan rights over Ted and Ray still stands. Good luck guys.

For me, pluots and grapes are close substitutes, though not perfect substitutes.

Let's say a house visitor brings a big bag of pluots as a gift.  That distorts my optimum pluot-grape ratio.  But I don't eat all the pluots at once, simply to restore the preferred ratio.  That would be an unbalanced meal.  Instead, I dig into the pluot bag at a higher rate than I would normally eat pluots.  Over a longer period of time the proper ratio is restored, pluot by pluot. 

The closer pluots and grapes are as substitutes, the longer it takes for equilibrium restoration.  But the closeness of substitution is not always the major factor determining the speed of adjustment.  It may be just as important, or more important, how hungry I am, how much of a glutton I am, and how much I like pluots.  It also matters whether I am fearing a large shock, requiring a major pluot reserve, such as when a bevy of pluot-devouring guests might suddenly visit the house.  

In any case, equilibrium restoration eventually comes.  Those pluots will clear my refrigerator, sooner or later.

Apply a similar analysis to cash and T-Bills.  At low nominal interest rates they are close substitutes but not perfect substitutes.  T-Bills are of greater use for clearinghouse collateral, and yield a bit more, but they are not liquid in exactly the same ways.  Even if cash and T-Bills are close substitutes, monetary policy will change the banks' mix and so banks eventually will reequilibrate, converting extra cash into AD, one way or another.  But as with the pluot adjustment, this won't happen all at once.

Equilibration (and the accompanying AD boost) may be slow, maybe too slow for comfort.  But the degree of substitutability is not the only factor determining the speed of this adjustment, just as with the pluots.   The degree of bank and business confidence may be the most important factor.  Other factors will be the cues from the Fed, the corporate cultures of the banks, possible uncertainty, transactional frictions (the difference in returns is small but perhaps the cost of adjusting is small too), and so on.  The degree of substitutability is one factor determining the speed of adjustment but not necessarily a major factor.  I am not sure it should be put in the top three most important factors.

The zero bound argument assumes that the degree of substitutability is, at current margins, the major factor which matters.  You are being "sold" a model of portfolio adjustment with one dominant factor.

Monetary policy is not working well today, but perhaps bank and business confidence is a bigger reason than the degree of substitutability.  From those who promote the relevance of the "zero bound" argument, you will see it implicitly assumed that we have a case of perfect substitutes and that substitutability is the major factor hindering portfolio adjustment, as would lead to an expansion of the broader money supply aggregates.

In many models "close substitutes" and "perfect substitutes" have very different properties.  Current discussions of the liquidity trap usually neglect this point.

Addendum: This is also a framework for thinking about ceasing to pay interest on reserves.  If it creates perfect substitutes, stop the policy immediately.  If it creates closer substitutes, it may matter much less.