What goes around comes around

September 13, 2017

This recent New York Times story about the rapid decline in the value of taxi medallions, due to competition from Uber, Lyft and the like, portrayed the purchasers of the medallions in a sympathetic light.  Many are immigrants struggling to enter the middle class, willing to work hard to achieve the American dream.

My reaction to the story was reflected in many of the readers’ comments (usually the best part of any Times story) who recounted taxi drivers refusing to pick them up because of their race, or refusing to take them to an outer borough.  I remember coming home more than once from an exhausting business trip, laden with luggage, and being refused a ride to where I lived at the time, in Brooklyn Heights.

While I do have sympathy for those rule-abiding driver-owners who lost their investments, I have no sympathy for the all-too-many drivers who viewed the oligopoly conferred by their medallions as a license to engage in predatory behavior.  Karma, as they say, can be a bitch.

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Breakage

July 11, 2017

I first heard the term “breakage” when learning about betting on horses.  Breakage is the rounding down (never up) of payoffs to the nearest nickel, dime, quarter or dollar, ostensibly to eliminate the need for mutuel clerks to handle pennies or other small change.  Breakage also helps fund “minus pools” in which the net amount bet on losers does not cover the legally mandated minimum payout of $2.10 on a winning $2.00 bet.  However, breakage really is a surcharge on almost every winning bet a horse player makes, especially when the rounding down is to an amount greater than a nickel, or when it is imposed on non-cash betting accounts.

In the casino gambling industry, the term is used to describe when an establishment does not have to give something a patron has been offered or is entitled to, as explained in this post.  Casinos want to appear generous in extending offers to potential patrons, but don’t necessarily want to incur the costs of fulfillment to everyone who shows up to take advantage.

Breakage also occurs in the commercial world.  I have written about several varieties, such as the gas discount that may be used only once for up to 20 gallons, when most people’s cars have tanks that don’t hold that much, and coupons that, in large type, purport to apply to any item in the store; the small-type exclusions (which always seem to apply to the item you intend to purchase) are not apparent until after you’ve traveled to the store and been told the bad news at the check out counter.

I don’t understand how merchants believe that losing a customer who feels misled by an offer (even if, when carefully read, the offer fairly represents its terms) is worth the savings it can realize in terms of breakage.  I prefer giving my business to businesses that are forthright in their communications with customers and don’t play “gotcha.”

 


Design

July 11, 2017

Good design is something we all crave in consumer products.  In my experience, manufacturers seldom deliver.  In many cases, the lack of good design is shocking — if anyone actually used the product for any time before putting it in production,  its design would have been changed.  Two examples of this appeared shortly after I bought a new car.  While I generally am pleased with the vehicle, two features, each very obvious to me after a few short drives, make me want to scream.  The first is the ornamental chrome-like trim on the dashboard air vent to the left of the steering wheel.  This metal reflects in a glaring way in the outside rear view mirror and is a constant annoyance.  Interestingly, my father’s car, from a different manufacturer, exhibits the same problem.  A more serious design flaw is presented by the control for the instrument panel lights — a thin, plastic stalk that sticks out of the instrument panel that is twisted to control the brightness of the instrument back lights.  Aside from the fact that the stalk is flimsy and likely to break, it presents a safety hazard when accessed while driving, because accessing it requires the driver to reach through the steering wheel with one hand.

Other design elements that are bad for the consumer are deliberate.  In my limited experience, Apple, whatever the other merits of its products, is a master at this — so much so, that when other companies see what it gets away with, they emulate it. The lack of a memory card slot on its phones and tablets (before any claim at water resistance, which might have justified its omission), as well as the lack of a user-replaceable battery put me off Apple products when I was looking to buy my first smart phone and tablet.  I simply did not want to pay five times the cost of a standard memory card for the same storage that had to be built into the phone, or pay the Apple store a hundred dollars to replace a fifteen dollar battery.  The recent elimination of the headphone jack on some products, to force the user to purchase a dongle or bluetooth ear pieces, is the same type of deliberate anti-consumer planned obsolescence design. Another is the changing of the jack for the charging cable that forces a consumer to buy all new cables each time he or she buys a new model Apple phone. In the biopic about Steve Jobs, a scene that resonated with me was the launch of a new Apple computer.  When the machine wouldn’t work seconds before the public unveiling, the poor guy who tried to fix it found that Jobs had used screws that prevented the opening of the computer with a standard screw driver.


Other hotel pet peeves

June 5, 2017

A couple of years ago, I wrote about some annoyances I encountered while staying at hotels.  Last night, at a fairly upscale hotel associated with a casino in the northeast, I encountered a few more.

When I entered the room, the bed had been turned down, chocolates had been placed on it, and the radio had been turned on.  I turned off the radio, and didn’t notice that the alarm had been left on by the previous guest.  My blissful sleep was rudely interrupted by the alarm at 6:00 a.m., long before my intended hour of waking.  I don’t think it’s incumbent upon the hotel guest to figure out whether the alarm clock in a hotel room (of which there are infinite confusing varieties) has been armed; that should be an item on the housekeeping check list, especially when a housekeeper is tasked with turning on the same radio as part of the hotel’s turn down service.

Were it not for the rude awakening I experienced, I would not be writing this.  But as long as I’m ranting, this hotel had a loose faucet in the bathroom sink that no housekeeper could have missed while cleaning the room.  The room, recently (and apparently expensively) renovated, also had a paucity of soft surfaces, such as drapes and rugs.  While I was on the phone, I sounded like I was in an echo chamber, and noises from the hallway and other rooms were quite audible.  The heavy doors also clanged loudly when closed by guests.

I do not envy the jobs of hotel housekeepers, whom I’ve heard work to a very tight schedule and sometimes encounter the messes left very inconsiderate guests that make their jobs more difficult and increase the pressures on them.  However, I think they are the crucial eyes and ears that must be trained to look for certain things, and correct or report them, before the room is released to a guest. Management, please take note.


Buried lede

March 2, 2017

Here’s a headline and story from USA Today that appears to unquestioningly accept the modern corporate culture that protects overpaid executives from the consequences of their mistakes.

Why isn’t the headline something like “Exec on whose watch company lost billions in value and exposed customers’ data to abuse keeps job and ‘golden parachute;’ takes slap on wrist.”

 


Health care conundrums

February 17, 2017

As I advance in age, I am exposed more and more to the health care industry, despite having enjoyed relatively good health until recently.  As a retired New York State employee, I am blessed with excellent health insurance that covers most doctor visits, medical tests and procedures, as well as prescription drugs, with only a relatively modest co-pay. Here are a few observations:

First, it appears that many of our health problems are what a friend of mine calls “diseases of affluence.”  More appropriately, they should be called “diseases of lifestyle,” since they affect people of all socioeconomic strata.  A lot of these are directly influenced by government policies.  For instance, our auto-centric physical infrastructure minimizes the opportunities for and pleasures of walking and cycling, and cannot help but contribute to obesity and other problems based on lack of physical activity.  Our government subsidies to cane sugar and corn (the main ingredient of high fructose corn syrup) help make junk food and sugared soft drinks attractively priced.  This is especially so for the poor, since the SNAP program (formerly known as Food Stamps) allows their purchase with SNAP benefits.  If we collectively spent more on complete streets that were friendly to pedestrians and cyclists, as well as cars, how much could we save on health care (not to mention on school transportation)?  How about if we stopped subsidizing sugar?  I think it would be worth a try.

For all the criticism leveled against it, the Affordable Care Act (“Obamacare”) has achieved something great — it has shifted the dialog from whether health care insurance should be extended to many of those who don’t have it to how the present system should be replaced or improved.  Neither Trump nor his minions are suggesting that those who obtained health insurance through Obamacare should lose it, meaning that they recognize that there is no going back on government’s commitment to growing numbers of its citizens.  Whether things actually get better or worse remains to be seen, but at least no one is talking a bout a pre-Obamacare “reset.”  To me, that is yuge.


Before you go to Rivers

February 2, 2017

I.

Its February 8 opening imminent, the Rivers Casino’s public relations operation is flooding the area with advertising and press releases.  The photos I’ve seen of the casino portray a modern, tastefully appointed property that reminds me of some of the nicer off-Strip properties in Las Vegas, such as the M Resort and Red Rock Station.  The restaurants look inviting.  But is it a place where you will want to spend your hard-earned money?

Casinos operate on the principle that they pay out less than the true odds on their games.  An illustration will explain this:  A fair coin, over a large number of tosses, will result in an equal number of heads and tails.  In a game in which you bet on the outcome, the true odds would be even.  Thus, if you bet a dollar on each toss, and lose your bet on heads, but win a dollar on tails, you are paid true odds, and the casino (and the player), in the long run, would break even on the game, which is not a sustainable business model.  Instead, for your dollar bet you may be paid 85 or 90 cents when you win (the casino keeping your dollar if you lose), the difference between the payoff amount and the dollar that would represent fair odds going to overhead and profit.  The difference between true odds and actual payouts can be roughly expressed as the “house edge.”

So, if virtually assured a long term loss, why would anyone gamble?  There are many answers to that question.  However, for the sake of simplicity, let’s choose the most common one – one gambles because of the possibility of “getting lucky.”  While the coin toss will result in equal numbers of heads and tails over a long run, the results are “streaky” — they may come in bunches of heads and bunches of tails, some fairly long.  This volatility can make players winners in the short run.  A well run casino recognizes the necessity of volatility and the winners it produces, and often advertises those who hit large slot jackpots, hoping to persuade others to try their luck.    Because the casino is dealing with a large number of players over a long time, volatility is not nearly as much a factor for it, and it will profit despite the short term winners if its business model is sound.

The more often one gambles, and the more one bets, the more one moves from the short term to the long term.  Volatility recedes in influence, and the house edge asserts itself more consistently.  This is why the educational materials addressed to problem gamblers and potential problem gamblers emphasize that “chasing losses” by continuing to bet seldom works and most often leads to more losses.

II.

A great truth almost never addressed by casinos, their regulators or the general news media is that not all casinos are alike.  In addition to offering different games and amenities, casinos have a wide latitude in adjusting their house edge on many games.  On some games, the player can calculate the house edge.  As I have written, video poker is one of those games. Similarly, the house edge in blackjack can be computed.  Other games, notably slot machines other than video poker, do not readily yield their payoff percentages or volatility.  As I previously wrote, the video poker offered by other casinos run by the company that manages the Rivers has relatively high house edges, and I expect the same here, given the high taxes and fees the Rivers must pay the State.  A recent check of the Rivers web site reveals that its single and double-deck blackjack games will pay 6:5 on a blackjack, which sends the house edge for those games into the unplayable stratosphere (the casino also will offer “shoe games” using more decks that will pay the traditional 3:2 for blackjacks; depending on the other factors, those games may or may not have a reasonable house edge).

If you have guests arriving for dinner in a few minutes, and suddenly find yourself out of something you need to finish the meal, you will go to the nearest store and pay whatever the cost, so that you can return in time to have the meal ready when your guests arrive.  That’s the principle behind convenience stores.  However, for your weekly shopping, particularly if you have a large family, you are likely to be more price conscious, even if it means a longer drive to a larger store.

From the presently available evidence, I predict the Rivers will be on the convenience store end of the spectrum.  If you are a casual, low stakes gambler, and the location is convenient, the comps and offers generous (which remains to be seen) and the atmosphere enjoyable, you can enjoy a day or night out at a reasonable cost if you limit the amount you bring, prepare to lose it, and leave the ATM card at home.  However, if you are a more regular gambler, you may wish to take it easy until you have an idea of how you may be expected to do compared to at the venues you presently frequent.