The world is always seemingly worried about a shortage of oil. Yet three days ago the OPEC Chief stated that oil prices and levels were fine. He went even further and said that markets who needed more oil could have up to two million extra barrels per day, if needed. It sure doesn't seem like there much of a shortage of oil. It seems as if the actual price of gasoline is completely irrelevent to the actual supply of oil/gasoline.
In the Consumer Reports for people buying computers online, Apple was the top choice with IBM coming up second, Dell in third and HP falling into fourth place. Dell used to be higher up on the list, however its customer service seems to be the factor that agrivated customers. Dell decided to outsource it's customer service branch which created language barriers between customers and technicians, and also customers complained of very long waits on the phone with the hotlines. Other factors that influenced customer's opinions about the companies inlcude price, products selection, products quality, and ease of use. Does Apple deserve to be the top choice because of its computers or maybe because of other products like the ipod? Do you think that with Apple being the top choice instead of PCs like Dell, that the business world may convert to Apple technology in the future? How will this affect the business world?
Chiquita the fruit company will be expecting some sales losses this quarter due to several tropical storms. Heavy rains destroyed about 1600 of its Honduras fruit farms. Also, they lost some of their fruit farms in Guatemala due to hurricane Stan. These storms will no doubt create a shortage of fruit production for their suppliers and consumers. But Chiquita is looking for alternative places such a Latin America. Is there any way that Chiquita can better prepare for such losses? Should they move to Latin America? How will this affect prices and consumer consumption?
Many people wanted to skip the 6am rush the day after Thanksgiving. It was a rush of people wanting to get there and catch the sales before the product was sold out. However, this year shoppers spent 26 percent more on online purchases than in 2004. Consumers spent $925 million on online retails from Thursday to Sunday. VisaUSA say online buying by their cardholders rose 26 percent. On Monday many continued to shop online getting little work done. Those who shopped online went from 11.1 million to 15 million. Stores such as Barnesandnobles.com said Monday was the biggest this holiday season. The three most popular sites were eBay, walmart, and Amazon. Internet sales were rising at a remarkable rate while shoppertrack, which keeps track of store sales, said it only rose 0.4 percent since last year. To get shoppers to purchase online many of the sites offered similar incentives as of the stores, and many sent emails out telling details about the sales. Were you one of these online shoppers? Do you think this will have an impact on the stores itself?
A recent poll in Europe showed that due to better medicine, working conditions, diet and education people are living longer. This seems as a good thing but the poll also showed less people having kids. According to the article this could create a problem for the future work force. As the present workforce continues to get older and less people having kids, replacements could be an issue. One argument was to allow people to work longer and maybe even pass their pension plans. But the majority of people do not even work until their pension plan, which is 65 yrs old. Also, if there is a younger worker shortage who will pay for the older workers pension? How will European companies fix their potential worker shortage? Will they require their older workers to work longer? How will they draw in the younger workforce?
ESPN, the largest provider of sports in North America is trying to go mobile. Disney, its parent company, has come up with an idea that will allow sports fans to watch games and get highlights and score reports on their phones. Their is one catch, the subscriber will have to buy one of Disney's new phones manufactured by Sanyo Electric Co. and get airtime minutes from Sprint Nextel Corp.'s national cellular network. These phones are not cheap costing $499.99. The billing statement would come from Mobile ESPN, not Sprint. It will range from $64.99 to $224.99 a month. This new idea is very challenging since the cell phone market already has heavyweights such as Verizon, T-Mobile, Cingular and Sprint. Their aim is to pull already existing customers away from their competitors. Will ESPN Mobile be able to exist in this already completive market? Will they have to lower prices to lure customers? Or will the existing companies provide their own sports service?
Online shopping keeps getting more and more popular. It has been reported that people are shopping online during work, and 59% of buying has come from work computers this month. In addition, the Monday after Thanksgiving has been named Cyber Monday because the large amount of people who shop online after the door buster sales the day after Thanksgiving. Online sales are expected to keep increasing, and stores are aware of the change in buying habits. Do you think that with the great sum of people buying online that the stores will reduce sales? In fact, do you think that most stores will have fewer employees this season than normally because of the expected online buying? Will this factor be a problem for families who rely on part time jobs around the holidays to purchase gifts? How will this affect the economy?
The drug company Merck and Company announced recently that it would be making cuts in it's costs. They will be making these cuts by getting rid of 7,000 jobs (11% of it's workforce) and closing various branches of the company including a few manufacturing plants, a research site, and two development sites.
How will these changes in Merck affect the overall prescription drug market? How will it effect the job market in the areas where the plants and sites are located? Finally, how will it effect the overall economy?
Link: http://biz.yahoo.com/ap/051128/merck_cuts.html?.v=12
Full Article [http://moneycentral.msn.com/content/P133917.asp?GT1=7390]
Given the huge amount of ?adult entertainment? we consume as a nation, it?s a wonder Playboy Enterprises' stock performs like it needs a dose of Viagra.
Just look at the size of the porn market:
Americans spend about $5 billion to $8 billion on smut each year.
Sex sites account for 40% of all Internet traffic.
Satellite and cable operators earn about $800 million a year from adult movies, or about 40% of pay TV and on-demand TV revenue.
Now look at how Playboy Enterprises (PLA, news, msgs) continues to struggle:
Playboy magazine lost money last quarter as publishing revenue slipped 8%. Playboy circulation fell again to near 3 million -- which means the monthly places 19th among U.S. magazines.
Founded by Hugh Hefner in 1953, the magazine is now firmly entrenched in circulation rankings below National Geographic, Good Housekeeping and Ladies? Home Journal. So far this year, Playboy's publishing unit has lost $3.4 million.
In the third quarter, Playboy as a company took in just $80.9 million in revenue. The 10 cents a share in profit Playboy earned may seem good -- since that beat last year?s results by four cents. But a closer peek reveals cost-cutting saved the day, along with sharp declines in taxes and interest payments. Without that help, which can?t last forever, the company would have reported a loss of 5 cents per share.
For the first three quarters of the year, Playboy revenue grew an anemic 3%, and the business lost 16 cents a share -- exactly the same amount of red ink spilled in the same period last year.
All of this paints a fairly dreary portrait of Playboy.
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My question is, if the porn industry is making decent money, then what can be expected if the most famous of the porn industry shuts down? Will the income fall, will it increase from some newer trendier playboy? If playboy doesnt start making up money, will our famous adult entertainment known as playboy change how we view the porn industry, and how we buy?
In Environmental Economics, we have discussed many different types of policies that are all geared towards reducing pollution. No matter the specific type of policy, enforcement is always a big problem. This is due to the fact that each individual firm will abate only to a point in which the MPC (marginal penalty curve) is equal to the MAC (marginal abatement curve). To increase the compliance rate, the EPA can raise fines for violations, raise the probability of getting caught, or do a combination of the two.
The EPA published an article on Nov. 15 that shows that the agency has increased the probability that violators of environmental policies will be caught. In 2005, the EPA prosecuted some of the “largest environmental crimes in history.” The specific charges and sentences can be found through the link to the EPA website.
My question to the audience is this: will the increased prosecutions shift the MPC to the left, causing a higher compliance rate, or will they not act as a deterrent?
http://www.epa.gov/compliance/data/results/annual/fy2005.html
http://www.msnbc.msn.com/id/9983120/ [full article]
With sales growth among U.S. consumer-products companies expected to lag behind last year's big gains, this holiday season may prove to be a double whammy for those outfits with already weakened financial profiles. On the heels of one of the worst hurricane seasons on record, in which Katrina and Rita helped drive up already steep energy and commodity prices, U.S. consumers are being forced to rejigger their usual spending habits this holiday shopping season.
Even though energy prices have retreated some in recent weeks, they remain at historically high levels. Lofty prices for gasoline and home heating fuels combined with rising interest rates may force consumers to reconsider big-ticket purchasing decisions.
At the same time, elevated energy expenses are fueling higher operating costs throughout the manufacturing supply chain, including raw materials, factory overhead costs, and transportation. The result: A further squeeze on the profit margins of consumer-products outfits
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With energy prices in record highs, one has to wonder, during this cold winter and natural disasters, how is this affecting the economy? Cold winters, gas heat, less spending this holiday season? Dramatic effects of energy prices, and recent hurricanes are definitly going to affect holiday spending this year.
Microsoft recently released its new game console, Xbox 360. Strangely enough, Microsoft is losing money on the Xbox consoles. According to the article, the cost of building a console is greater than the console's price. The cost of making and testing the Xbox 360 is around $552.27 while the retail price is only $399. The article also explained that the chip that runs the console costs $106 while the graphics processing unit costs around $141. However, these two costs are projected to decrease as their manufacturing processes become more efficient.
Even though Microsoft is losing money by selling Xbox 360's do you think that they should continue producing them at this point in time?
http://money.cnn.com/2005/11/24/technology/xbox_loss.reut/index.htm
Full Article @ :http://www.msnbc.msn.com/id/5612507/
SINGAPORE - Oil prices were lower Wednesday after the government reported a substantial increase in the nation?s fuel stockpiles.
A barrel of light crude was lately quoted at $57.95, down 89 cents on the New York Mercantile Exchange. Prices slid to five-month lows last week and are about 20 percent above year-ago levels.
In the U.S. Energy Information Agency?s weekly petroleum inventories data, released mid-morning, the Energy Department said the U.S. crude oil supply went up by more than 400,000 barrels last week. Inventories of distillate fuels, such as diesel, increased by more than 1 million barrels, and gasoline inventories rose by 200,000 barrels.
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With Oil prices dropping and the demand increasing, one has to wonder, are the prices going to rise again? With the supply increasing and the price decreasing, you'd think they'd have lots of sales. Is the increasing supply and low costs going to effect consumers buying gas and oil? Can this help our economy? Or is it just a weekly thing, and some people get lucky with cheap gas and oil?
University of Maryland business professor predicts that consumers will buy less in the upcoming year. Gas prices have declined after post-Katrina, but it is still up 5 % over last year's. He doesn't expect people to buckle over the holidays, but he says, "watch out for the post-holiday blues when people realize that they're poorer in the new year that they were a year ago."
With that in mind, mortgage rates are starting to increase once again. It is said that the nation's housing market has made consumers feel wealthier, acting as a bulwark agaisnt the summer's rising energy prices.
Do you think UM business professor Peter Morici is going to be right? Will consumers spend less in 2006 and cause the economy to suffer?
General Motors has absorbed nearly four billion dollars in losses this year. This has led to the decision to eliminate 30,000 jobs and close down nine North American production plants by 2008. The company hopes that this will bring production in line with demand and allow the automobile manufacturer to begin making money once more. The 30,000 jobs represent nine percent of the company's entire global workforce. This has not been an easy decision to take by the United Auto Workers, who have quoted GM's actions as being "extremely disappointing, unfair, and unfortunate" and "devastating to many thousands of workers". The union will be protected by its job security agreements, but contract negotiations in 2007 will now be more difficult. Although GM stands to cut costs by seven billion dollars, it will also cut its amount of production. Also, because the union has stated that negotiations will be more difficult in the future due to the job losses, I'm wondering about the impact this will have on labor-management relations, and how this will affect the company's future.
Oprah Winfrey is not only one of the world's richest women but she is arguably one of the world's most influential women. Her daily talk show, Oprah, is watched faithfully by millions of women across the country. Not to long ago, Oprah hosted a bra and jean fitting segment on her show. She was sponsored by Nordstrom. Just by uttering the words, "If you're watching around the country and you want to know where to go, go to a Nordstrom's nearest you. They're trained to do the fittings." Oprah has increased Nordstrom's sales by 189%. Because Oprah said it was true, it has to be.
What kind of kickback is Oprah getting from saying that she likes a particular brand of clothes or bras? If you were a designer what would you do to convince Oprah, who could increase your sales with a just a few words, that you brand is the best? How much “free” stuff do you think that she receives on a daily basis?
General Motors has been facing some devastating blows in the past year. Delphi, which was once apart of GM, has just filed for bankruptcy and GM is in $12 billion dollars worth of debt to them. Delphi is GM's largest supplier and if GM doesn't pay up they will go on strike. This is would be a crushing blow to GM allowing their competition to take their potential customers. Also, the Securities and Exchange Commission is investigating on GM is dispersing its money to health and pensions. This follows suit to GM's health and retirement costs. Since Asian automakers have no obligation to pay for health care for their employees they are able to save money. This is something that GM cannot compete with. With high gas prices, it is obvious that people are reluctant to buy SUVs and pickups which are its major source of income. This rolls into their weak sales problem. People are now buying more of the smaller more gas efficient cars made by Asian automakers.
What should GM do to try to win back their customers and avoid filing for bankruptcy? Should they make smaller cars to try and compete? Or make SUVs and pickups more efficient?
http://www.msnbc.msn.com/id/10068776/ [for full article]
WASHINGTON - Ford Motor Co. recalled 220,000 vehicles from the 2005 model year Wednesday amid fire worries from a battery cable rubbing against the frame and concern that a fuel tank strap could separate after tens of thousands of miles.
The recall linked to the cable involves more than 98,000 Ford Crown Victoria, Lincoln Town Car and Mercury Grand Marquis sedans. Ford said in a letter to the National Highway Traffic Safety Administration that it has received four reports of fires.
Ford spokeswoman Kristen Kinley said chafing of the cable caused the exposure of wires to the vehicle frame, causing the frame to become electrified in some cases and carry the potential for heat damage or fires.
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With this huge recall from Ford, one has to question if the company can handle the cost? With gas prices on the fritz and shooting up and down, people aren't looking to buy many trucks or SUVs. Even with the larger sedans, consumers are looking for one thing, cars that can save on gas. Is Ford's opportunity cost of still making this cars and sedans worth it? Can they keep up the high cost of maintaining their operations?
For years, many have been aware of the personal dangers of smoking. They have known that smoking can cause different types of cancer and can complicate other health problems. But what many have yet to realize is that their decision to smoke doesn’t just hurt them, but it hurts society.
In this article – published by HealthDay News – some of these costs and the approach that New Mexico is using to deal with these costs are discussed. The issue at hand is that second hand smoke does not just cause problems for people, it also causes environmental and wildlife concerns. And the main objective of New Mexico’s program is to send this message to children before they start to smoke.
The program involves taking injured birds (hawks, owls, falcons) to middle school classrooms once a week and showing the students the effects that human actions have had on the health of these animals. These birds suffer from a variety of problems caused by human action. One of the birds died of lung cancer; another suffers from birth defects believed to be caused by toxins, while a third bird suffers from a broken wing caused by the pesticide DDT. DDT causes a thinning of the bird’s egg shells and increased birth defects if not death.
The students learn about the lives of these animals and how their personal actions can lead to either make things better or worse for them. The program is hoping to connect with these students through the use of the birds; making them aware that there are other costs of smoking besides personal risk and the price of cigarettes.
Do you think this program will work? Should other states set up similar programs? Is there a more efficient way to go about decreasing the number of smokers in the United States?
Above figure shows the sources of sulfur dioxide emissions in the U.S. according to year 2002.How many times a day would you say you washed your hands? Do you use regular soap or anti-bacterial soap? Which do you think is better? Before reading an Article on ABCNews.com, I would have said that anti-bacterial soap is probably better. After all, one of the main reasons people wash their hands is to destroy bacteria; hopefully preventing illness in the process.
But according to a new study by the Alliance for Prudent Use of Antibiotics and the Nonprescription Drugs Advisory Committee, instead of preventing illnesses, the use of anti-bacterial soaps may be creating future strands of bacteria resistant to antibacterial remedies. By using this anti-bacterial soap you may be enabling the evolution of bacteria; making them less susceptible to human control.
So, what does this information do to the market for soap and the market for anti-bacterial soap? If consumers take these studies seriously, they will most likely switch from anti-bacterial soaps to regular soaps. The demand for anti-bacterial soaps will diminish (shift left) and the price will decrease. The opposite would happen in the market for regular soap. The demand would increase (shift right); causing the price to increase.
I do believe that society may have overdone it with cleaning by killing all bacteria. And I do believe that bacteria have the capability to evolve and cause problems for the human population. But what I don’t know is whether or not consumers will be willing to change their mindset that all bacteria is bad based on one study; especially since we really don’t know how valid this study is. Will the FDA get involved? What impact would it have if the FDA agreed/disagreed with this study? Would it change your opinions/mindset?
According to an article in USA Today, recent data has shown that 2004 has set a new record. Last year in the U.S., 1.5 million babies were born to non-married women. Unlike past years, these mothers are not teenagers; they are women in their twenties.
On the surface, this may not seem like an economic issue or even a problem. However, when many of these women earn low incomes and have low levels of education, this presents a problem for the children involved and society as a whole.
Due to their low income family, these children may be brought up in unhealthy environments. They may suffer from lack of health care or a weak education system. With their mother being the only person working to support them, these children may be emotionally affected by parental lack of involvement in their lives.
From society’s point of view, these families may be likely to look for government assistance – welfare. People’s tax dollars will be going to support these children.
Based on this information, do you think that it is in the best interest of society to try and lower the birth rate among unwed mothers? Or is it up to each individual? Obviously each individual situation will be different; but looking at this issue from an economic viewpoint, what is best? How can you quantify who will be a good parent?
From an article from the Associated Press:
WASHINGTON - Repairs to New Orleans’ levees may be insufficient to protect residents moving back to the devastated city if another hurricane comes before the tropical storm season ends this month, experts and engineers said Wednesday.
Dozens of breaches continue to mar the city’s levee system, including a large seep at the Industrial Canal last week, according to engineering experts who have examined the floodwalls.
Repairs have gotten better in recent days, the experts told a Senate panel investigating floodwall failures after Hurricane Katrina. But the initial rebuilding process was done with little or no engineering guidance and perhaps substandard materials, they said.
Should they stop letting people return? What are the standards exactly? Will this hurrican season wipe out Lousiana? How can they prepare? Is this going to effect our economy and gas prices even more? Is the effort of rebuilding going at it's full potential? I think the relief is going as well as it can. I think people are doing what they can, and trying to get their lives back together. It's just a matter of keeping them safe after the storm.
The 1995 Honda Civic topped the NICB list as the most stolen vehicle during 2004, according to the "Hot Wheels" study from the National Insurance Crime Bureau.
Cars being stolen, especially older models that are good on gas, may be the reason for this jump. Honda's are built to have excellent gas mileage, and with the gas prices soaring, its no wonder they are the choice of thieves. It's apparent even for thieves, the price of gas, can influence a theft of a old honda civic, over a new hummer.
We talked about the Hazardous Waste in ECON350 class.
"Household hazardous waste typically consists of cleaning products found in most homes as well as lawn and garden products, pesticides and herbicides, fuels and paints as well as batteries found in most garages"
There is a new announcement by the U.S. Environmental Protection Agency (EPA) that an estimated one million pounds of household hazardous waste has been collected in Louisiana in the aftermath of Hurricanes Katrina and Rita.
This collection milestone underscores our pledge to the people in the Gulf Coast region," said EPA Administrator Stephen L. Johnson. "EPA will continue its efforts to dispose of hazardous materials and protect public health."
In a recent episode of “60 Minutes” Prince Charles expressed his concern for the world and the effects of global warming. Global warming has been a topic of debate that has been around for a long time and only seems to get more and more attention as time goes on (and this is certain due to the recent airing of an episode of South Park in which Global Warming is a major theme). What is actually going on with the world in relation to global warming then? If so many are convinced that it is already upon us, yet other like our own president refuse to believe it, then where does the truth fit in. Even more of a pressing matter is whether or not merely trying to ease human consumption is such a problem. Whether or not global warming exists may be under debate, by undoubtedly the world only gets dirtier each year. When will there be too much? Hopefully there will eventually be an economically (because I have just as many money problems as the next guy) and environmentally(because c’mon, who doesn’t like trees let alone fresh air to breathe) sound course of action to be taken to improve the world.
Craig Venter, a world-renowned scientist is hoping to create a new form of energy created from new organisms. This new energy source will produce hydrogen for cars and will produce nonpolluting heating oil for homes. This new energy can also be used to provide power for any electrical device. The new organisms will be created from micro-organisms found in the ocean and from large mammals such as dogs. This could be a cure for the increasing energy crisis currently found by using fossil fuels for cars and electricity. What do you feel about this new idea for fuel? Is there any moral problem by using man-made organisms, or could this be the answer to the energy problem? Or could this just be a far out idea that will be way to costly to use as a viable form or power.
After Hurricane Katrina, people were concerned about all the toxic chemicals that could have gotten into the water. Researchers from Louisiana State University have found that there were higher levels of bacteria in the water, but the concentration of heavy metals and chemicals from gasoline was no worse than it would have been if there was a hard rain. There is still some concern about other dangerous substances such as sewers, gasoline stations, factories, dry cleaners, chemical plants, and oil refineries. It is still to early to give New Orleans a clean bill of health. The main concern now is that the mud, silt, and groundwater probably has some toxic materials still remaining in it. Possibly New Orleans will not be a total loss now that there is not as much contamination as what had been anticipated.
Have you ever wondered what happens to all the old computers, televisions, and other electronic devices that people get rid of? A new report says that the majority of this old equipment is being donated or sold to developing nations throughout the world. This may seem like the a nice thing for the United States to do; however, when 75% of the equipment is not useable, it just creats more problems for the developing nations. A typical computer monitor can contain up to eight pounds of lead, flame retardents, and cadmium. These are all very harmful to the environment. When the developing countries get these computers that do not work, they have to do something with them. These developing countries do not have the infastructure to properly recycle these electronics, so they end up in landfills polluting the groundwater and creating other unhealthy conditions. The United Nations is trying to enforce the Basel Convention treaty that limits the trade of hazardous waste, the United States has yet to sign this treaty. As of now, there have been 30 recycling companies in the United States that have agreed to not send anymore electronic waste to other countries. Is the United States trying to help these other countries or are we trying to get rid of our own waste so we will not have to deal with it anymore?
A new emphasis is being placed on “alternative” sources of energy. The reasons for this are many. Rising petroleum and natural gas prices as well as the limited nature of our current sources of energy are some of the most significant. A largely untapped and unlimited potential source of energy is wind. Over the last decade a few “wind farms” have popped up across the country, though total wind produced electricity only accounts for .5% of total energy. Even though wind is free, it is still often times cheaper to produce electricity from burning coal. Wind-energy advocators claim that the main reason for the delayed utilization of this source is underdeveloped federal legislation. Currently, the government provides a 1.9 cent-per-kilowatt-hour tax credit to new wind farms during the first 10 years of operation. Wind prospectors complain that longer-term government commitment is necessary in order to promote further utilization. This complaint raises an important environmental economic issue. To what extent should the government subsidize an infant energy industry that is currently more costly then existing sources of energy? Obviously, the fact the wind is unlimited and produces no pollutants must be seriously considered.
http://www.cnn.com/2005/US/11/07/energy.wind.reut/index.html
Due to the recent scare of bird flu travelers of all sorts are starting to rethink some of their flight plans. Bob Goldberg, an international lawyer, had his meeting relocated from Vietnam to Singapore. Vietnam had and outbreak of the bird flu. Even though the Center for Disease Control has not stated the disease to be an outbreak airlines are starting to feel the results. When SARS broke out in 2003, it cost the airlines $8 billion in just nine months. Obviously, SARS and the Bird Flu are not everywhere but how will the airlines handle this situation. Will they end as last year lose another $8 billion or will they lure customers in with low air fair.
The once tacky gift of giving money in a card is now coming back in its new form stronger as ever, gift cards. According to the National Retail Federation, gift cards racked in $20 billion dollars in 2004. This is a 36% increase from 2003. It’s expected to go up another 11% over the holiday season. SVS, one of the first companies to get invalid in the gift card business has grown from supplying gift cards to just 1,500 locations to over 75,000 locations nation wide. But this new craze is making retailers very weary. When their customers use gift cards they have to wait at least 30 days before they can receive the revenue. This is could push back some of the merchandise for the upcoming year. How will gift cards affect retailers? Do you think that it will affect them at all
In Britain, women are facing difficulties in receiving pensions as high as those of men. Two of the main reasons for this are lower wages and breaks in employment due to starting and raising families. Historically, women have been shown to have a dominant substitution effect, which in this case means they would work less because of lower compensation. If you analyze this trend, it is self-accelerating and could lead to lower and lower levels of female employment. From a policy-maker's standpoint, would it therefore be beneficial to implement some type of extra incentive for women with families to work? This is not necessarily during the time when the women would be having and raising small children, but perhaps a pumped up pension plan for women who re-enter the workforce after a family. What do you think of this type of policy?
A new savings account called the Roth 401(k) could be made available to employees of specific companies as early as next year. This new account gives people the opportunity to possibly pay less taxes in the long run.
This is how it works: workers pay tax on earnings before setting aside the money for retirement. In exchange, the money grows and can be withdrawn tax-free. It's modeled on the Roth individual retirement account, which works the same way.
It's the opposite of the 401(k) accounts currently used. Those let employees save and invest some of their salary before paying tax, but taxes come due when the money is withdrawn in retirement.
My question to you all is this: Will this cause an Income Effect or a Substitution Effect in regards to Labor Supply. If you look at this as an increase in wage, then the income effect would say that people would work less. The substitution effect says that as wages increase, hours worked increase due to increased opportunity costs. Which do you think will occur?
My gut says that the income effect will take over. If people can save more of their hard-earned money and pay less in taxes now rather than pay more in taxes later, then we will see people retiring earlier. What do you all think?
