T HE P ENNSYLVANIA S TATE U NIVERSITY E CONOMICS A SSOCIATION P RESENTS :

T HE O PTIMAL B UNDLE
S PRING 2014:
WEEK OF

F EBRUARY 27 H

E DITOR : C OLE LENNON P RINT EDUCATION COORDINATOR C ONTRIBUTORS : L EAH G ALAMBA , J OE K EARNS , C OLE L ENNON , R YAN S OSNADER , E LEANOR T SAI

Upcoming Events: General Body Meeting: 2/27

Case-Shiller Index Update: 2/25

Psuea.org EA Homepage Psuea.org/blog Education Blog

WHY WE GIVE
Penn States annual dance marathon, THON, raises money throughout the year to assist families with children struggling with pediatric cancer. The marathons fundraising total for the THON 2013 fiscal year from July 1, 2012 to June 30, 2013 was $12,939,895.36. 83.32% of this money comes from everyday people offering up donations, whether at an intersection or other locations. We like to think donors have altruistic motives and are primarily concerned with helping any charity reach maximum revenues, but Tim Harford of Slate.com disagrees. He argues that all charity is just intended to make the donator feel good internally. He cites that people in the US are more likely to volunteer rather than donate, even though donation can be just as effective, if not more effective. Harford explains that a rich banker could easily hire soup-chefs and servers with part of his salary, but it would not match the feeling he gets by ladling out the dish himself. This argument misses a bigger motivation of giving: prestige and social gratification, the feelings that come from proving to others you are generous. A breakdown of THONs total and economic research shows that fundraising that combines this social pressure with advertising is most effective at getting people to donate. Research shows that people are motivated to donate when the public eye is on them, and putting enthusiastic students out in public places as THON does is what really brings in donations. 98.1% of donations toward 2013s $12,939,895.36 fundraising total resulted from in -person advertising. The corresponding percentages from the large 2011 and 2012 fiscal year totals, 98.96% and 98.34% respectively, are also extremely high. Economists Amihai Glazer and Kai Konrad also agree that social pressure encourages people to donate, and their research confirms that the feeling donors receive from being perceived as generous gives them the best incentive to donate. The efforts of students at Penn State for THON perfectly captures this sentiment to receive the maximum amount of donations. Aggressively pursuing people that want to be perceived as generous and getting them to donate is most effective for THON and other charitable causes. It is not just about why we dance, but why we donate that matters.LG
CHECK OUT THE ARTICLES: BIT . LY /1 K 4 I F QH ; BIT . LY /1 F M9 TJ 9 ; SLATE . ME /1 LD A O M9 ; BIT . LY /1 F M9CTK ; BIT . LY /1 HG 6 E 75
BIT . LY /1 H 3PHU G

A T ALE OF 23 C ITIES
Gross metropolitan product in the 23 top-producing U.S. cities was equal to half of the United States GDP in 2012, new research shows. 305 out of all 381 metropolitan areas experienced real growth in 2012, and this increase in gross metropolitan product, or GMP, includes trade and financial services. The New York-NewarkJersey City area had the top GMP of 1.36 trillion dollars in 2012, roughly 1/15 of U.S. GDP that year. Look for cities to continue increasing their own economic leverage; their expansion shows no signs of stopping, and rural areas are set to become increasingly disenfranchised with this push for more urban growth.CL
Check out the articles: 1.usa.gov/1k1zKOo ; read.bi/1c2YAIT ; 1.usa.gov/1mC2137

There must be a city or two here.

W HATS A PP W ITH F ACEBOOK

Facebook recently agreed to acquire WhatsApp, a company whose app is a replacement for text messaging, for about $19 billion. This purchase marks Facebooks latest attempt at expanding its user base, after 2012s $1 billion acquisition of Instagram and last years $3 billion offer to Snapchat. WhatsApp is popular among teenagers, a demographic Facebook has been losing to other social networks like Twitter. The expansion comes with a high price tag, however, at around $42 for each of WhatsApps 450 million monthly active users. Facebook is closer to becoming a monopoly, and this buyout is a massive step closer to anti-trust litigation that would end Facebooks dominance in social media.RS
Check out the Article: on.wsj.com/1eTvtHS

With Facebook, this is WhatsApp.

H OUSEHOLD D EBT R ISING

According to the New York Fed, fewer foreclosures and bankruptcies caused total household debt to rise by $241 billion, or 2.1%, during the fourth quarter. This constituted the largest rise in borrowing since the recession, encompassing new mortgages and car and student loans. While the rise in mortgages and car loans is usually a sign of consumer confidence, accumulating more debt to pay for these necessities is especially troublesome given high unemployment and stagnant wages. Until the economy sees corresponding increases in job creation and average income, it is set to be overleveraged, making it harder to recover from future recessions. ET
More debt with more swipes.
Check out the Articles: nyti.ms/Nfb2z2 ; lat.ms/1fvjGEq