Opportunity Cost of Gambling

The economic term that has been running through my mind for the past month is opportunity cost. What is opportunity cost? It is defined as the cost of choosing one thing over the other. Mr. Richard Pilar, my former finance teacher used the example of investing stocks. When a person chooses to invest a certain amount of money in the stock market that leaving it in the bank, he is paying an opportunity cost. By choosing the stock market over the bank, he declines the annual interest that the bank offers. However, the money can grow at a larger rate when it is invested in the stock market. But we must also remember that the risk of losing the money is very probable. The risk is defined by its beta coefficient.

Like the stock investor in my teacher’s example, I chose to “invest” my money in a risky market because of the high return that it offered. As a result, I deprived myself of the interest that the bank offers. For the past two months, I’ve been playing at Games.com online casinos during my idle time. During my first visit, I grew my money by150%. No bank in this universe will offer an investor that amount of interest.

I was excited and scared at the same time. I was excited because I know I could win more but I got scared as well because I knew that getting hooked on gambling can ruin my life. Gambling is like a drug pusher. A drug pusher attracts customers or potential addicts by offering free drugs. On the other hand, gambling gains new players by allowing them to play for free through what we call the beginner’s luck. In my first day of playing Black Jack, I didn’t spend anything and I gained a lot of money. Blinded by the reward, I refused to see that it was the work of the devil. I carried on played together with my friends.

I am aware of the psychological effects of gambling on people and I am also aware of the things that I have to do to prevent them but being the hard-headed boy that I am, I ignored such things. For a week, the Black Jack table became my best friend but like any phony friend, it left me right away. The amount of money that I won was only 20% of what I lost in total. The opportunity cost that I paid was really big and it was really painful. The money that I spent gambling can provide a family of 5 with their basic needs for an entire month. I wish I have used my money wisely and bought the Jordan’s that I wanted and several toys. At least, my utility will be satisfied. But no! I was a fool and I am still a fool for playing in the casinos, hoping that I would have a lucky day and hit the jackpot in the slot machines. My desire for gambling is still in the early stage and can be managed but as early as now, I must do something about it to avoid paying a larger opportunity cost.

Raymond Varilla

Adieu to Rice?

Recently, I was able to read an article from the Time magazine regarding the rice shortage crisis that has hit Asia by storm. I was particularly interested with this article because I for one am a rice lover. I cannot imagine living the rest of my life without having rice with my meals. It simply won’t do. How can there be a rice shortage? It was quite disturbing to think of this absurd reality. However, as absurd as it may sound, it is real, it is happening and we should deal with it.

As I have learned, most Asian countries have been dealing with it, among them the Philippines, where the government has plans of issuing charges of economic sabotage to rice hoarders, a crime which is punishable by sentencing one to prison forever. This is the case here in our country because apparently, once word got around concerning the rice shortage, several people saw this crisis as an opportunity to make money and took advantage of the inelastic demand for rice by collecting the subsidized rice distributed by the government and by selling them for higher prices. Demand for rice is inelastic for Asian countries because there is still no other good that can replace rice as a major component of a meal. With this said, no matter how high the price of rice goes, the market will still inevitably buy rice considering how essential it is in most Asian diets.

The question is, why the sudden rice shortage? The crisis unexpectedly popped out of nowhere and caused hysteria all over Asia. According to the Rice Institute, we had it coming for a couple of years. Apparently, the world is consuming more than it is producing rice, where worldwide rice consumption rose by 0.9% last year while production rose to only barely 0.7%. As we can see, if this trend continues for the next few years, we might just have to face a rice-less world in the future. As of now, each country is looking out for its own welfare, and countries such as China and Vietnam have imposed export limits to be able to retain domestic rice supply for their own good. As this strategy may seem wise, it is not however a very helpful plan for the future and for their neighboring countries since this would just push global prices higher. I think that every Asian country, especially the Philippines, must first focus on how to make more rice rather than focusing on how to regulate their rice flow and this can be done by diverting their attention to improving Agricultural techniques. After all, isn’t our country known for its diverse ecosystem and rich soils?

- j.uy

Addison A., Horn, R., Overland M., Rauhala E., Robinson S., Tedjasukmana J., & Yang L. (2008, April 21). No Grain, Big Pain. Time, 32-35.

Forever Love

People say that love can last forever. You could spend all day eating something that you love (like chocolate desserts!), and you may think that you can eat that certain thing forever. You could spend almost 24/7 with someone you love, and you may also wish for time to stand still so that you can spend eternity by that person’s side. But then again, you can’t love something forever.

It’s impossible to love that something or someone “forever”. There will always be those times when you get sick and tired of eating your favorite food over and over again, or times when you’d want some “me” time and yearn to be apart from someone you love

(or even question his/her love for you). No matter how hard you try to deny reality, there will always, ALWAYS be that circumstance; hence, disregarding the concept of “forever”. Somehow, it will always come to a point wherein you’d get tired of seeing that certain thing after quite some time (regardless of the fact that there’s a high chance of you loving that thing again after a long period of hiatus ).

Take Tikoy (glutinous/sticky rice flour cakes) for instance. In celebration of the Chinese New Year, suppliers, families, and friends give our family boxes of Tikoy as presents. It’s definitely a heart-warming gesture, especially since almost all of us in the family are fond of eating Tikoy. The real beef with this is that although we enjoy eating Tikoy, we are somewhat forced to consume everything cooked (especially if most, if not all, of the Tikoy were emptied from the boxes and cooked at the same time) lest it goes to waste (honestly, cooked and refrigerated Tikoy doesn’t taste as good as newly-cooked Tikoy). The first few bites of Tikoy are fine and enjoyable; the next few are somewhat tolerable and filling; but as you consume the nth slice of Tikoy for the umpteenth time, there’s this sense of satiation–as if you’re no longer satisfied with what you’ve just eaten.

The same goes with getting a dose of Last Song Syndrome (LSS), wherein a really good song gets stuck in your head for a time period and you don’t know exactly how to shake off that song from your head. I remember back in first year college, I enjoyed listening to the song “The Day You Said Goodnight” by Hale (yes, I am was jologs). The song got so popular that they started playing it on the radio non-stop, and everywhere I went, people were singing or humming the song. It came to a point though where my satisfaction, appreciation, and love for that song slowly deteriorated. Like I’ve said, you can’t love something forever.

The concept of Diminishing Marginal Utility thereby comes into plays in these given scenarios. “Utility,” derived from the term “utils,” is the measure of the amount of satisfaction one gets from consuming a certain good.

The Law of Diminishing Marginal Utility simply tells us that we may love one thing for quite some time until we reach a point of satiation, where we are no longer satisfied and enjoying that very same thing that gave us satisfaction and enjoyment in the first place. Sure, eating Tikoy is fun, but to continually eat it to avoid wasting it can get a bit “tiring” to the point that I don’t want to eat it anymore. Yes, I like listening to my favorite songs on the radio. I like getting LSS-ed. But if the songs were to be repeated over and over and over again, my enjoyment decreases each time the songs are played.

These, my dear readers, are a few examples of how my utility or level of satisfaction diminishes for every additional item that comes into play beyond my optimal level of satisfaction. We all have our optimal points. We can’t love something forever. Going beyond that optimal level of satisfaction is just pushing your luck and testing your love to the limits. At the end of the day, you’ll only find yourself satiated (and possibly sick and tired from too much of what you “love”). In this world of Economics (mind you, I would like to stress the word ECONOMICS, since it differs from a Theological perspective), there’s definitely no such thing as “Forever Love,” but only “Love”

by Angela Eliza Lim

The Luxury Car

Cruising down the highway after a tiring trip with my immediate circle in Subic, I noticed the signs saying 80 kph. I was the driver that time. I didn’t really expect my other companions to volunteer and sacrifice sleeping instead. So, being the responsible driver, I chose not to attract heat from the patrol and just simply follow what the sign said. Besides, the car didn’t really have the look of a law-breaker. We were riding my friend’s battered Isuzu Fuego pick-up truck, a vehicle adequate enough to perform to our needs.

As a good driver, I remembered the fundamental words I had learned from my mentors: to check out the mirrors as much as possible. Then, I suddenly noticed in the mirror that this silver piece of metal was swiftly approaching me. It’s a rule breaker! It must be going around double my speed. I grinned remembering the tales I heard that the cops are more active in catching speeding cars nowadays. I just hoped that they catch this one.

Before I knew it, the speedster was on my left side. Hearing its noise, one of my asleep friends was forced to wake, look and say, “shit pare!” Thus, I glanced as well and suddenly I felt my eyes bulge as well! What the hell?! I was so star struck in recognition of what I witnessed. It’s a Ferrari! A rare silver Ferrari F430 whose shimmer was trying to lure me out of the car. It’s a vehicle any hopeful automobile enthusiast like me will be willing to lick simply for satisfaction. My friends and I stared at it for a long while (or did its presence just make it long?). It also took a while until the “woahs” and the “wows” disappeared from us. After this experience my lust towards luxurious cars were upgraded.

The luxury car. Of course, who wouldn’t want to own one? The market offers several tempting brands such as the Benz, BMW, Audi etc. which for most of us are very present in dreams. Even if you are not so much into cars, you understand the value and prestige they offer with their name and their expected quality. I can’t wait for that day when I’ll be able to park my own Ferrari in my garage, if ever it still comes.

Then I ask myself, is there really such thing as a luxury car? After my philosophy got better, realizations between me and the real world just got better. I concluded, luxury cars do not exist (even though it was hard for me to proclaim this, I guess this is the truth). Why? Simply because, rationally speaking, every owned vehicle IS a luxury. Toyota is a luxury. Even the owner-type jeep is a luxury! I guess that simply owning any kind of vehicle is a luxury because owning a car in general already means going over what we really need.

Obviously, people need to move from point A to point B. If it’s not walking distance, we’ll need the help of a car. Basically, the need here is just transportation and that is why public transportation was invented. I could call this a second order form of need, probably staying in the same level as clothing and social life. I believe we can survive the present world without really considering of owning our own vehicle (not minding the picky).

I’m speaking in line with economics. There is no such thing as a luxury car, because every owned car is a luxury. Now this is what the rational person would say. Yet honestly, when it comes to cars, I become too irrational. This is where my own preferences and utils would come into play. If someone out there can understand me, luxury cars such as the BMW are better than the ones economically manufactured by Kia Motors. It’s always best to keep rational because you’ll be able to save a lot of money, but when it comes to things you love and desire, you’ll do anything to acquire it no matter what. These personal desires come with a force which pushes us to the limit. It enhances our ambitions which should encourage us to work harder. Thus, sociologically, if everyone has desires to make them work harder, thus, making them work harder, then good this means good news for our country’s economy. Ayos ba? Wahahaha.

So, I guess it’s not all good to be rational at all times. We need our liberal expressions and desires create ambitions for the better.

-Jon Gancayco

Monopoly: Is it really just a game?

When I was still very young, I along with my three other siblings used to play Monopoly all the time. The game, as one who’s used to playing it would be aware, takes us nearly a whole day to finish, sometimes even until daybreak just to declare a winner. The game takes so long for two reasons. First, the objective for the entire first part of the game is just to pray for luck with dicing, and hoard all the properties that you can with the standard amount of money allocated to each player. The second one is because of how the money keeps transferring from player to player until one of the players finally strikes luck and is able to form a whole chain of hotels over powerful properties. The game got us addicted because aside from the thrill of having that much amount of money in your own hands, it’s also enthralling to experience having to collect rent whenever someone passes by your properties and being able to completely manage your own money.

In a lot of ways, the game Monopoly can be considered quite educational for young and aspiring entrepreneurs, as the game not only relies on luck but also requires strategizing and logic. To some, it may be just a game, but actually, it teaches a lot about real life, from making kids aware of how rentals and tenancy works to teaching them about mortgages and bankruptcy. Moreover, Monopoly does not just entail money matters, but it also reveals to its players how luck can either push your credit limits or possibly turn you into a millionaire with its “chance” and “community chest” squares.

Looking back, as much as the game excited me whenever I was winning, losing the game was very, very stressful and dramatic. I remember when my sister Jean struck luck and got a hold of all the properties on the “Upper East Side”—meaning the ones that asked for the most expensive rental fees. It was nerve-wrecking whenever I had to pass by those two properties at the end of the road. One wrong throw of the dice and everything I owned would be hers. Of course, the inevitable had to happen and after a few hours of being able to avoid stepping on her costly property, I got shot down. The damage was devastating. I had to return my hotels and houses for half the price, mortgage all my properties and surrender all my cash on hand, but, it still wasn’t enough to pay for my rental fee. At that moment, we declared that Jean was our Monopolist for the day as she beamed with joy and showed off her wads of colorful play money. When a Monopolist is present, there’s no way out, there’s no other way but to follow the prices being dictated and to pray for luck to be on your side. However, the bottom line is, as much as we might all dislike the presence of Monopolists, at the end of the day, we all want to be the Monopolist for the day, and that’s why we play the game.

- j.uy

My Life as a Bagger

Last December, as part of the Junior Engagement Program (JEEP) of the OSCI, I was required to go on a three day immersion at Robinsons Supermarket in Marikina. What seemed to be fun at first eventually led to much boredom and a significant improvement in understanding the lives of people behind the cash registers and customer service counters. At the time, I was enrolled in an Operations Management class where terms such as employee empowerment, job specialization and “idle times” became familiar to me. Theoretically it was easy to understand, however, putting faces behind these words made it a matter of a little more significance to me.

Similarly, in Economics we learn the idea behind the Law of Diminishing Returns – where if a firm keeps increasing only one input such as labor, while holding the level of other inputs like supplies and grocery stocks constant, they experience inefficiency. During my first 8-hour shift behind the customer service counter, I witnessed the gravity of the situation. Considering I was one of several students in the JEEP program, so much extra workers were on hand while the level of work was constant. To my “ate”, the personnel assigned to me, I seemed like more of a distraction and the more I helped, the more idle time we had. By the end of the day, I was practically ready to write her life’s biography. As a grocery store employee, you can only do so much. Merchandisers roam about all day, while cashiers beep away and baggers simply bag. It’s not like the work is all that difficult really, it’s just that they can only do as they are tasked. In this situation, there is no room for growth and employee empowerment. Although Adam Smith says job specialization can be good for work is more concentrated, this too has its downside. Standing for 8 hours is no joke. Neither is it when you have to call a supervisor to correct a petty mistake that you can well do on your own.

Workers such as those employed in Supermarkets are employed contractually – meaning no job security and no benefits. As the law of Diminishing Returns indicates, oftentimes not enough work + too many employees = inefficiency. There always comes a point wherein if all else remains the same, increasing workers will no longer be beneficial to the firm. At times where shoppers are less, less workers are hired. The workers I met during my three-day stint in the grocery, were very dedicated to their jobs and took every 15 minute break very seriously. In spite of this, in another month or so, they once again go in search of new jobs no more challenging than the ones they had. What happens to the person stuck in this never ending cycle? I wonder what this says about the state of the Filipino?

- Karissa Herrera

Photos from http://www.robinsons-supermarket.com.ph/EWSL/ewsl.htm