Thank you Freakanomics, for showing me a website dedicated to rearranging fast food items. Yes, this really is a Big Mac, fries, and Coke:
As the good economists point out, it is an interesting case of tricking the mind by repackaging. We assume a beautifully presented meal is tasty, perhaps because there is some eye-mouth sensual link, but more likely just because most of the beautifully presented meals we consume are tasty.
We generally assume that a tax break is a good thing. More money in our pocket, less for the bolshy government bureaucrats. But there are all sorts of tax breaks that merely recycle money through us. For example, think of the mortgage interest deduction. The government ostensibly susbsidizes the purchase of a house by letting house buyers deduct the interest on their mortgage. Yipee for house buyers, right? Better not repeal it, or house buyers will be screwed.
Except just about all house buyers qualify (yes, I know, AMT, house markets where the cap is a small portion…I get it). So the clearing price of the house reflects the subsidy – if all bidders got a $100 check from the government, the selling price would simply be (previous price+100). In the first instance, the beneficiary is the house seller, but since he is often a house buyer somewhere else, he might not make out amazingly well. Who really gets the money? The real estate broker, who just took 6% of a government-inflated number for doing nothing more. The good deed for salt-of-the-earth house buyers does nothing for them and benefits an entirely different monopoly class of intermediaries. But I’d bet a vanishingly small percentage of house buyers can overcome their gut instinct (great, tax deduction) and understand the crap being served on fine china.
