Two minor economic puzzles
When "Fahrenheit 911" "Bowling for Columbine"
was the big and talked-about movie, there was a lot of controversy
about the scene in which Michael Moore opens a bank account and gets a
free rifle. But I don't remember anybody writing about an aspect of
this issue that I really wondered about. If a rifle like that costs
something like $150, the bank is essentially paying $150 to get a new
customer. So how long does it take them to recoup this cost in the
profits that they make from that customer, especially when many
customers only join to get the freebie and then do nothing with the
account? If the average individual keeps an average of $1000 in their
chequing account and the bank's interest margin is perhaps 2%, the
answer is: quite a long time. (I don't know how the bank profits
actually break down in America, but in the immortal words of one
Finnish bank manager, individual customers only bring in dirt in their
shoes into the bank.) This whole thing just doesn't make sense to me,
but in an economic sense instead of the much more debated moral sense.
I have sometimes seen Jehova's Witnesses around, trying to chat me up and offering literature. I can kind of understand how their chosen strategy to gain converts works, constantly setting up many individual sales pitch situations which are unlikely to yield a new convert, but when this is done often enough, they keep finding people when they are at their weakest and suitable targets for conversion. If this didn't work, the whole religion probably would have ceased to exist by now. But I wonder what the bottom line would be if you added up all the man-hours and divided this total by the number of new converts that it yields. This number is probably so high that the value of the time of a single Jehova's Witness must be very low. Of course, there might be a higher prize waiting for them in Heaven for all this grunt work, but I would still bet that a far more efficient approach for the JW church would be to have the Witnesses do some real paid work, whose earnings would be spent to finance a professionally created and administered campaign that consists of real advertising, direct mailing and scouting for promising leads for potential converts. An average Witness would earn at least the minimum wage, so with thousands of witnesses, this would quickly pay for a major campaign. In addition, lots of useful work would get done, making the world a better place.
I have sometimes seen Jehova's Witnesses around, trying to chat me up and offering literature. I can kind of understand how their chosen strategy to gain converts works, constantly setting up many individual sales pitch situations which are unlikely to yield a new convert, but when this is done often enough, they keep finding people when they are at their weakest and suitable targets for conversion. If this didn't work, the whole religion probably would have ceased to exist by now. But I wonder what the bottom line would be if you added up all the man-hours and divided this total by the number of new converts that it yields. This number is probably so high that the value of the time of a single Jehova's Witness must be very low. Of course, there might be a higher prize waiting for them in Heaven for all this grunt work, but I would still bet that a far more efficient approach for the JW church would be to have the Witnesses do some real paid work, whose earnings would be spent to finance a professionally created and administered campaign that consists of real advertising, direct mailing and scouting for promising leads for potential converts. An average Witness would earn at least the minimum wage, so with thousands of witnesses, this would quickly pay for a major campaign. In addition, lots of useful work would get done, making the world a better place.
I don't know the actual details of the free rifle offer, but it's a reasonable guess that getting the rifle required a substantial deposit into a CD (certificate of deposit), which requires the customer to keep the money on deposit for a set period of time. It seems highly unlikely that any bank would give a rifle or other valuable gift in return for a deposit into a passbook savings account from which funds get be withdrawn at any time. In addition, the bank probably figured that customers attracted by the rifle offer would use the bank for other, more profitable services, such as credit cards and mortgages.
As for the Jehovah's Witness, it is my understanding that most of those who go around seeking converts have regular, secular jobs and engage in the religious activities in their spare time.
Peter
Iron Rails & Iron Weights
Posted by Anonymous | 10:01 AM
First, the movie was Bowling for Columbine, not Fahrenheit 911. Next, from what I've heard, the scene was more or less fabricated: you couldn't just walk out with a gun, but did get a rifle several days later after background checks.
As for the money making aspect, you probably couldn't just open a $50 bank account.
Every so often, various American cities have gun buyback programs, where they pay $50 or $100 per gun brought in. This always yields a lot of guns, but I wonder how many are complete junk that have essentially no value and couldn't fire a bullet anymore. Heck, I wonder if scrap dealers dispose of their non-working firearms in such gun buyback programs.
Posted by George Regnery | 10:08 AM
First, the movie was Bowling for Columbine, not Fahrenheit 911.
D'oh!
Posted by Ilkka | 10:50 AM
Peter: As for the Jehovah's Witness, it is my understanding that most of those who go around seeking converts have regular, secular jobs and engage in the religious activities in their spare time.
Of course, but I was wondering if this spare time could be used more productively, measured in the number of total converts gained. The way they do it now just feels so... inefficient to me.
Posted by Ilkka | 11:09 AM