May 19, 2024 

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HEDONIC PRICE: The notion that the price of good is based on an assortment of characteristics that are both intrinsic to the good itself and external to the good. Hedonic pricing is commonly applied to the housing market in which the price of housing is based on the physical characteristics of the house (size, appearance, features) and the surrounding neighborhood (accessibility to schools and shopping, quality of other houses, availability of public services). Estimating hedonic prices makes it possible to identify the extent to which specific factors affect the price.

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A Brief Introduction To Get You Started

Through undaunted determination, sheer luck, or a missed turnpike exit, you have happened upon A Pedestrian's Guide to the Economy. You'll find hours of reading pleasure contained within this site, with more entertainment value per calorie than most office memos. A Pedestrian's Guide to the Economy, however, is more than a recreational web site. As a handy reference source, it provides answers to many of the most asked, a few of the least asked, and some of the never asked questions about the economy.

What's a Pedestrian's Guide?

The best way to begin our excursion through the economy is with a simple question: What is a "pedestrian's guide," anyway? Let's resort to the time-tested technique of analogy.

Consider how you might embark on an exploration of the American heartland. An airplane, flying 10,000 feet in the air, provides a panoramic view of the landscape. You'll easily detect that Kansas has fewer mountains than Colorado and more vegetation than New Mexico. A car, by contrast, gives you more insight into the terrain. You'll not only see Colorado's mountains, you'll experience them first hand as your 1972 Volkswagen Beetle strains to reach higher elevations.

But, if you really want to discover America's heartland, then throw a couple of granola bars and an extra pair of sweatsocks into a backpack, and take a stroll across the Kansas plains, the Colorado mountains, and the New Mexican desert. A pedestrian's trudge across the country will give you insight unattainable by car or plane.

In terms of the economy, most of us have a pedestrian's knowledge of our own neighborhood, but only see the rest by car or plane. This site tries to fill in those sightseeing gaps with a more leisurely pedestrian's stroll.

Who Should Browse this Site?

A Pedestrian's Guide has been specifically formulated, designed, and engineered for the overworked, underappreciated members of the third estate. "What's the third estate?" you might ask. And, "How do I know if I'm part?" Both are excellent questions. A little explanation is in order.

Back in the days of yore (when knights, castles, and the like were popular), people were usually lumped into one of three "estates." Religious leaders and the clergy were the first estate, nobility the second, and the common folk (everyone else) made up the third. (Later on, journalists -- bless their hearts -- added their occupation as the fourth estate.) Most importantly, the educated, powerful leaders of the first and second estates made the rules that the uneducated, uninformed peasants of the third estate were suppose to follow.

A great deal has changed since those bygone days of yore, but then again much remains the same. The clergy and nobility aren't all that important now, but new versions of these estates have arisen. Our modern first estate is populated by a handful of government leaders who spend the majority of their adult lives running for an elected office, holding an elected office, or resting in appointed government positions until an elected office is available. Our modern second estate consists of a select few business leaders who run major corporations, sit on the boards of major corporations, or own a gadzillion (a handy term meaning "a whole bunch") shares of stock in major corporations. Like their counterparts of yore, members of the new first and second estates -- government and business leaders -- make the rules and control the information. (Of course, our fourth estate journalists try to keep a close eye on the nefarious doings of our leaders, but they often end up working for, rather than watching over, the first two estates.)

The Third Estate

That leaves us with our modern third estate. Like the peasants of yore, our third estate includes the vast majority of common, everyday, folk, who do their work, pay their taxes, and quietly follow the dictates of the first two estates. If you're a consumer, worker, and taxpayer, then you're part of the third estate. Even though you might work for a big corporation, are in the employ of our government, or run your own small business, if you don't set the rules, then you're in the third-estate. And, while you're certainly more educated and informed than your hardworking, overtaxed third-estate counterparts in the days of yore, you can never learn too much about the world.

That's where A Pedestrian's Guide enters the picture. Most books on the economy are written by economists for economists (who are well-known henchmen for the first two estates). Occasionally, economists will pen a volume or two directly for politicians or business leaders. I suppose both of these have a place in the grand scheme of things. But, what if you don't have a PhD in economics, run for re-election every few years, or head a Fortune 500 company? What if you're one of the gadzillion overworked, underappreciated, taxpaying consumers who form the backbone of our economy? What if you're a member of the third estate? Well, this site, A Pedestrian's Guide to the Economy, is for you!

Why Do I Need this Site?

If you're like most overworked, underappreciated members of the third estate, you get information about the economy in three ways:

  • College. Because you wiled away the early years of your adult life in college, you were manuevered into an economics course -- usually by an economics professor seeking job security. You bought the textbook; spent a few hours a week listening to endless lectures on prices, costs, and "gross something or another"; took a few exams; and sold the textbook back to the bookstore. Then you forgot as much as you could except "gross something or another" and the fact that the instructor usually had one of the following: (a) a hair out of place, (b) a nervous eye twitch, or (c) unzipped pants.

  • Nightly news. Because your television remote control was mailed to Aunt Helen with last year's Christmas packages, your TV is left untouched between Oprah Winfrey and Wheel of Fortune. As a result, once a night, Dan Rather, Tom Brookaw, or Peter Jennings introduces a news story that uses the term economy at least twice and contains a quote from a noted government economist. You suspect that portions of the news event affect you, but you're not quite sure why.

  • Life. Because you have a job, pay taxes, frequent your local grocery store, and have more bills than unmatched socks, you recognize the existence and importance of this thing we call the economy. While you may not know that economists have created sophisticated, mathematical economic theories that use every Greek letter that exists, you do understand through the miracle of plain old common sense, that the economy affects your life. Wouldn't it be nice if you knew a little more about what affects what -- without the Greek letters?

Everyone has occasional questions about the economy, such as: "What are those leading economic indicators that Dan Rather joked about last night?" One way to answer your questions is to get a PhD in economics, which then forces you to learn all sorts of stuff that can only be written with Greek letters. Another option is to befriend an economist and subtlely pose questions such as, "WHAT THE HECK IS A LEADING INDICATOR?" This, however, can have serious side effects, such as an FTuciatingly painful bout of boredom.

A third option is to browse this site often. It gives you a reference guide to the more intriguing, important, and confusing aspects of the economy, while omitting the Greek letters and sophisticated mathematical economic theories.

How Should I Use This Site?

A Pedestrian's Guide contains two sections -- "excursions" into enlightenment -- not including the table of contents and this introduction. If you like, you can read all both in sequence, one right after the other, and become very, very knowledgeable about the economy all at once. A second, highly recommended, option is to read only the stuff that seems to be the most interesting or relevant to your own situation. A third alternative is to say you've browsed this guide for the sole purpose of impressing others. This, however, will cause problems when your friends, who have read this Guide, begin spirited, but one-sided conversations. You'll then get a stiff neck from constantly nodding in agreement to perpetuate your charade.

Here's what's in store:

I--THE 7 FACTS OF ECONOMIC LIFE THAT EVERYONE SHOULD KNOW tours seven fundamental features of the economy that most of your probably, sort of know, but then again, may not. Because it gives you a working start into the economy, this journey is best taken before moving on to the more detailed topics in section II.

II--A WHOLE BUNCH OF INTRIGUING, CONFUSING, OR CONTROVERSIAL ISSUES IN OUR ECONOMY journeys into economic issues that are often discussed, but seldom fully understood. You can read every issue, beginning with ADVERTISING and ending with WORKING WOMEN, or you can pick and choose them in any order. Each is cross-referenced to provide you with something more than a random walk through the economy.

A Spattering of Pedestrian Tips

Sprinkled throughout sections I and II (look for 5) are an assortment of tips that give bits of advice and recommendations. They're intended to assist your walk through the economy as a consumer, housemaker, citizen, worker, voter, or taxpayer. Some of the tips are obvious, but some are not.

The not-so-obvious tips come from one of the most important facts about the economy, one that can't wait any longer. Because of its overwhelming importance, let's call this Fact 0:

FACT 0 A MULTITUDE OF PRIMAL ECONOMIC FORCES--Our economy contains many diverse, pervasive forces, some that are easily controllable and others that are not.

Because this site helps you identify the often obscure forces of the economy, especially the ones that are most controllable and the ones that aren't, I would be remiss if I failed to note how you can act on the information. Consider these three options:

  • Individually. You can often improve your lot in life with the right information. Many of the tips offered in this Guide suggest things to do, questions to ask, and warnings to heed.

  • Collectively. No man (or woman) is an island. In some cases life can be improved only by joint efforts of a neighborhood, community, city, county, state, nation, or the world. Several tips note what you should consider before casting your vote, writing letters to politicians, or otherwise jumping into the collective decision-making waters of the government.

  • Do Nothing. Occasionally you find economic forces so powerful that nothing can be done. In this case, it's best to sit back, grab a granola bar, and check the television listings for your favorite programs.

Valuable time can be wasted with individual efforts on collective problems, collective solutions where individual actions are best, or pursuing either when the primal forces are insurmountable. Please note, though, that these tips are only tips -- mere suggestions. The ultimate responsibility rests with you. (This, by the way, is probably the most important tip that you'll get.)

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A PEDestrian's Guide
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