I love it when I can tell my students about how I use economics on a daily basis. It helps them get thinking about the cost-benefit analysis or thinking on the margin. To demonstrate, I will share two economic concepts and how I apply them with two personal apps. I live for applying economics with technology.
In economics, we talk about how "there is no such thing as a free lunch." Everything has a cost. If someone advertises a buy one, get 1 free special, in order to get the free item, one must buy the first one. Likewise, if there is an advertisement stating something in the store is free, you still have to give up your time to go to the store.
Yesterday, my wife and I went to see Despicable Me 2. Now, they tell you at the beginning of the previews to shut your phone off, and I am a rule follower. Then, an advertisement came on stating that if you open the Cinemark App and put your phone on "Cinemark Mode", you will get a reward at the end of the movie. This is epic! And I want the reward. I turned my phone back on, downloaded the app, created an account, and signed in. This took place while the previews were still showing so I thought it was an acceptable practice of movie etiquette. I, then, turned my phone to "Cinemark Mode". After enjoying the movie with several laugh out loud moments, I opened my Cinemark app and found this:
Success! But is it really free? Let's examine. First, I had to be in the movie theater to get the free soda, and second, I have to come back to see another movie to redeem the reward. Cinemark is incentivizing me to return to the theater by 8/14. Nothing is really free.
Still on the edge of your seat? How about another example?
Another important economic concept is demand and supply. This plays out in our daily lives especially gas prices. Instead of going into all of the factors that cause a gas station to set it's price, a typical consumer just wants to pay for gas at the cheapest price possible. However, the gas station owner wants to charge the highest price possible. Market forces set the price somewhere in the middle.
What's strange is that when we drive down the street, we notice that different gas stations have different prices. I could drive around town finding the lowest gas price, but that would defeat the purpose of getting the biggest bang for my buck.
That's why I use the GasBuddy app. This app allows its users to report gas prices when they see them at the pump. I can open the app and instantly find the cheapest gas nearest me right now:
Why would you want to pay 20 cents more per gallon if you don't have to?
The free market only works if information is easily accessible. Both parties benefit. I benefit by knowing the lowest gas price near me immediately, and the gas stations benefit by getting the advertisment.
Now, go get some cheap gas on your way to a movie!