Protect Big Cities or Small Cities from Terrorists?

An article in the New York Times called "Bad Things Happen in Small Places" criticizes the Department of Homeland Security for directing all of its spending to large, coastal cities and neglecting terrorism defense for smaller cities.

The author was the governor of Oklahoma when Timothy McVeigh's Oklahoma City bombing took place in 1995, which provides the motivation for teh op-ed and part of his argument.

The decision of how to spend Homeland Security funds is definitely a problem of allocating limited resources. What do you guys think of how this decision should be made? What do you think of Keating's criticism of current spending plans? (Make sure you read the article before responding & you frame your answer in terms of costs and benefits).

(Source: Environmental and Urban Economics Blog)

Starbucks' Price Discrimination

This article last week by Tim Harford discusses price discrimination by Starbucks. Apparently, there is a size of cappucino that they do not list on the menu and you have to ask for specially: the "short" cappucino, which is higher quality and cheaper.

Making you ask for it is the way that they differentiate their customers: people who are more price-conscious are more willing to go through specially asking for the size.

This strategy is similar to the strategy of offering coupons. Another example mentioned in the article is a British grocery store, Tesco, that puts its cheaper store-brand of products in notoriously ugly packaging (again, more price-conscious customers will care more about the price than the packaging).

Any other examples of businesses trying to segment their customers this way? Any other explanations for why Starbucks would have that secret menu item?

Livestock ATM

Here are a couple of excerpts from an article from the BBC about Muslims in Indonesia being able to make religious sacrifices through ATMs:

On Tuesday Muslims across the world are celebrating Eid al-Adha, the Islamic day of sacrifice. Every Muslim who is rich enough is supposed to donate an animal to be slaughtered, and the meat is donated to the poor.

Sourcing the ideal beast can be time-consuming, but in Indonesia help is at hand. There is now an easy alternative - you can buy an animal at your nearest ATM machine. A newspaper, TV station and local bank have joined forces to provide the service. Having made their electronic purchase, customers are promised photographs of the slaughtered animal and a letter of thanks from the community which will benefit from the donated meat.

So far almost 4,000 goats have been sold this way at a cost of about $70 (£40) each. A sacrificial cow will set you back more than $500.

(Source: PSD Blog)