Aug 28, 2008

MBAs and the business cycle

An MBA programme is a special type of animal in the jungle of post-graduate education. The typical student of an MBA programme is somebody with some working experience who drops out of the labour market for a couple of years, in order to get a hopefully better paid job later in his career. If in the same company or somewhere else often depends on circumstances.

When I have asked MBA students the question "Why did you do that?" the typical answers were:
  1. "Because I am paid to do it";
  2. "Because I want to start my own business";
  3. "Because I was working too much, I needed a break";

Here is a chart taken from our favourite magazine which somehow gives a more economically sound argument.

The chart says that attending an MBA is more likely in times of economic downturns. Why? As the wage rate falls on the labour market, the opportunity cost of attending a post-graduate programme falls too. Thus, people hedge their loss in pecuniary assets investing in human capital. Here is the link to the original article.

By the way, if you want to know what they teach you at MBAs, I found this interesting book, reviewed always on our favourite magazine, which I have just ordered.

Aug 25, 2008

Good service - Part 2

While we don't seem to be sure what explains good service in restaurants-is it tips, the weather or culture-, here's a natural experiment one could write on, and show how economic incentives alter the quality of service, in electronics megashops, this time.
Future Shop, a canadian electronics chain, pays its employees more when they sell more. Basically, the salesmen get a share of what they manage to sell, a scheme similar to tips. One could expect good service from this scheme, but what actually happened was perceived more like harrasment than good service by the Quebec consumers. Best Buy's promotion (the American competitor) lets people know that its employees have a fixed income, therefore are not annoying, and hence the service is better!
According to my experience, you get better service at Best Buy, so the economic incentive to sell more would not translate into better service. But then again I am not controlling for ethnicity, which is extremely diverse among electronics salesmen! Company culture could be the explaining factor (more than country culture), which should be determined by competition, or simply reflect the culture of the CEO.


Wow! I was on the SAC (HEI old student association) website to see if there was anything going on and I saw two very surprising comments! Check it out. Look at the "Recent comments" on the right of the page and follow the link!

Aug 18, 2008

Good service: culture or competition

I was recently traveling in California and I was amazed at the quality of the service in restaurants and shops. No matter how you look, how you're dressed, you get a nice smile, suggestions and caring and on top of that a great selection. This led me to ask myself, is this amazing service the consequence of competition (restaurants want to offer the best experience to attract as many customers as possible), tips, or just culture?

In Geneva, I personnaly obtain the worst service that you can possibly imagine, to the point where I am scared to ask for too much when I am out, for example for a glass of water. Is this because of its protestant history or its lack of competition?

So how about trying to identify the determinants of international differences in the quality of service in restaurants? Some economists would be happy to prove the power of capitalism at work, others would be happy to show that only culture, or social capital explains service quality.

I also came to wonder if waitresses were so nice to me beacuse they want a big tip (it can between 10 and 20% by law), or simply because they are nice people. If the former is the case, they surely are good actresses! I guess one way to find out would be to measure at what speed their smile dissapears from their face, the faster the faker.

A good possible paper, I think.