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This week, a guy had random buyers show up to his house thanks to Meta's new AI agent Muse! A cautionary tale for you... Matt Robb, a YouTube creator, posted online that he let Muse manage his Facebook Marketplace account. When he let Jarvis (the name of this AI agent) sell a wireless keyboard, things did NOT go as planned. The bot accepted a low-ball offer and consequently handed out Matt's ADDRESS to a potential buyer.
The Indicator team has been talking about Muse a lot this week after the app popped off with around 5 million downloads since its Sept. 8 launch. Is it trustworthy? How useful can it really be? Host Wailin Wong says her mom is already finding a use for it!
"My mother named her Muse agent after Mr. Darcy from Jane Austen's Pride and Prejudice. She had Darcy design a greeting card for a relative and a t-shirt as an 80th birthday gift for someone in her senior living community," Wailin says. "Then she got them printed at the public library maker-space. I never imagined my mom would use an AI agent!"
Coming up:
- Why people are spending so much on their hobbies
- Why diesel seems to always be more expensive
- What strategies colleges can use to boost applications
Trivia Question: What is one mechanism hedge funds use to help people sidestep paying the government? Email us indicator@npr.org.
New's We're Watching
Is it getting more expensive to have fun?
What to know: Bloomberg wrote this week that American consumers are spending less on bowling, arcades or amusement parks. With inflation tightening people's purse strings, spots like Dave & Buster's and Lucky Strike are seeing less traffic and it's hurting their bottom line. Six Flags is seeing lower attendance, too.
On the OTHER hand, CNBC wrote how consumers are spending more on hobbies at home compared to last year. People are making more transactions AND hobbies are costing more. We're talking arts & crafts, video games, books, the list goes on.
So IS fun over?: Of course not, but people may be substituting treks out of the house for more in-home activities. It's pricey as heck to travel right now, whether you're driving or flying!
So is it getting more expensive to have fun? Whether it's out of the house, or in the house, it's costing more. But people are willing to spend on more localized activities.
One interesting note from Bank of America's analysis on the price of fun: people with the least free time are spending the most on hobbies, aka older millennials. Part of the reason: they're buying for their kids too.
Why is diesel more expensive than regular gas?
What to know: When you go to the gas station, diesel is often the pricier option compared to unleaded or premium gas. Can you remember a time when it was less expensive?? Right now, the price of diesel is a BIT of an aberration. The national average this week is $6.38... last year, the average was $3.60. It's gotten so bad, Republican members of Congress have been lobbying President Trump to ban diesel exports in hopes of lowering prices. Apparently, the administration is seriously weighing the move, though the American Petroleum Institute is adamantly against it.
REGARDLESS! Diesel prices are consistently higher than unleaded or premium gas prices. Why is that?
When diesel got expensive: This week, diesel fuel costs just under $2 more than regular gasoline per gallon. But once upon a time, diesel actually cost LESS than regular-grade gas. The switch happened back in Sept. 2004. The Energy Information Administration points to three primary reasons.
Demand: Back in the early 2000s, China and India were motorizing and industrializing at new levels, according to Clay Seigl, who leads the energy practice at Beacon Global Strategies. He adds they were ramping up agriculture alongside big construction and infrastructure projects too. That's all powered by diesel.
At the same time, in Europe, diesel grew from just 13.8% of new car registrations in 1990 to 53% in 2007.
It's worth noting though, that nowadays, the price hike on diesel is less about demand, and more about supply. There's a lot less diesel due to the Iran and Ukraine wars limiting refining capacity and crude production, and yet the need for diesel fuel is still essential from trucks and trains to generator farms and heating.
Air quality standards: In June 2006, federal regulation kicked in that reduced the maximum amount of sulfur that could be included in diesel fuel. The hope? Reduce air pollution. But it costs more to produce ultra-low sulfur diesel due to higher refining and distribution costs. This came after 2004, but may have contributed to higher prices later on.
Taxes: In 1993, the federal excise tax increased to 24.4 cents per gallon for on-highway diesel. That's 6 cents more than the equivalent for gasoline.
Today's Indicator
Why colleges spend so much money on athletics
If you HAVEN'T listened: Back in 1984, Doug Flutie threw a Hail Mary pass in the final seconds of a college Bowl game against Miami. He made the pass and Boston College was victorious. The win boosted the entire college's admissions, starting something called the "Flutie effect." The idea: when your sports programs do well, your whole admissions does well.
Nowadays, the stakes are high for colleges to increase enrollment. In the coming years, fewer high school students are expected to go to college in the U.S. So … universities are investing in their sports programs and advertising them hard. Is it working?
If you HAVE listened: Doug Chung, our Flutie Effect researcher, found if a school elevates their sports team from "mediocre" to "great," it boosts their applications by nearly 18%. BUT … there are other proven ways to get to that same figure.
Schools can:
- Decrease tuition by 4%
- Paying faculty 5% more than market rate
Our reporter Ricky Mulvey's take-away: "Football is the flashiest part of a school, but boring economic decisions get more people coming through."
Rest of the Week
- The "great American tax dodge" making the rich even richer
- The government classification codes every industry relies on
- Colleges are hard-launching AI majors
Listener Mailbag
Listener Laura sent in a question from Belton, TX
Question: I just listened to your episode on AQR tax-loss harvesting, which appears to only be available to the rich. Could you discuss in an episode the difference between that and direct indexing which also involves tax loss harvesting? Direct indexing has been available on sites like Public.com for as little as $1,000 recently.
Answer: Oh, the ways we Americans can avoid paying the government. So numerous! Laura, you are right, direct indexing is another way to do tax-loss harvesting, distinct from the tax-aware long-short strategy we talk about in the episode. So let's break it down.
I spoke with Alex Matturri, who used to run the S&P 500 and Dow Jones Indices, to help me understand. He explains that direct indexing, at a basic level, is just customizing an index. For example, you might start with S&P 500 and then only choose companies for ESG purposes. But when it comes to saving money on your tax bill, you can build a portfolio GEARED towards tax efficiency. And you don't need a ton of money to do that.
That's different from what AQR is doing, which is much more sophisticated. But at the basic level, the tax-aware long-short strategy is both buying stocks and shorting some of them to create losses that can then offset your tax bill. Thank you for the question, Laura!
If you have an economics question, email us at indicator@npr.org
In Our Spare Time
Producer Julia Ritchey is watching silent films at her local arthouse theater
Opened in 1921, the Lucas Theater in Savannah, Ga., regularly screens old movies that have been digitally restored. Notably, the theater also houses its original Wurlitzer pipe organ from 1925 that would regularly accompany movies during the silent film era. Of the 2,100 or so Wurlitzer pipe organs produced by the Wurlitzer Company up until 1943, fewer than 15 remain in the building where they were originally installed, let alone restored and played regularly! Unlike other pipe organs, these engineering marvels have percussive sound effects for thunderclaps, horse hooves and train whistles, perfect for old movie palaces.
For the 100th anniversary screening of Buster Keaton's The General, considered one of the greatest comedic films ever made, the Lucas' organist scored the entire 75-minute film without one break, including several of Keaton's legendary locomotive stunts. It was a delightful cinematic treat for any film buff.
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