The economics of edges

They’ve headed back down since, but for quite some time gas/petrol prices here were kept below three dollars a gallon only by the bulwark of the number system. Apart from one place in Beverly Hills which seemed to leap with abandon from the $2.90s into the $3.20s in order to skip the whole argument, everywhere else froze at $2.99, unsure of what to do next. Things had headed upwards quickly enough that it was clear this wasn’t a natural equilibrium. The tide just stopped.

We’re so used to being treated as fools who believe that 3 dollars (or pounds or whatever) is significantly more than 2.99 that it doesn’t strike us as just a tiny bit irrational. Actually I suspect we’re so used to being fools who believe that 3 is significantly more than 2.99. Personally I say a quiet thank you to places like Gap which eschew such manipulative, trivial, and quite, quite effective mind games.

So, it was nice to see the pump in the other hand for a change. Where usually the number system is a marketing tool, in this case it deprived the oil companies of squillions of dollars, and they only had their own timidity and greed to blame. They lost all that money because we happen to have ten fingers. I find the randomness of that oddly pleasing.

However, there’s a general principle here, which is that it’s pretty bloody stupid for any decisions of social significance to be influenced so heavily by the number of digits we happen to have evolved, or otherwise the number system we happen to have chosen for ourselves. Artistic, too. A film might lose a worthwhile scene or two because it’s contractually obliged to run at less than two hours. Sure, there are economical reasons why shorter is more profitable, but that specific boundary is determined not by the intrinsic artistic worth of any individual part of the whole, but by accident of number system. If there’s an optimal length for any work, it’s vanishingly unlikely to have anything to do with how we divide up days.

So, I have a modest proposal for a mechanism which might help combat this economics of edges. Of course, in any number system there are going to be edges, so the solution is clearly to switch between number systems when it’s prudent to do so. Gas prices stuck at 2.99 and feeling a bit queasy about being the first to break three dollars? Okay, then why not switch to displaying prices in hexadecimal: the leap from 12B cents to 12C cents doesn’t look nearly so scary as the leap from 2.99 to 3.00, does it? If things go well and prices fall below FF, you might worry about the impending leap back above 100, but a quick switch to decimal 2.55 should solve that problem, because who cares about the difference between 2.55 and 2.56?

Of course, all this will be made much easier once we’ve converted to using Intergalactic Credits, and the number base can be switched intergalactically by some remote Big Brother at his economic or political whim — or because the numbers get so large that compression into hex is necessary to make them fit on the currency.

And I used to think I knew nothing about economics. Seriously.