Emma Peaslee
Appearances
Planet Money
How much for that egg
This is Planet Money from NPR. All right, Sam, you posted a thing in Slack. Do you just want to, like, read that message to start?
Planet Money
How much for that egg
So how then do you get people to zero in on that true value? Well, economists and researchers... have developed a very clever way to do this. It's a little topsy-turvy. I'll be honest, it took me a couple times to really understand it, but it is so cool and has become my new favorite cocktail party trick. And we're going to show you how we use this on our egg-curious NPR colleagues.
Planet Money
How much for that egg
The answer, apparently, Sam is the hookup himself. At work, Sam helps write computer programs that help NPR get to your ears, dear listener. But at home, apparently, Sam has chickens. Backyard chickens.
Planet Money
How much for that egg
So Rebecca was in rural Uganda conducting an economics experiment.
Planet Money
How much for that egg
So there's this idea that mothers may value things like educational and health goods more than fathers. And so maybe aid groups would do better delivering that kind of aid through mothers.
Planet Money
How much for that egg
Now, like we've discussed, just asking, hey, how much is this worth to you? That will not necessarily work.
Planet Money
How much for that egg
So here is how this worked for Rebecca in Uganda. She would find parents willing to participate in her research.
Planet Money
How much for that egg
And let's say you, dear listener, you are the parent here. Rebecca pulls out a math workbook. She then tells you she is about to generate a random price for this book.
Planet Money
How much for that egg
But but before she generates that random price, she needs from you your max willingness to pay price.
Planet Money
How much for that egg
It's not a negotiation. It's not an offer. You are simply stating the absolute max you'd be willing to pay.
Planet Money
How much for that egg
If it is not entirely clear how this method pushes people to be honest about their max price, well, that is understandable. The good news is that we have been Becker DeGroote Marshacking the heck out of our colleagues at NPR, and you're about to see it in action.
Planet Money
How much for that egg
Hello, Becky. You are the next contestant on How Much Is That Egg?
Planet Money
How much for that egg
A couple of notes about our version of Becker DeGroote Marshak. Ours is a game show. And what each person would be asked to value was not one dozen eggs, but one. One single Sam Merton's chicken egg. This was a test. A test to see how much each person valued Sam's eggs.
Planet Money
How much for that egg
We didn't violate his terms. No. No. So, we begin our BDM assessment now. With Becky Brown, audio engineer, we show her a basket of Sam's eggs. So is there one of these eggs in particular that looks great?
Planet Money
How much for that egg
In fact, Sam told me that egg came from Noodles, who is indeed a very happy chicken.
Planet Money
How much for that egg
Oh, wow, look at that. You've got little steps for them. Yeah. They're in a whole covered thing. Yeah, that's their run. It's so loud. Yes. Wow. Okay, I'm counting one, two, three, four, five.
Planet Money
How much for that egg
And here, here, listeners, is where you can see why the BDM method forces people into a rational corner, forces them to reveal their true willingness to pay.
Planet Money
How much for that egg
That is below Becky's 90 cents. She will have to buy the egg for that random price, 89 cents.
Planet Money
How much for that egg
We're going to go to Cheezoid, our random number generator, which is held by Jeff. Jeff, go ahead and fire up Cheezoid.
Planet Money
How much for that egg
Really healthy, Becky. Truly healthy. Okay. Jeff, drumroll please. Now remember, Becky buys the incredibly precious Sam Merton's Backyard Chicken egg at 90 cents or lower. Here we go. Oh, $1.12. Wow. You were so close, Becky. No egg. That's okay. You look a little disappointed, I'm going to be honest.
Planet Money
How much for that egg
Now, again, Becky had no idea that this was all our test to determine who would get to buy a full dozen of Sam's eggs for a mere five dollars. And to figure that out. Hello, Maggie Goodhall.
Planet Money
How much for that egg
I have questions about how the random price is generated. Jeff is going to randomly generate a number within a reasonable interval. Got it.
Planet Money
How much for that egg
We may need to take a timeout. Jeff, how do we do this? Pause the game. Okay. We should say it is not best bet. Becker to Groot-Marshak practiced to immediately reveal to someone that you think their number is way too high. But this person had a little bit broken our game, I suppose.
Planet Money
How much for that egg
Because, again... $5 was the amount Sam was selling an entire dozen of his eggs for. So, you know, we needed to make extra sure that this was, in fact, her truest, in her heart of hearts, value for a single egg. You said $5?
Planet Money
How much for that egg
It occurred to us in this moment that perhaps making this a game show may have impacted our results a tad. Like maybe it turned one single egg into too much of a prize, imbued it with more value than we had intended.
Planet Money
How much for that egg
Again, Valentina was willing to pay up to $5, but she would only have to pay the random price. Oh my, okay, here we go. All right, all right. And the number is? 22 cents. Oh my God!
Planet Money
How much for that egg
You saved $4.78. Of consumer surplus. That's what you just got. Oh, wow. My goodness. The next week, we asked Valentina to meet us in a studio.
Planet Money
How much for that egg
Valentina, in playing the single egg game, we were trying to determine, using an economic technique, who valued eggs the most based on willingness to pay.
Planet Money
How much for that egg
Maybe we leave it on Sam making a chicken dad joke. That's where we leave things.
Planet Money
How much for that egg
Special thanks this week to Len Testa, Tim Harford, Alice Evans, and the University of Minnesota Women's Ultimate Team. Go Golden Gophers! I'm Jeff Glow. I'm Kenny Malone. This is NPR. Thanks for listening.
Planet Money
How much for that egg
Yeah, Sam loves his chickens so much. He'll never eat them. They all have names. The one named Cookie knows her name and sticks out her little wing to get scritches like a puppy from Sam.
Planet Money
How much for that egg
Well, I mean, Sam, you know, Planet Money shows up, we are going to suggest an auction first and foremost. But I think your initial condition is you don't want to do that.
Planet Money
How much for that egg
Okay. I have to shut this. It's so distracting. I have to turn it down. All right, hold on. It's so loud.
Planet Money
How much for that egg
As long as you are okay with us having no limit on the increasing complexity of our suggestions.
Planet Money
How much for that egg
Today on the show, a very Planet Money puzzle. We look for ways to determine which of Sam's colleagues, which are also our colleagues, values Sam's eggs the most, therefore winning the right to buy a dozen of his precious eggs at his absurdly low price of $5.
Planet Money
How much for that egg
And we discover a pricing method from a development economist that forces people to express their true value for an item. And maybe America's next great game show.
Planet Money
How much for that egg
And $5 meaning $5 for a dozen farm fresh eggs in this egg-conomy.
Planet Money
How much for that egg
That's after the break. Our colleague Sam Mertens has backyard chickens, which, in an egg shortage, makes him the egg king. And he has tasked us... We made him task us a little bit with figuring out who should get eggs when he has an extra dozen.
Planet Money
How much for that egg
But Sam has given us an interesting little twist. His egg price is fixed. He will not let us sell a dozen eggs for anything other than $5, which basically covers his backyard chicken costs. So what this means is that we cannot just do the planet money thing and let the market decide, sell to the highest bidder.
Planet Money
How much for that egg
So with our invisible hands tied behind our invisible backs, we went looking for some other way to determine who values Sam's eggs the most. And that, that is how we ended up talking to Abigail Jones.
Planet Money
How much for that egg
You want to jazz it up? I don't know, like... Professional survey designer?
Planet Money
How much for that egg
Right. Is there a way we could ask our 15 NPR colleagues how much they value eggs?
Planet Money
How much for that egg
My fear is that they'll just be like, oh, this is about whether I get to buy the eggs. I'm going to pretend to like eggs the most. Yes. Yes. If people know they're taking a survey about this, it certainly could mess up the results.
Planet Money
How much for that egg
Can my list of foods just be like, I don't know, the items at the Holiday Inn Express Buffet?
Planet Money
How much for that egg
Now, I would think, great, we now show people 10 breakfast buffet items and have them rank them. But Abigail says, oh, no, no, no.
Planet Money
How much for that egg
Yeah, so in the company world, this would look like, oh, I don't know, I'm a car company, and I ask people, if you had to choose, do you want a car with fancy sound system or fancy navigation system? Now, how about choosing between a powerful engine and good mileage?
Planet Money
How much for that egg
Abigail suggested we add a couple traditional survey questions about some of those foods.
Planet Money
How much for that egg
Do you remember that there was an egg council campaign that was like, I love eggs from my head down to my legs?
Planet Money
How much for that egg
Okay. Because I would love to call this the I love eggs from my head down to my legs composite.
Planet Money
How much for that egg
Welcome to the inaugural Planet Money presents a food breakfast food preferences survey.
Planet Money
How much for that egg
Oh, I think it's what makes it wonderful. Here's how this all worked. Imagine that you go into a Holiday Inn Express breakfast buffet.
Planet Money
How much for that egg
Yeah, most desired eggs. I pretty much always grab eggs. Waffles most.
Planet Money
How much for that egg
Now, I mean, I'll just say this caught fire in the Planet Money slack. We just saw it as a bat signal for us. We're like, we can help. Sure. Sam clearly wanted our help, or at least that is what I'm hearing. Because look, we've got a scarce commodity with a dramatically low price ceiling in need of an optimized system of fair distribution.
Planet Money
How much for that egg
Six times in total, there were six different groupings of food that they were forced to make trade-offs within.
Planet Money
How much for that egg
Now, one big lesson for us is how a tiny decision in survey design can have unintended consequences. So I thought that literally telling everyone to imagine they were looking at a hotel breakfast buffet would be fun and make this all concrete and real for them. But immediately, like in the very first survey, the issue became clear.
Planet Money
How much for that egg
Yeah, we unintentionally caused people to imagine the worst versions of all of these foods, especially the eggs.
Planet Money
How much for that egg
Yeah, there was exactly one, only one person who over and over chose eggs above all other foods every single time.
Planet Money
How much for that egg
I... I honestly was, but I'm indiscriminate. Eggs are eggs. Throw enough salt and pepper on them, maybe some hot sauce. You know, maybe the weird hotel inclusion was accidentally a great way to separate people who love eggs from people who truly love eggs from their head down to their legs. Test, test, check, one, two. Later that week, we brought Mike into a studio. With someone coming in.
Planet Money
How much for that egg
Come on in. And we had Sam Mertens surprise him with one dozen way below market price backyard chicken eggs. Mike, do you know Sam? Hey, Sam.
Planet Money
How much for that egg
Oh, wow. Those are gorgeous. What can Mike expect in terms of flavor profiles?
Planet Money
How much for that egg
Sort of, because that method did rely entirely on us being sneaky. We were hiding eggs in a blinded survey, so that's probably only going to work one time. What about the next time Sam has a dozen eggs?
Planet Money
How much for that egg
I mean, what is Planet Money here for if not to get overly involved in this very situation?
Planet Money
How much for that egg
Now, before we decide how to allocate the next dozen eggs from Sam, we needed to have a delicate conversation with him.
Planet Money
How much for that egg
But the thing is, how much someone is willing to pay is a very useful, very economics-y data point that we would love to use as we figure out who values Sam's eggs the most. Or as we put it to Sam, I don't know how else to say this, but planet money gonna planet money. And it's very hard for us to not use price to some degree.
Planet Money
How much for that egg
Oh, interesting. Rebecca Dizon-Ross, not one of our colleagues, you Chicago economist, big egg spender, apparently.
Planet Money
How much for that egg
Willingness to pay is simply the absolute maximum dollar amount someone is willing to pay for something. But that is deceptively complicated to measure. Like if we just ask our NPR egg colleagues, hey, what's the most you would pay for a dozen eggs? You know, like we did with Rebecca.
Planet Money
Tariffs, grocery prices and other listener questions
Our producer, Emma Peasley, called Aaron up. Do you want to tell me about your question and why you decided to write into us?
Planet Money
Tariffs, grocery prices and other listener questions
Um, I will say with your question, we were like, we don't know. Like your question is a hard question. Were you expecting, like, what kind of answer did you think?
Planet Money
The great German land lottery
He pulls out his map of the Osing and writes down his name.
Planet Money
The great German land lottery
So we're walking down a hill. I'm thinking like maybe these are scratchy plants.
Planet Money
The great German land lottery
It feels like things are changing. The sun is bearing down on us, and the soil in these plots is noticeably worse. This is not the kind of land Friedrich wants. But he still has three stakes left. Friedrich is worried about getting one of these really bad plots. And after a few draws, his name does get called. Friedrich's son Veit hammers their stick in.
Planet Money
The great German land lottery
And when he finishes, he leans over and mutters something to Markus.
Planet Money
The great German land lottery
This land has terrible rocky soil. It's nowhere near his house or even his other plots.
Planet Money
The great German land lottery
He says it's a bit schlumpy, but not worthless. Still land, though. Friedrich, the eternal optimist, knows that all hope is not lost.
Planet Money
The great German land lottery
Every 10 years for the last 500 years, so since the 1500s, the people in this community hold a lottery where farmers randomly get assigned plots of land that they will farm for the next 10 years of their lives. It's like farmland musical chairs.
Planet Money
The great German land lottery
After 15 miles of walking and more than 600 names being drawn, the map of the osing has been rewritten. And looking at the new map, it's kind of a mess. Farmers have plots that are all disconnected from each other, and wheat farmers have soil that's good for potatoes. Potato farmers have soil that's better for corn.
Planet Money
The great German land lottery
This is partly why pretty much everyone else on the planet buys and sells land. If Friedrich could just buy the land he wants, he could make sure he got exactly the land he needs for potato farming. But because he's in the lottery, he has to leave it to chance.
Planet Money
The great German land lottery
And this is maybe the coolest part of the day. Farmers are sprawled out across tables. They're pouring over their maps of the osing. They're constantly writing and erasing as they go back and forth on offers.
Planet Money
The great German land lottery
Yeah, farmers are trying to trade their plots like Monopoly property, hoping to get a bunch of them together.
Planet Money
The great German land lottery
What does that mean, a little bit? A little bit means the other farmer is open, he's willing to trade, but only if Friedrich and his son convince the farmer with the plot on the other side of them to trade too. So they'll have to wait and see on that one.
Planet Money
The great German land lottery
His son walks up to one of the big farmers and proposes a trade. He tells them about one of his schlumpy plots. But before he even gets to the specifics, the group laughs him off.
Planet Money
The great German land lottery
The lottery is about to kick off soon. It takes place on hundreds of acres of grain, corn, potato fields, fields that will be up for grabs today. The opening ceremony starts inside a big tent. We settle in at a table with Friedrich.
Planet Money
The great German land lottery
One farmer says he might make a deal with them. But Friedrich's plot is next to an organic farmer's. That might be a hassle. It might affect how he can farm. So he's going to wait and see who else will make him an offer.
Planet Money
The great German land lottery
The people here spend three or four hours negotiating. You can picture the map of the osing being drawn and erased, drawn and erased hundreds of times throughout the night.
Planet Money
The great German land lottery
And we notice, yes, each farmer is looking out for their own interests. But there's also this sense of community. People are making deals and saying, like, we'll figure out the money later. Because the people here are all neighbors. They'll sing in the community choir together. Their kids will go to school together. And they'll all see each other at the one restaurant in town.
Planet Money
The great German land lottery
Shout out to the gasthaus Grunerbaum. And of course, they're going to do this whole thing again in 10 years.
Planet Money
The great German land lottery
They get ready to leave. Friedrich feels confident he'll get some trades done in the next couple of weeks before all the plots have to be locked in until 2034.
Planet Money
The great German land lottery
Way back when, the lottery was a solution to all kinds of equity problems. And at different points in history, the people of the Osing could have abandoned this lottery.
Planet Money
The great German land lottery
But instead, the O-Sing holds the lottery every 10 years. Every decade, the plots all get mixed up and reassigned. So everyone gets a chance at getting the good land. And if not, they can see what trades they can make.
Planet Money
The great German land lottery
He says the first thing he wants is at least two pieces of good land.
Planet Money
The great German land lottery
Today's show was produced by me, Emma Peasley. It was edited by Jess Jang, reporting help from Sophia Shukina. It was fact-checked by Sierra Juarez. It was engineered by Neil Rauch.
Planet Money
The great German land lottery
I'm Erica Barris. And I'm Emma Peasley. This is NPR. Thanks for listening.
Planet Money
The great German land lottery
Friedrich has nine plots of land, which means he will get nine new plots of land. But not every plot is suited for potatoes. Some land is really bad for growing potatoes. It's too swampy or the soil is too dense. And every plot that's not ripe for potatoes will cost him.
Planet Money
The great German land lottery
And I'm Emma Peasley. In many ways, economics is about the best way a society could allocate their scarce resources. Hundreds of years ago, a community in Germany came up with their own unique solution to that question.
Planet Money
The great German land lottery
George tells us he was a farmer. But today, his main gig is being the Ossing historian. And the history of this land lottery all starts with, what else, a classic German fairy tale.
Planet Money
The great German land lottery
Back then, this land was all forest. And there were four villages at the edge of the forest, to the north, south, east, and west.
Planet Money
The great German land lottery
Okay, so parts of this fairy tale are probably not true. Like, these churches did not have bells a thousand years ago. But everyone agrees the empress gave them the land. And while giving them the land was nice, it also created a problem. A problem that would eventually lead to the Osing lottery.
Planet Money
The great German land lottery
This is Markus Hofmann. He's an interpreter who helped us out.
Planet Money
The great German land lottery
Okay, so punching, but not a war. all over Who Got Better land. Some parts were hilly, hard to get to. Some soil was better because it was fertile and you could grow almost anything on it. The worst soil was rocky and full of pebbles.
Planet Money
The great German land lottery
So after 10 years, the names went back in the bag and there was a new drawing. It meant no one would be stuck with a bad plot forever. Another lottery, another chance.
Planet Money
The great German land lottery
And while we don't do a lot of things today the way we did in the 1500s, for good reason, this land lottery has not changed at all. Every 10 years, in a year that ends in four, right after the harvest, the people here have held a lottery. No matter what. In 1984, the year it rained the day before the lottery and the fields were muddy, they did the lottery.
Planet Money
The great German land lottery
Even in 1944, during World War II, when bombers flew overhead, they still did the lottery.
Planet Money
The great German land lottery
The first thing to know about this lottery is that it involves a lot of walking. They really walk at a brisk pace.
Planet Money
The great German land lottery
Friedrich, the potato farmer, is moving fast. He has real dad at the airport energy. He's walking with a purpose, and we initially lose him in the crowd.
Planet Money
The great German land lottery
We get to our first plot with Friedrich and his son Veit, who's taking over the farm. Veit has all the stakes with their name. They have nine stakes for nine plots of land. Some farmers have dozens of stakes, others just a few.
Planet Money
The great German land lottery
We're meeting him and his family in rural Germany, in the middle of miles and miles of farm fields.
Planet Money
The great German land lottery
Some of the best plots are at the beginning of the lottery. This first plot would be good for any crop, but it would be especially good for potatoes. So Friedrich really wants his name to be called.
Planet Money
The great German land lottery
After an hour, two miles of walking, and a dozen more names being called. Not you again? No, my name. Friedrich has watched as a lot of his neighbors get good land.
Planet Money
The great German land lottery
I got a 30 again. Now I have 90. You have 90? So you've read three times? Yeah.
Planet Money
The great German land lottery
As the day stretches on, we start to notice all the ways that it feels like we are not in the year 2024. This whole lottery seems really inefficient. For example, they walk plot to plot and they measure all the plots by hand using a tool that predates the metric system. The tool is called a girt. It's basically a giant wooden ruler with an incremental measurement called a shoe.
Planet Money
The great German land lottery
That's German for shoe. And it's based on an actual person's shoe size. The people here, though, say all this ceremony is because of fairness.
Planet Money
The great German land lottery
For the last 10 years, Friedrich has planted, harvested, and cared for nine specific plots of land here in Germany, specifically in this area called the Ossing. The Ossing is collectively owned by a group of 141 farmers.
Planet Money
The great German land lottery
And this is key to what makes this system work. That people believe it's fair. The things we're seeing, like measuring the land by hand using an ancient tool, walking plot to plot, and watching each name drawn out of a bag. These are symbols of the system's fairness. And because people believe this is all fair, they're willing to accept the outcome of the lottery.
Planet Money
The great German land lottery
I do it fast so everyone can go on, go on, go on. Like all the kids are like, uh, like staying there for like three minutes. Wiggling their whole hand in the bag, trying to pick it out, opening it, then struggling to like, eh, eh, they can't even read. Can you read the names? Sort of.
Planet Money
The great German land lottery
Three hours in, and a few dozen plots have new owners. But Friedrich is still waiting for his turn, waiting for his name to be called.