When to Rob a Bank by Steven D. Levitt & Stephen J. Dubner

Ten years ago, Steven Levitt and Stephen Dubner published Freakonomics; they also started to answer strange questions on the Freakonomics blog. 8000 posts later, the best of this writing has been collected into one volume...

When to Rob a Bank

A few of our favourite Freakonomics answers to some of life's quirkier questions:

Q: How much would Pepsi pay to get Coca-Cola's secret formula?
A: Nothing

Recently, some Coca-Cola employees were caught trying to sell corporate secrets to Pepsi. Pepsi turned the bad guys in and here's probably why: Knowing Coke's secret formula is worth nothing to Pepsi; should Pepsi publish the secret formula so that anyone could make the drink, the impact would be that the price of real Coke would fall a lot, which would be terrible for both companies. With Coke much cheaper, people would switch from Pepsi to Coke; Pepsi profits would therefore fall.

So if Pepsi had Coke's secret formula, they wouldn't want to give it away to everyone but if they kept it to themselves and made their own drink that tasted exactly like Coke? Then the new Pepsi-made version of Coke and the Real Thing would be what economists call 'perfect substitutes' – which tends to lead to fierce price competition and very low profits. Neither Coke nor the Pepsi knock off would be very profitable as a consequence.

So maybe the executives at Pepsi were acting morally and honourably when they turned in those suspected of stealing Coke's secrets. Or maybe they are just good economists.

Q: What is the most addictive thing in the world?
A: Other people

It is worth thinking about what it means for something to be addictive:
– Once you start consuming it, you want to consume more and more of it.
– Over time you build up a tolerance to it; i.e. you get less enjoyment.
– Pursuit of it leads you to sacrifice other things in your life to get it.
– There is a period of withdrawal when you stop consuming this.

Falling in love is the ultimate addiction. There is no question that in the early stages of attraction, spending a little bit of time with someone makes you desperately want more. Infatuation can be all-encompassing, and people will do anything to make a relationship blossom. They will risk everything and often end up looking utterly foolish.

Once someone is in a relationship however, the utility he or she derives from time with the beloved diminishes. The heady excitement of courtship gives way to something much more mundane. Even if a relationship isn't that good, for at least one of the parties there is a painful withdrawal period.

Q: When is the best time to rob a bank?
A: Probably never

According to the FBI, there are roughly 5,000 bank robberies a year in the US. Friday is easily the busiest weekday (there are relatively few robberies on the weekend), with 1042. This is then followed in number by Tuesdays, Thursdays, Mondays and Wednesdays. But there is no evidence that any one day is more likely to be successful than another.

It also appears as though robbers are not very good at maximizing their return. Morning robberies yield far more money than afternoon robberies (on average $5180 vs $3705) and yet bank robbers are far more prone to strike in the afternoon. (Maybe they like to sleep in?)

Overall, US bank robbers earn an average of $4120 when they are successful but they aren't successful as often as I would have thought: they are arrested 35% of the time! The results are similar in the UK - the sums of money gained on average are significantly higher ($18,000) but the likelihood of arrest is high. The authors therefore conclude that 'the return on an average bank robbery is, frankly, rubbish' and that 'as a profitable occupation, bank robbery leaves a lot to be desired.'

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