On today's Planet Money:
We give a sneak preview of our upcoming This American Life special on health insurance, airing on a public radio station near you.
How much would you pay to protect someone or something you love? Kristin Zorbini Bongard and her husband love their pet hedgehog, Harriet, so much that they spend about $80 a year on health insurance for her. Even with the coverage, they shelled out $1,911.20 for the hedgehog's cancer treatment.
Economist Tim Harford, the Financial Times' Undercover Economist, who admits to not being a pet person, says the problem with pet insurance is not that it's for pets. It's that it causes waste, because you're spending someone else's money.
Bonus: After the jump, an economic riddle about sports and parking.
Jesse Boehm writes from Boston, where the hometown baseball team routinely sells out Fenway Park:
Just returned from watching the Red Sox get swept by the Angels -- very painful. As I was leaving the game, I came across an interesting "economic" situation -- something I've always wondered about.
The parking lots near the game normally charge $25 to park for the game. This is the same throughout the year. However, for playoff games, they charge $50 (or more -- they used to charge $75-$100 before the city stepped in). Charging more for the actual tickets makes sense to me since there is some added value in attending a big game. But it seems to me that there is something interesting going on here with the parking.
It's not a supply and demand issue since there are the same number of fans attending the game and wanting parking. If the lots could get $50 per spot, they would charge this all the time. So there must be something behavioral that allows people to rationalize paying more to park their cars since it's the playoffs. People must actually think that it is worth more to park during the playoffs!
Are there parallels to this "perceived value" in the wider world of economics?
categories: Planet Money Podcast