Episode 944: We Should Have Mentioned That : Planet Money Sometimes we forget to mention something. And our listeners always let us know. Today on the show, we make good. | Subscribe to our weekly newsletter here.
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Episode 944: We Should Have Mentioned That

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Episode 944: We Should Have Mentioned That

Episode 944: We Should Have Mentioned That

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UNIDENTIFIED REPORTER, BYLINE: This is PLANET MONEY from NPR.

BRYANT URSTADT, HOST:

Wait; can you hear me?

ELLIOT WILSON: I can. Can you hear me?

URSTADT: I forgot to press a crucial button.

WILSON: I could hear you the whole time.

URSTADT: I'm an editor, not a reporter.

WILSON: (Laughter) Fair enough.

URSTADT: Hey, this is Bryant. And one thing I do as PLANET MONEY's editor is I read a lot of emails from listeners. And sometimes, I call them up.

Can you tell me your name?

WILSON: It's Elliot Wilson (ph).

URSTADT: And what do you do?

WILSON: I'm a civil engineer.

URSTADT: How long have you been listening?

WILSON: Couple years now.

URSTADT: And what's your - what's your, like, favorite mode of listening? Are you driving, dishes?

WILSON: Mostly when I'm working out or running, which sounds weird because you would think you'd want to listen to music while you're running to, like, motivate you. But I've found I'm not very good at running, and I don't like doing it. So I found if I can make myself focus on something else, like a podcast, then I'll forget how much I hate running.

URSTADT: So Elliot emailed us a couple weeks ago after we did a segment about these things called Loot Boxes. These are these in-video-game prizes that you can get. You pay for them, and you don't know what you're going to get. And we did this whole segment about whether or not they were tempting children into gambling by, like, offering them this stuff for real money. And we're exploring all these deep thoughts about gambling and children and stuff. And Elliot was listening, and he thought we missed something really kind of obvious.

WILSON: Well, I was running. I remember that. I was heading up a hill. But I remember I was thinking about, you know, this whole idea, you know, behind the Loot Box, and that was baseball cards for me. Yeah, it was kind of being presented as, like, this is a new phenomenon. And it's like, well, maybe it's a new thing for video games, but, you know, the phenomenon itself is not new. And I've never actually emailed a podcast, but for some reason, when I was on that run, I thought to myself, I'm going to shoot them an email when I get home.

(SOUNDBITE OF JORDACHE V. GRANT AND SKINNY WILLIAMS' "TANGLED UP")

URSTADT: Elliot did, along with so many other people. And today on the show, we're going to answer some of the most embarrassing and pointed questions we've gotten over the last two months - things we probably should've thought to mention on our own, like if baseball cards are obviously fine, then why are we arguing about Loot Boxes in video games? It turns out it's a great question, and there's a whole legal history we should've looked into.

Here's another one. Something huge seemed like it happened at the Federal Reserve in September - something involving billions of dollars and the whole financial system. We totally did not cover it. And finally, we did a whole show about the most common American. And you know who we left out? The least common American. And everyone wanted to know who they are.

(SOUNDBITE OF JORDACHE V. GRANT AND SKINNY WILLIAMS' "TANGLED UP")

URSTADT: Hello, and welcome to PLANET MONEY. I am Bryant Urstadt. I am the editor. And I am sorry it took us so long to get to these.

So we did this segment about kids buying Loot Boxes in video games, and a million people wrote us to ask, isn't this just like baseball cards? Like, why are you talking about this? Ben Brock Johnson, host of the Endless Thread podcast, helped us on our show the other day, and we have him back to help us again. Ben, what happened? How did we miss that?

BEN BROCK JOHNSON, BYLINE: I mean, Bryant, editors are people, too, but I think you cut it out of my original draft, so I blame you, frankly.

URSTADT: OK, that is true, but it was part of a plan, which was to get you back here in the studio, and it worked perfectly. And I am so glad because we started looking into it. Baseball cards actually are a really good analog for Loot Boxes, and there is a whole interesting legal history about the argument over baseball cards and gambling.

JOHNSON: Yeah, so let's review how baseball cards and Loot Boxes are similar, right? They both look like they meet the legal standards for gambling, which really has kind of three aspects to it - game of chance, potential reward and something called consideration.

THOMAS HANSFIELD: Yeah. Consideration, in the most simple terms I can think of, is basically I give something of value and then I receive something of value in return.

JOHNSON: This is Thomas Hansfield. He's a law student at the University of Minnesota who wrote the perfect article for our story today. And we didn't even ask him to. Maybe nobody asked him to.

HANSFIELD: Pretty shocked that anyone had actually read this.

JOHNSON: Tommy's blog post for the Minnesota Law Review is all about how Loot Box lawsuits may end up a lot like a bunch of lawsuits that happened way back - ancient history - in the '90s.

HANSFIELD: The title of the article is "Loot Box Lottery: How The Backlash Against Video Game Loot Boxes Is Affecting Game Developers, Retailers, And Consumers In The Legal Sphere."

JOHNSON: So in the 1990s, baseball card manufacturers, like Topps and Fleer, started offering what are called chase cards into the packs that you'd buy at the store.

URSTADT: Oh, yeah. I totally remember that.

JOHNSON: Yeah, you do, right? Did you ever get any?

URSTADT: I never got one 'cause I was too cheap to buy enough.

JOHNSON: So basically, you'd get a pack. You might get a really high-value chase card, unless you didn't buy enough packs, like Bryant didn't. You might get, like, a Ken Griffey Jr. card, something you could actually resell or trade. And in the 1990s, several groups brought class-action lawsuits against the baseball card manufacturers - and also Pokemon card manufacturers; they were doing it, too - arguing that the introduction of these chase cards made buying baseball cards the same as gambling, with consideration, chance and a prize.

URSTADT: Right, class-action lawsuit - I can just see in my mind a ton of really high-paid, really well-dressed lawyers just trying to compete with each other to discuss how much they care about children.

JOHNSON: They just want us to think about the children, Bryant. Who's protecting the children?

OK, so little slot machines for kids - that's basically the argument here. And the cases went on for years. But the cases were eventually decided not on whether kids were gambling with these cards. Instead, they were decided on whether or not these cases had standing in the first place.

HANSFIELD: Standing is essentially determining whether - do you actually have some legitimate reason to bring a lawsuit? You know, and oftentimes, that means, did you actually lose money? Because if you didn't, well, what reason do you have to bring the lawsuit? You don't have standing. And if you don't have standing, you can't bring the suit. That's it. You're done.

JOHNSON: And in the end, courts decided that the plaintiffs were not really harmed. Each purchaser did, after all, get a pack of cards. So the suits were dismissed.

URSTADT: Yeah, and you can see how Loot Boxes might be in a similar boat. And there are new cases coming that someone is actually suing, I think, Fortnite or something. And you can imagine that they're going to see a similar set of challenges.

JOHNSON: Yep. Tommy says without establishing harm in the first place, these cases probably won't go anywhere.

HANSFIELD: The main question is going to be and was then, were the plaintiffs actually injured? Did they actually suffer any economic damage?

JOHNSON: And this may come down to an argument over odds as well. Baseball cards print the odds right on the pack.

URSTADT: Oh, that totally sounds like gambling.

JOHNSON: It does. And video game companies are starting to do the same thing.

URSTADT: Also sounds like gambling.

JOHNSON: Everyone knows what's at stake here. And people are already suing. But if you know the odds, it's really hard to claim you were taken advantage of. And so right now, your odds of successfully suing a gaming company in court, according to Tommy, not great.

(SOUNDBITE OF ADRIAN QUESADA AND SKINNY WILLIAMS' "NAWLEANS BOOM BAP")

URSTADT: Thanks, Ben. I am so glad we found a way to get you back.

JOHNSON: See you.

URSTADT: Next, we go to a much larger problem at the central bank.

(SOUNDBITE OF ADRIAN QUESADA AND SKINNY WILLIAMS' "NAWLEANS BOOM BAP")

URSTADT: So while we were busy not talking about baseball cards, something huge was going on. It was happening in the financial markets last month. Mary Childs, help.

MARY CHILDS, BYLINE: Do-do-do (ph).

URSTADT: Tell me what happened.

CHILDS: Yeah. So on the morning of Tuesday, September 17, the New York Federal Reserve announced it was going to put $53 billion into the super-short-term market.

URSTADT: For people who watch banks at all, this was alarming. And we got so many emails asking us what was going on and, more specifically, if this was a sign of a financial crisis.

CHILDS: Yeah, because the Federal Reserve hasn't done this - pouring billions of dollars into this market - in 10 years, literally since the last financial crisis.

URSTADT: We really should've gotten to this sooner.

CHILDS: That's on me. I'm so sorry. I didn't work here yet.

URSTADT: We didn't hire you soon enough. Mary Childs, you're new. Welcome.

CHILDS: Thank you.

URSTADT: You are the latest PLANET MONEY host. So tell us what was going on.

CHILDS: So the problem was in the repo market. Repo is short for repurchase agreements. It's this whole market that you can kind of think of like a pawnshop.

URSTADT: Right, like an extremely nice pawnshop for the people who control all of the money.

CHILDS: Yes, or kind of like a row of really, really nice pawnshops. So say I have something, like a watch, to take to this pawnshop. And in this market, that would be a U.S. Treasury bill, which is just a type of government debt. And that's super safe. Everyone agrees on its value. And today, I want to borrow money, so I will go to this row of very nice pawnshops, and you're there because you're a pawnshop. And I'll say, hey, Bryant, I want to give you this Treasury bill, the safest thing I have - this watch, for all intents and purposes - for $100, and I will buy it back from you in the morning for $100.01, which is your interest.

URSTADT: OK. That sounds really great. Easy penny.

CHILDS: Yes, great. So that means, too, if I bail, I skip town, I go bankrupt, you have my Treasury.

URSTADT: Yeah, I'm a pawnshop. That's no problem.

CHILDS: And people are always showing up here at this pawnshop town neighborhood because some days they need cash, and some days they want a little income from Treasurys.

URSTADT: So this is like in the old days when people used to move their money between checking and savings so they could get a little interest when they weren't spending it and then they could write checks when they needed it.

CHILDS: That sounds totally foreign to me, but I believe you.

URSTADT: It happened once.

CHILDS: So on this one day, September 16, for reasons that we're still examining, all these people went with their Treasurys to go where all the pawnshops are - to the repo market. And suddenly, there was not enough money. Nobody would take their Treasurys. So to ease that, the Fed said, OK, OK, OK, we will be a pawnshop. We will give you cash in exchange for your Treasurys. And it was a lot of cash - $53 billion on that first day. And they've been loaning more ever since - tens of billions of dollars a day.

URSTADT: OK, so this is where I started paying attention and where the front page of the Financial Times started paying attention and when our email inbox just lit up.

CHILDS: So part of the reason a lot of finance people were paying very close attention to this is because problems in the repo market were one of the early major warning signs of the financial crisis in 2007. So everyone was asking if this was that again. So to figure out why this happened and if it's really bad, I called a repo expert.

Do you want to say your name and what you do real quick?

ANDREW METRICK: Andrew Metrick, professor of finance at the Yale School of Management.

CHILDS: Beautiful. Thank you.

Metrick co-wrote one of the defining papers about the financial crisis, specifically about repo. And we asked him why there wasn't enough money in the repo market on this one day in September. And he said there were two things that happened that made big finance companies on this one day have to use their cash for something else.

METRICK: It was corporate tax day, and it was a day where a lot of Treasurys settled.

CHILDS: On corporate tax day, companies pay their taxes, which means they have less cash. And also, just by coincidence, it was a day when banks had to pay for a bunch of new Treasury bills - double whammy. Everyone's short on cash, and so that's why there just wasn't enough cash in the repo market.

URSTADT: So should listeners be worried like they might've been in 2008, 2009?

CHILDS: So I'm actually going to punt on that and give you what Metrick thinks.

METRICK: This is a very different thing. What was happening in - starting in 2007 and then really getting severe in 2008 is that there was a deep concern about the quality of the collateral.

CHILDS: Collateral. In 2008, the collateral that really worried people was mortgages.

METRICK: What's going on now really has nothing to do with risk at all because the underlying collateral here is just U.S. Treasury collateral. Nobody is saying, oh, God, I'm afraid if I give you money and you give me U.S. Treasury security that if you can't pay me back tomorrow, I'm going to be stuck with this thing that isn't worth anything. No one's worried about that.

URSTADT: So it is just a little imbalance that got sorted out?

CHILDS: Yeah. So it was weird, and it was unnerving. And it definitely says something about the structure of this new world we crafted after the crisis; it's just not totally clear what. But at least we do know that our muscle memory from the crisis is leading us astray. It's not the exact same thing that happened in '07, '08.

METRICK: This is a plumbing issue in a very complicated system, but it's basically a plumbing issue. It's not a risk and crisis kind of issue. We do need to sort it out, but it doesn't have any implications for, you know, the broader economy right now.

CHILDS: The Fed is still worried about this plumbing problem - about days when there might not be enough cash. So just this week, the Fed said that it will try new ways to fix this imbalance of Treasurys versus cash in the market.

URSTADT: So, Mary.

CHILDS: Yes.

URSTADT: You're here for your first segment, and you're telling me I don't need to worry; everything is fine. And that's your official first position?

CHILDS: Oh, so that's super not what I'm - yeah, no. You should be anxious all the time. That's my - at least my default setting. I would recommend it.

URSTADT: We will remain vigilant.

(SOUNDBITE OF LE FAT CLUB'S "PINAPPLE SWIM RING")

URSTADT: After the break, we get to the least common American.

(SOUNDBITE OF LE FAT CLUB'S "PINAPPLE SWIM RING")

URSTADT: Couple weeks ago, Kenny Malone ran a story called The Modal American. It was a statistical search for the most common types of Americans. Hey, Kenny.

KENNY MALONE, BYLINE: Lot of feedback on this story - lot of feedback.

URSTADT: Yeah, we easily got more emails about this one than any story we've done recently.

MALONE: Yes. And most of it kind, but some of it implying that we just did the wrong thing, which, you know, like, fair enough. To each their own.

URSTADT: Yeah. More than one listener sent an email basically insisting that you had, in fact, asked the wrong question.

MALONE: Yes. And...

(SOUNDBITE OF PHONE RINGING)

MALONE: ...I called one of these listeners.

AARON RIGAMONTI: This is Aaron.

MALONE: The wrong question?

RIGAMONTI: (Laughing).

MALONE: So this is Aaron Rigamonti. He is from Houston, Texas. And he explained to me why he thinks we asked the wrong question, and it has to do with this part of the story where we were explaining our methodology for finding the most common kind of person in America.

So we needed to count every single kind of person, and what we had done is we'd taken a bunch of characteristics, like income, age, education level, and then we essentially created 3,000 different buckets that every single person in this country would fit into. There was a bucket for every single combination of eight characteristics. And we were looking for whichever bucket was the fullest. That was the most common kind of person, and there were going to be millions of people in that bucket. And Aaron told me he was listening to this, and he was like, OK, cool, cool.

RIGAMONTI: But once you kind of, like, got halfway through, it's like, oh, but who are these little buckets of one? Who are these individual snowflakes out there that we can say, like, you are unique?

URSTADT: Yeah. You were asking who is the most common American, the modal American, and Aaron wanted to know who was the least common American. Around here, we've been calling it the least modal American, which we know technically doesn't make any sense, but whatever.

MALONE: Yes. And tons of people asked this specific question. And so last week, I called up my co-reporter on this story from The New York Times.

(SOUNDBITE OF PHONE RINGING)

BEN CASSELMAN: Ben Casselman.

MALONE: As you know, Bryant, Ben was the real genius behind doing the analysis for this story.

Hey. So, listen; the people have questions about our modal American story.

CASSELMAN: Did we get it all wrong?

MALONE: We didn't get it wrong. They want more.

CASSELMAN: More modal.

MALONE: More modal.

So, Bryant, you will remember the mode of a data set is the most common thing in that data set. So the modal American is the person you are most likely to run into out in America. And so I explained to Ben that what the people are asking is, who is the least modal American?

CASSELMAN: Oh, the person we're least likely to bump into.

MALONE: Yeah.

CASSELMAN: We can mostly answer that question.

MALONE: So Ben explained that the problem with this question is that it's hard to trust the really small buckets in our distribution of Americans.

URSTADT: Yeah. Right, 'cause statistics doesn't really like small numbers and small samples. They want large.

MALONE: Yeah, because you - you'll have all this noise in the data, potentially. And, like, let me give you the prime example of this. So our data came from this huge thing that the U.S. Census Bureau conducts called the American Community Survey, which, you know, is a survey. It relies on people actually correctly filling this thing out. But when you look at the buckets with, like, one or two or three people in them, what makes a lot of these people, quote-unquote, "unique" is that a piece of information is just missing. So like, instead of income, there is nothing - not zero income, just missing data.

CASSELMAN: And so in all probability, those people really should be in one of these other buckets.

MALONE: OK, right.

CASSELMAN: We just don't have any information on them. So we can throw them out. That's pretty easy.

MALONE: And so what we are left with, then, is the smallest bucket without any missing fields, and we're going to call that bucket our least modal American. And how many people are in this bucket?

CASSELMAN: In our survey, there's only one person who met this description, which the Census Bureau, in their wisdom, thinks if there was one person who fit this description, then there are probably three of them in the whole country.

MALONE: Three, OK.

CASSELMAN: But I'm not totally convinced that this person really exists.

MALONE: Why not?

CASSELMAN: Well, I'm going to describe the person to you.

MALONE: OK.

CASSELMAN: So she, a white woman...

MALONE: OK.

CASSELMAN: ...In Gen Z - basically 18, 19 or 20...

MALONE: That's right. We cut out anyone who wasn't of working age, essentially.

CASSELMAN: That's right.

MALONE: OK.

CASSELMAN: ...Working full-time in a middle-income household in a rural area.

MALONE: OK. So far, totally reasonable.

CASSELMAN: Here's the trick - college graduate.

MALONE: At 18, 19 or 20 years old.

CASSELMAN: Yup, yup.

MALONE: OK, precocious.

CASSELMAN: Precocious, and previously married - could be separated.

MALONE: Whoa - 18, 19 or 20 and you've already fit in one failed marriage or...

CASSELMAN: Or tragically ended marriage, yeah.

MALONE: ...Or tragically ended marriage and a college degree.

CASSELMAN: That's right. I actually looked up - I said - right? - there's one person in the survey, so I looked them up in more detail.

MALONE: Yeah.

CASSELMAN: She's 19...

MALONE: OK.

CASSELMAN: ...Living in rural western Virginia, living with her parents. She's a receptionist. So maybe she's out there.

MALONE: But, Bryant, Ben's point is also maybe she is not out there because this is one person from the American Community Survey. Like, what if the person filling this thing out accidentally put down the wrong marital status or education level? What if a mistake got made going from, like, paper to digital? Like, we just don't know.

URSTADT: Right. And this is the whole problem with asking about the least modal person because the data, by necessity, by definition, has to be thin. It's much more susceptible to noise.

MALONE: Yeah, that's exactly right. And, like, ultimately, we did talk about including this kind of information in the original episode, but it just felt like we needed too much time to explain all of the caveats. But, you know, here we are. And people wanted to know the answer. And so when I was on the phone with our listener, Aaron, I explained all of this to him. I said, here is your least modal person. Maybe it's a mistake, but it's all theoretically possible. Maybe she is real, living with her parents in western Virginia, previously married, college degree, 19 years old.

RIGAMONTI: It begets the next question of, like, what happened?

MALONE: Yeah.

RIGAMONTI: How are they in the middle of such a unique life?

MALONE: You're saying we should get in touch with that person?

RIGAMONTI: I think it would be amazing, yeah.

MALONE: Well, listen; by definition, the modal American was the easiest person in the country to find.

RIGAMONTI: (Laughter) That's very true.

MALONE: And by definition, this is the hardest person to find, if she is even real.

RIGAMONTI: Yes.

MALONE: All right, Aaron.

RIGAMONTI: Well, awesome.

MALONE: You're not wrong. It's a good question. It's a good question.

RIGAMONTI: All right, thanks, man.

MALONE: All right.

RIGAMONTI: Bye-bye.

MALONE: Bye.

And, Bryant, I think we should, like, leave this story here. Like, if you are listening to this and you are that person or you know that person, get in touch. We would love to talk. We would love to know more.

URSTADT: Yeah, definitely.

(SOUNDBITE OF CHRIS PENNY AND SKINNY WILLIAMS SONG, "GIVE 'EM A TASTE")

URSTADT: Least common American, write us - planetmoney@npr.org - or find us on social media. This episode was produced by Liza Yeager. Alex Goldmark is our supervising producer. Special thanks to all the listeners who wrote in, including Rod (ph) and Seth (ph). By the way, we got a ton of letters about our update to our show about demonetization in India. Listeners wanted to know if it had done anything to reduce corruption or affect the black markets. We don't know yet. We just don't have the data.

PLANET MONEY is made by NPR. I'm Bryant Urstadt. Thanks for listening.

(SOUNDBITE OF CHRIS PENNY AND SKINNY WILLIAMS SONG, "GIVE 'EM A TASTE")

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