Posts Tagged “california”

Museum of Arbitrage: The Pudding Guy

1Ross • 1st Mar 2010 • Uncategorized • air miles, airmiles, arbitrage, california, economics, finance, hacks, money, pudding, reward, saving, usa

Why the museum of arbitrage? Well, because if arbitrage existed now, I would be doing it rather than writing this.

In 1999, UC-Davis civil engineer David Phillips was grocery shopping when he noticed something peculiar. Healthy Choice Foods was offering frequent-flyer miles to customers who bought its products. But a 25-cent pudding would bring 100 miles — the reward was worth more than the product itself.

Recognizing a good thing, Phillips bought 12,150 servings of pudding for $3,140, claiming he was stocking up for Y2K. Then he enlisted the Salvation Army to help him peel off the UPC codes, in exchange for donating the pudding.

He mailed his submission to Healthy Choice, and to their credit they awarded him 1.25 million frequent-flyer miles, enough for 31 round trips to Europe, 42 to Hawaii, 21 to Australia, or 50 anywhere in the United States.

There’s no downside. Phillips also got Aadvantage Gold status for life with American Airlines, which brings a special reservations number, priority boarding, upgrades, and bonus miles. And he got an $815 tax writeoff for donating the pudding.

Lifted wholesale from Futility Closet.

Restraining utility prices is rarely a good idea

0Ross • 26th Jul 2008 • Thinking • california, economics, usa, utilities, water

Reading an comment-piece about Californian water shortages on Forbes.com reminds me of my work on the Dominican electricity system a couple of years ago. Artificially restrained prices are common to both markets, (although in Santo Domingo, there were the additional problems of institutional disorganisation and widespread consumer theft). I can’t help but wonder for how long societies will continue to be surprised to discover that keeping utility prices low by regulatory fiat leads to over-consumption and shortage.