Monday, April 16, 2007

Service Auction Economics

Our ward had a service auction, and I'm intrigued by the economics of it. Basically they raise money for the Young Women to go to Girls Camp by having members donate goods or services and then auctioning them off.

What is so fascinating to me is who spends how much money. If I donate a service that costs me ten dollars to provide, I am giving ten dollars. However, not all of it is necessarily going to the girls. If that service is auctioned off for five dollars, I've given five dollars to the girls and give dollars to the winning bidder, who has donated nothing, since he's won a service in return for the five dollars he gives to the girls. If that service is auctioned for fifteen dollars, though, I give ten dollars to the girls and the winning bidder gives five more.

So it's possible to end up with a loss of value if the cash value of what the girls receive in auction sales is less than the cash value of goods and services volunteered for the auction. The bidders could be taking value the girls would have received if everyone just gave cash.

But most things don't sell that way. Most people donate services and then buy goods and end up giving the girls more than just cash, and it's more fun, too. But it's still super interesting to me. But I guess that's why I'm going to school for economics. Because I'm a nerd who's interested in things that everyone else finds boring.

1 comment:

Erik said...

One of my most interesting classes at BYU, and my most inspiring Professor was my Economics 101 class. His name was Dr. Kearl, and I feel like I learned more about politics, human behavior, and policy in that class then in any other setting in my life. I even got a bad grade and had to retake the class but I wasn't even upset about because I thought he was such a good teacher, and I had a ton of respect for him. Crisitn graduated as a poly science major at NAU in Flagstaff, and It FLOORED me when i found out she never took economics. If politicians used good economic theory for public policy decsions, I think a majority of our governement's issues would be easy fixes. I wonder how many of our current politicans have never taken an economics class.