Six Degrees of Separation From My Cousin Paul to The Underwear Indicator

My cousin Paul told me a very funny story. He was walking along a street in East London when a car blaring out dance music pulled alongside him. Expecting some obnoxious teenager to open the car door, he was surprised when an 80 year-old man emerged. ‘Please can you help me, sonny?’ the man pleaded, music still blaring, ‘my grandson borrowed my car and I don’t know how to turn the stereo down’. Thus begins my tale of thinking ‘outside the box’, via my cousin and underwear.   

There was an advertisement in last week’s Economist for a car. The focal point of the ad, however, was not the engine, its look, or its reliability. The key point was, in fact, a key. A MyKey™ . And it really could have helped the grandpa in my cousin’s story. As the ad explained, the MyKey™ is a car key through which a parent can not only limit the speed at which their teenager drives, but also the audio volume of the car stereo. This not only encourages them to drive safer, but also means better fuel efficiency from lower speeds (= aha, the green angle). This ad fascinated me as the product (= the car) was being sold on the merit of something which really had nothing to do with it. This was thinking ‘outside the box’ at its best.  

In a world where our lives are being ever more analyzed through data – from our social networking patterns to our spending habits -thinking ‘outside the box’ has become less maverick, and more mandatory. The MyKey™ ad exemplifies this mindset: approaching a common concept but from a different angle. This logic extends itself to other areas, such as data mining. MasterCard is one of the more prominent advocates of this. Through SpendingPulse™ they analyze credit /debit card transactions to identify consumer spending trends. Through real-time data collection, they are able to inform us of the latest trends in consumer behavior – for example, just yesterday SpendingPulse™ told us that gasoline demand on a 4-week average basis just posted its 31st consecutive decline. Extracting such value from a raw and seemingly unrelated set of data is pretty smart, but is becoming ever more the norm.      

Flipping (yep, pun intended, read on…) this product-to-trend process on its head, The Economist has not only thought ‘outside the box’, but also ‘inside the bun’ to develop The Big Mac Index. This index, through burgernomics (…or perhaps burger-nom-nom-nom-ics), takes something which is truly synonymous the world over and pegs it as a global benchmark to determine whether a currency is under or overvalued. Essentially, you can tell whether a country’s currency is fairly priced or not, based on the cost of a Big Mac there. Through burgernomics, as of July we can identify that the Brazilian currency (Real) is extremely overvalued, while the Chinese currency (Yuan) appears surprisingly close to fair value.   

   

Technological advancement not only means we can measure the things we can hold (and bite), but we can also measure the less tangible. For example, satellite images are now used to predict economic and commodity trends; parking lots are monitored to predict retail sales, while images of storage tanks (like at Cushing, Oklahoma where WTI is priced) are used to predict the level of oil stockpiles. Once again, by being ‘outside the box’ (and ‘into the atmosphere’) interesting insights can be yielded, even from unorthodox methods. But that doesn’t mean we have to ignore what is in front of us everyday…    

 

As life goes by at a hundred miles an hour, there are probably a hundred trends we could identify if we looked hard enough. Some indicators can be easily quantifiable, yet some are more subjective. This leads us to one of the more random yet recognized ‘outside the box’ economic indicators in the world; the Hemline Index. According to this study by the Econometric Institute, the hemline on women’s dresses fluctuates with the economy. In times of economic woes, the hemline moves closer to the floor, while in good times skirts get shorter. The Econometric Institute study concludes that the economic indicator holds true, but at a three-year lag. Hence, the latest financial crisis a few years back means next year’s fashion is set to be…ankle length skirts.

The Hemline Index

From my cousin walking on an East London street, we have looked at ‘outside the box’  logic via MyKeys™, MasterCard, Big Macs, Satellites, Hemlines, to finally go one layer less to….the Underwear Indicator. Now the MUI (Men’s Underwear Index) – much like the last – has its support embedded in the upper echelons of academia. For the underwear indicator is a favorite of none other than the last chairman of the US central bank – for 19 years, no less - Alan Greenspan. The indicator simply identifies tough economic times, as sales dip as men try to space out their purchases. The silver lining? Apparently men’s underwear sales are on the up.  On that good news, I leave you where we started; with my cousin Paul.

Paul, Penguin, Me

1 Comment

  1. Bob Hayes

    Outstanding!!!

    #1