Can you outsource your child care on a plane?

[This post was originally published on the Parentonomics blog on Forbes on 14th April 2012]

In a recent post, I noted that Air Canada's policies that restricted seat selection might leave some other adult sitting next to, and by default, taking care of your kid on a flight. I also noted that might not be so bad, for you, the parent. Now while Air Canada's approach seems somewhat strange (asking parents for money to sit next to their kids), there was the hint of an opportunity here. Sometimes parents might pay good money to not to sit next to their kids.

Enter Nanny in the Clouds, a service that caters for just that [HT: Dean Karlin]. This is a web service that allows parents to identify other adults on a flight who might take care of their kids. And if you are the sort of person who wouldn't mind taking care of someone's kids on a flight, the service lets you signal your availability. All going well, if you find a match, a price is negotiated, Nanny in the Clouds gets $10, and everyone is happy.

There are several interesting issues associated with this idea. Basically, Nanny in the Clouds is creating a labor market where none currently exists.

Audio-animatronic versions of Mary Poppins and Bert in The Great Movie Ride. (Photo credit: Wikipedia)

That's a good idea but it is really only going to work if its liquid -- that is, if there are lots of people registered and matches can be made. In the best scenario, one entrepreneurial nanny is able to claim a couple of rows of seats at the back of the plane and earn money from the flight. Indeed, people might actually be able to justify flying just to offer nanny services. There could be something there but, as Dean Karlin points out, surely then it would make sense for airlines rather than a third party service to offer to broker some deals. After all, they routinely try to facilitate 'exchanges' between passengers when flights are over-booked.

But there is another problem. Let's consider for the moment, who is going to want this service? Now some well-off parents already have nannies for which airline duty is part of the deal. So this is probably for a lower income tier. The best opportunity is for situations where the parents want to sit in business or first class and leave the children back in coach. And if we add to the mix a long-haul flight, the gains from trade seem enormous. In that world, this market will work well indeed.

That, however, is not the only type parent that might find this opportunity worth the trouble and money. Specifically, the parents of 'lemons' might find this worthwhile. The term 'lemon' here refers to used cars that are of poor quality. So if you are a buyer of a used car, you are worried about getting a lemon. So too if you are a potential supplier of cloud-based nanny services. The whole deal may be worthwhile if a child just needs to be supervised but might otherwise happily take care of themselves or, more generally, behave well. But it could be very costly indeed for the nanny if the child is a 'lemon' which could include poor behavior or alternatively being a poor flyer. It would be hard for would be nannies to negotiate air sickness contingent pricing.

The problem, of course, is that parents know their children and so if you, as a nanny, priced in the risk of getting a lemon, parents of good children will not take the deal and you will just be left with lemons. To be sure, there may be gains from trade here but it is also the case that the market is thinner as a result and might take a while to sort itself out. Nanny in the Cloud could help by allowing parents to rate nannies but also nannies to rate children. But I suspect that last part might be somewhat controversial.

It would be interesting to see how this works. Alas, I have both stingy and have children who, at least on flights, aren't lemons. So I won't be availing myself of the service. But for anyone who does, the comment forum here is open for stories of your experiences.

My Little Pony will Blast you into Oblivion!

[This post was originally published at the Parentonomics blog at Forbes.com on 30th March 2012].

That is precisely what you will get if you try out this great new site: GenderRemixer.com. What the site allows you to do is take the audio from one toy advertisement (say, Battleship) and place it

Lego Friends (Photo credit: Per Olof Forsberg)

with the video of another toy advertisement (say, My Little Pony). While the result is to tell us what we already know -- toy manufacturers treat boys and girls differently -- it does so in a beautifully stark manner. That makes it worth your attention if only to see how similar the structure and narrative of these ads are despite their markedly different tone and orientation.

Actually, GenderRemixer specifically target Lego that has been in the news lately releasing Lego sets designed specifically for girls. If you try this tool outyou can play around with those advertisements too. Lego recently released 'Lego Friends' that were designed to be played with as well as built. This all came from Lego's own research that suggested a gender difference in how kids play with Lego (boys build and girls play they found). And, of course, given that no such research that is devised to determine differences in average behavior can possibly suit all comers, that generated controversy. In my household, with two girls and one boy, 'Lego Friends' were completely unappealing. Why? My eldest daughter (13) is only interested in building stuff from sets. My son (11) wants to build set to understand how he can change them. While my youngest daughter (7) loves the Star Wars sets so she can reenact the scenes from the movies. Now, of course, that last bit is consistent with Lego's research about play versus building. But she wanted to play with the sets related to the movie she loves and not some alternative Lego structured scenario. 

Marketing is a tricky business but, as a parent, I'm sensitive to the messages marketing sends. Despite years of progress so reasons that have long kept me troubled, the market still finds it worthwhile to target genders differently. They do this for adults as well as for children. But it is the children we worry about because we worry about reinforcement of stereotypes. In my case, we have ruthlessly used the hard hand of parental preference to stamp these things out. While for our eldest, we achieved our goal (perhaps too far), for our youngest, we got Star Wars but we also could not rid ourselves of American Girl Place. Call it all just part of the ongoing battle of wills.

Worse than baggage

The best thing you can say about kids and travel is that they are worse than baggage. Now Westjet solves the problem. They will make a ton.

GPS Enabled Sippy Cup

Over at Forbes I discuss an exciting new breakthrough in sippy cup technology. Finally, the inclusion of GPS! I believe this is my first scoop.

The Hunger Games is a great movie for kids

[This post was originally published at Forbes.com on 26th March 2012]

That's my opinion having just taken my 11 year old son to see it. And if I am to read the blogosphere, it is a controversial opinion to hold. Some, including here at Forbes, see it as potentially causing reduced civility amongst kids. Others see it as pure escapism for teens with little teach them or improve their understanding of the world. I have read the first book and now seen the movie and I disagree.

Just in case you missed it, The Hunger Games involves a future society where, as a result of the outcome of an earlier suppressed rebellion, each year, each of 12 ruled districts offers up two 12-18 year olds as tribute to basically play a game of Survivor. The twist is that there is no tribal council or votes but instead the kids just kill each other until one is left standing. To be sure, this is not the sort of movie that we have come to associate as kid friendly these days. But to hold that view is to opt for a sheltered view of what our kids should be exposed to.

My son is actually quite a sensitive soul. When trailers for horror movies come on, he covers his ears and shields his eyes. So I was somewhat surprised when I learned that last year he had read The Hunger Games and enjoyed it. Why I asked? He said, "it made you think."

Cover of The Hunger Games

And it is from that perspective that I approached the book and then the movie. Right from the start the movie opens, not with the game, but with its anticipation. All of the kids are put in the position of facing uncertainty as to whether they would be offered as tribute for the game. It taxes them so much so that the lead character proclaims she will never have children in that world. It is this feature more than the game itself that teaches kids, especially amongst the more privileged in our society -- of which my son is one -- to think about the uncertainty that many less well off both here and throughout the world live. It may not beThe Hunger Games that taxes them but the fear of becoming ill without adequate health insurance or of losing one's home to a financial crisis. Studies show that this has great harmful implications for the welfare of adults. Think about what it does to children. The Hunger Games forces the reader to experience that fact of many people's lives even if dressed up in a fictional world.

The game itself brings forward another thought: what would you do? The disturbing thing about The Hunger Games but also its most plausible aspect is how easily most of the tributes buy into the game and are comfortable with killing others to save their own lives. To be sure, not all of them are alike but there is little thought in the moment given to the notion of combat or murder. How often in discussing the news or past historical wars have your children asked you how people come to kill one another? The Hunger Gamespaints a picture of how the situation rather than the person can matter. This is what social psychologists have taught us (think of the famous Milgram or Stanford prison experiments). Here, it is presented in fictional form and it is powerful. To us, it provoked a discussion of precisely that and made our children step back and think about how the situation can define their actions and the actions of others. This is not an easy subject to broach but The Hunger Games gives us the context.

Finally, there is the question of plausibility. In The Hunger Games, most players are coerced but some volunteer. Interestingly, they are from the apparently richer districts even though there is a prize of incredible riches for the victor. That provokes thoughts about whether people would volunteer for this sort of game in today's world. This is also the context upon which you can broach the subject of Kony2012 with your kids. The most salient part of that movement is the notion of stolen children who are made to fight (think abou that people who believe The Hunger Games is far removed from reality). But there have also been times in history where kids fought without coercion. In many respects, this is all about the plausibility of the economics of the movie. The point is that the very subject of how far removed the movie is from reality is one that the movie can stimulate. 

In my mind, the controversy surrounding The Hunger Games reflects a steady move towards a more sheltered existence for our children. I will freely admit that I might have hesitated about taking my son to see the movie had he not already discovered the book. And he saw it and enjoyed it and was not traumatised by the experience. The situation that took the choice out of our hands allowed him to broaden his own horizons without the cost of parental deliberation.

And what age is appropriate? That depends on the kid. Given knowledge my son's reaction, I would not hesitate in letting him see the movie had he been a year or two younger. Beyond that, the benefits I have suggested above in terms of a broader discussion of the world would probably be lost. But truth be told, apart from all the killing, the kids in this movie or the book are far less mean or cruel than children in the school playground. It is easy to get distract by adult classifications of trauma that may loom less large than those children actually experience.

Why Disney would like you to subscribe to vacations

[This post was originally published at Forbes.com on 25th March 2012.]

"I'm only here for the Fast Passes." That is what I unashamedly told the consultant trying to pitch us on Disney's Vacation Club. We had been at

Cinderella Castle at the Magic Kingdom, Walt Disney World Resort (Photo credit: Wikipedia)

Walt Disney World and while we were waiting for something such as children cycling through a bathroom run, we had wondered what all of the "enjoy your vacation for 70% off, ask us how" posters were all about. Standing right there was an appropriately uniformed person to ask them how. He said lots of stuff but I wasn't really paying attention. But then he said, if you'd like to hear all the details, it will take about an hour but in return Disney will give you enough Fast Passes for the day. From then, I was all ears (pun intended).

A Fast Pass is Disney's ingenious method of allowing theme park visitors to spend less time in queues. They usually work by turning up to a popular ride, grabbing a pass which then gives you an hour window to queue skip at some time later in the day. You can only hold one of these at a time so they have to be used sparingly.

But the Fast Passes on offer here were not of that variety. They could be used right away. And there were enough of them that we would be free of queues for a day. It didn't take me long to work out that that would save us a couple of hours in queuing. So I'd happily trade-off hearing a sales pitch on the Disney Vacation Club for that any day. I may even get a blog post out of it.

To that end, despite my clear and transparent motivations for being at the pitch, I paid attention. At our scheduled time, we were brought the Disney Vacation Club installation at Walt Disney World. This was a large facility that was part of the Saratoga Springs Resort. We were led to a consultation room with its appropriately Disney styling and we were given the deal. Here's what it was. Instead of paying for vacations -- specifically accommodation -- as we currently did, when we booked them, we could pay for them in advance. For either a one time payment or a 'mortgage' over 10 years (or it turns out anything in between), we would get 50 years of holidays. Yes, 50! For we who were currently involved in heavy planning of our activities over the next 50 hours, this was quite an adjustment in time horizon.

Now you might say that this just sounds like a 'time share.' A traditional time share is where you buy a 1/52nd share in a property somewhere and you are required to vacation during a specific week each year. For those, more popular weeks carry higher payments but you do get some real estate in the process. This has never been too appealing a notion to us as we never found a place we would be happy with to vacation every year and there just seemed to be too many things that may change our minds even if we did.

The Disney Vacation Club is 'time share' like in that you get 'time' and you are 'sharing' but that is about it. Instead, while legally you are buying a share of a property, in actuality, Disney has set up an organized market over the top of it that allows you to vacation at some 200 possible locations (near as I can count) at any time of the year you want. Now, it is subject to availability but when you are encouraged to book several months in advance, that isn't an issue. And there is a 'rate of exchange' based on your primary buy-in. What that means is that you purchase points and Disney assigns different redemption amounts for points at different properties and at different times of the year. Want to vacation at more deluxe accommodations, buy more points. Want longer vacations, buy more points. In economic terms, you are paying for the rights to a certain amount of vacation quantity/quality at Disney resorts.

But it is even better than that. First, if in one year, you don't want to do that, you can bank the points and have a longer vacation next year. Second, if you are impatient and want a longer vacation this year, you can borrow from next year's allotment. Third, this isn't tied to you. You can gift vacations to friends and family and indeed, leave the future vacations to your children and perhaps your children's children. If it is at a Disney resort they get all the resort privileges too. Finally, you aren't confined to Disney resorts. Disney has done deals with others so that you can choose places to go all over the world. To be sure, the redemption rates are higher for those but if you want to go to Australia, paying in advance in this way isn't going to cause you a dilemma.

What about the financials? Now I won't go into the details as that borders on financial advice that I am not in a position to give. But the demonstration of the costs and benefits was crystal clear in the pitch and stood up to my probing questions. If you are the sort of person who pays full price for vacations, you can, indeed, save 70 percent on accommodation but probably only if being a Club member turns you into the person who would plan for vacations and take advantage of discounts. Instead, for us, I believed it would have saved us 50 percent on what we paid for this year. That means that the Disney Vacation Club would pay for itself in 7 to 9 visits. Although it also would save me the days of planning for a vacation and researching options. Once you bought it, there'd be no reason to stress over that anymore. All that said, if you want to learn more about that I recommend this grumpy blog post from 2007.

What I would say is that the financing option offered by Disney wasn't too attractive at 12.5% APR for we Australians. That said, there was apparently no credit check required for non-US and non-Canadian citizens. For Disney you can't exactly make a few payments and run off with the property so they don't act as if you can. That was refreshing. I had never seen a financial option where foreigners were treated better.

Finally, your points can be resold to anyone (with a few minor restrictions). But it has to be officiated by Disney and they have a 'right of first refusal' to buy the points back at the price you may have negotiated. This is probably done to stop people trading just for individual year vacations but if you were a Club member you would probably appreciate Disney's oversight on asset value depreciation. It can't exactly hurt. You either resell the rights to whomever you have negotiated with or to Disney.

As I sat there listening to this, it all seemed too good to be true. What were Disney getting out of this? The consultant told us that Disney were doing this because their customers asked for it. That I didn't doubt. And then he went on to tell us that Disney weren't really getting anything out of it and that is why they made it work so flexibly. As I sat there in the considerable Disney Vacation Club installation, I doubted that. But I'd get no help from the consultant. I'd have to work that one out for myself.

So here goes. The first place my keen economist senses takes me is to tax. Is there some tax advantage to all of this? The answer is, probably yes. When you stay in a hotel or resort in Florida, Florida charges a whole lot of taxes for that accommodation. But when you buy into Disney Vacation Club you are buying real estate. That may involve some taxes but they appeared to be far less than the 12 or 13% tax that was running in Orlando.

But taxes weren't getting us the whole way. If our vacation accommodation costs were halved, the real value had to be greater than that for Disney to get their cut.

The second place I looked was in capital budgeting. Disney build resorts. They are high quality and expensive. So they face an issue of forecasting demand. If you can get people to buy in early, you get those capital costs funded upfront. That sounds attractive but remember, it is more costly for me to get money to pay for Disney's capital costs than it is for Disney. So that is a negative. But if Disney can improve the risk profile of their investments because some demand is assured, then that does get them something. But something tells me that this wasn't going to be a huge benefit.

The third clue is that accommodation costs are just a part of what we spend on a holiday. You might want to stay a few more days but here Disney will allow that for a 25% discount (which is about as good as it gets). There are airfares but Disney don't share in that. More importantly, there is food and activities. At Disney resorts these are considerable. There are park fees, food and Disney paraphernalia. Of course, if you were to come every year, you'd likely economize on these. Now Disney could, of course, discount its own accommodation to encourage more visitors and this stream of cash (you know, they way movie theatres try to encourage popcorn sales by getting more people through the door). But lower priced accommodations, may screen for the cash constrained. Instead, if you have customers who have paid in advance for their accommodation, they may be more liberal in their spending; especially, if they are friends and family who didn't have to fork out for that at all.

In the end, taxes, capital planning and extra spending, all could explain part of the value but my guess is that there was something else. I went so far as to read the contract about all this which was the most beautifully clear legal document I have ever read. Two pages, no fine print. From my examination, there didn't appear to be anything sinister hidden there and a good search of what was written on the web didn't uncover any broad disgruntlement. Instead, we have 20 years of the program, 145,000 odd club members (encompassing perhaps up to half a million people) and Disney Vacation Club sales points at regularly spaced as bathroom facilities at Disney theme parks and hotels. All that points to Disney and its customers getting something from all this even if I couldn't quite parse it during my own vacation time. To add to all this, Disney gives you it all back in taking the pitch.

And what did the children do while we were listening to all this? Disney, of course, had that covered. There was a big activity center and the kids happily played for an hour and when we came to pick them up with "Let's go to the Magic Kingdom" they all said (even the 13 year old!) "do we have to?" Well, yes, but not before they were parcelled out the door with an ice cream sundae.

I came for the Fast Passes but the pitch was worth hearing even if you weren't writing a post about it. It will cost you at most an hour which you make up for in reduced queuing and your kids will be more than happy for the fun.

There are more high priced nannies than you think

[This post was originally published at Forbes on March 22, 2012]

When NPR's Adam Davidson wrote this week about a New York nanny who earned $180,000 per year plus benefits, I knew this would be something I'd have to look into. Much of the discussion about this was whether it was worth it. The implication was that nannies even earning $50,000 or $100,000 a year wouldn't be worth it.

But what does worth it mean? Davidson looks to some utilitarian rationale:

Many clients are paying for the privilege of not having to worry about their child’s care, which means never worrying if their nanny has plans.

That is, are the services themselves worth paying for. He concludes not and, instead, ends up seeing high priced nannies as a "credence good." Something you purchase to keep up with the Joneses.

Screenshot of Julie Andrews from the trailer for the film Mary Poppins (Photo credit: Wikipedia)

But I'm not so sure. There are many more high priced nannies than you think and they aren't just on the Upper West Side of Manhattan.

How often is it the case that one parent (yes, usually the mother but there is a small but significant group of fathers in this category) give up a high paying job to take care of children, particularly, pre-school aged children? In each of those cases, the household is "paying" for their services in the form of what economist's call an "opportunity cost." In this case, it is the loss of the salary of the parent staying at home. If that parent would have earned $50,000 to $100,000 plus per year, that means your internal nanny service (i.e., the parent) is as extravagant an expense as an Upper West Side counterpart. In fact, it can be more so if you take into account the tax implications.

Now you might say that what you are getting for the parent supplied services is better than the outsourced nanny services. Parents know their children, have their interests at heart, are on call all the time and mean you don't have to worry about child care. But go read the Davidson piece again. This is precisely the utilitarian services that the high priced nannies are being valued for. Once you include stay-at-home parents, you'll find that we are all paying much more for nannies than we think.