Monday, February 09, 2009

High Finance: Michael Phelps vs. Kellogg's

by Chris Makler

Kellogg's recently dropped its sponsorship of Michael Phelps after a photo of the Olympic swimmer smoking marijuana was printed in a British tabloid. In a recent "Saturday Night Live" sketch, Seth Meyers pointed out that it doesn't necessarily make sense for Kellogg's to have done this:



Discussion Questions

1. What is the economic term for the relationship between marijuana and Kellogg's products that Mr. Meyers is suggesting?

2. Which of the economic theories you've discussed in class best explains why Kellogg's would spend millions of dollars to be associated with Michael Phelps in the first place? Would that same theory be consistent with why it would drop the sponsorship when Phelps's marijuana use came to light? According to that theory, under what circumstances would Kellogg's benefit from dropping Phelps? Under what circumstances might the decision backfire?

3. Analyze Michael Phelps's decision to smoke marijuana from an economic perspective. Clearly, the costs of being caught smoking marijuana are extremely high for him. Can economic theory explain why Michael Phelps chose to make such a bad decision? If not, what could help?

5:59 PM | Permalink | Comments | Assign Aplia Reading

1 Comments:

  • At 9:34 PM, February 10, 2009, Blogger Lisa said…

    I was feeling rather low these past few weeks, then saw Laura Rowley's post on Yahoo Finance...

    She recommended we all "avoid money porn" and I decided to take her advice.
    ======================
    "Kevin McKinley, a Wisconsin financial planner, author, and host of the public radio program 'On Your Money', advises clients to tune out the market play-by-play, as well as news stories about layoffs or the economy.

    "Do not watch the ‘money porn' television channels," he wrote in an email. "Nobody knows for sure how this is going to turn out, or what's going to happen next. Understand that many of the people who are telling you that the end is near are the same ones who in 2007 were telling us that good times would never end."

    Lyubomirsky and other researchers have found that diverting attention can break a cycle of rumination and lead to clearer decisions. "If you're dysphoric, pay direct attention to something neutral or something positive," then focus on reappraisals and revised goals, Lyubomirsky says."
    ===========================
    All I can say is thanks Chris, you made me smile today.

     

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