According to Moneyball Economics founder and CEO, Andrew Zatlin, when we take a look at luxury spending (specifically on ‘vices’ such as gambling and prostitution) we can accurately predict other economic activity.
Zatlin states that traditional markers used to measure luxury spending are taken from JP Morgan and Morgan Stanley and include Tiffany’s and Sothebys. However, that represents, Zatlin points out, only the top .5 percent.
He noted that 40-50 million people visit Las Vegas yearly, and “That’s a pretty good sample population baby!” So why not use this more average sampling of people as a statistical sample?
“When we get to gambling and illegal vices, it’s all about cash flow.”
Zatlin also noted the nearly 17 million pot smokers in the U.S. –another vice to measure as it ebbs and flows with the economy.
According to Zatlin, old forms of measuring data such as consumer credit is old news. This is largely due to the fact that “vice spending” is measured in real time.
“Vice spending,” he said, “reflects how consumers feel in real time. Someone is going see a prostitute and spend $300 an hour and making $30,000 a year, you’re talking two to three days of wages. This is not a small event. You gotta feel pretty damn good.”
Also to note, Zatlin said when he wants the most accurate U.S. data, he usually tracks gambling in Detroit and not Las Vegas. “Your average Chinese gambler is not flying into Detroit, Foxwood or New Orleans. I like to look at where the lower income goes.”
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