United States

The Ebook Market in Numbers

Over the years the ebook market has grown from a relatively obscure niche to a thrilling billion-dollar mass market. The total ebook revenues went from 64 million $ in 2008 to about 3 billion $ in 2012. That’s a increase by a factor of close to 50 in just a few years.

ebook market revenues

The number of units sold also increased by the same factor (from 10 million units in 2008 to 457 million in 2012).

ebook market units sold

(Source)

However, many experts believe that the ebook market has reached a plateau and the numbers for the first half of 2013 seem to confirm that.

From the revenues and units sold we can also extract the development of the average price for sold ebooks. It strongly increased from 6.4 $ in 2008 to about 8 $ in 2009. After that, it quickly went back down to 7 $ in 2010 and 6.7 $ in 2012. So ebooks have gotten cheaper in the last few years, but are still more expensive than in 2008.

average price ebook

As of 2012, ebooks make up 20 % of the general book market.

21 % of American adults have read an ebook / magazine / newspaper on an e-reader in 2012. This is up from 17 % in the previous year.

A survey, again from 2012, shows that most e-book consumers prefer Amazon’s Kindle Fire (17 %, up from no use) , followed by Apple’s iPad (10 %, same as previous year) and Barnes & Noble’s Nook (7 %, up from 2 %).

Types Of Federal Student Loans

Students who look for financial aid during studies either go for federal student loans or private student loans. Federal student loans are offered by the US government, which are available directly through banks, student loan lenders, schools or from the Federal Family Education Loan program (FFELP). Federal loans are offered with very low interest rates, longer repayment periods and various kinds of repayment options with simpler credit requirements than private loans. In case of federal subsidized student loans, the interest is paid by the government to the financial institution while the student is enrolled as well as during a grace period. A federal loan may not be enough to cover all the expenses of the student and in that case, the student might have to take an additional private student loan. Note that the student will not get the full loan amount applied for and should only take the actual amount into account while preparing the budget.

There are different kinds of federal student loans from different institutions. Hence, it is advisable to take the guidance of parents or other financial aiding sources to decide on the type of federal direct student loan that suits the student the best.

Perkins loan option:

This loan is available for undergraduates and graduates in need at a fixed lower interest rate of five percent for a repayment period of ten years. The loan limits for undergraduates are $5,500 per year and $27,500 per lifetime. For graduate students the limit is $8,000 per year and $60,000 per lifetime (including undergraduate loans). The funds are handled directly by the school, making it easier to get the amount as soon as the student enrolls.

Stafford loan option:

This is the most common federal student loan and anyone can apply for it. It offers fixed interest rates and is available in the subsidized and unsubsidized form. When making use of the subsidized federal student loan, the government pays the interest while the student is enrolled. In the case of unsubsidized federal student loan, the student has to the pay the interest but can wait with payments until he completes his or her graduation. The interest rate for unsubsidized loans is currently at 6.8 %. Students applying for a Stafford Loan must complete the FAFSA (free application for federal student aid). Stafford Loans are available directly from the United States Department of Education through the Federal Direct Student Loan Program (FDSLP). It is important to apply much earlier than the closing date for the application to avoid any last minute trouble.

PLUS loan option:

Also known as parent loan for undergraduate students. It is given to the parents of undergraduate students who are dependent and have enrolled at least half-time. This loan option requires the applicant to be free from any adverse credit experiences like bankruptcy, default etc on their credit record. These loans are offered at a fixed interest rate that is higher than the Stafford loan rate and repayment starts while the student is enrolled.

For more information on student loans check out my post about Student Loan Consolidation.

How Does Student Loan Consolidation Work?

Nowadays, the cost of higher education is getting more and more expensive. Some families may not be able to afford further education for their son or daughter. Getting a student loan will help.

There are 2 broad categories of student loans available. Government student loans and private student loans

Government or federal student loans are funded and administered by the US Department Of Education. It is classified under Federal Student Loans Aid Program. They have very few requirements other than you are studying in a US college or university. International students may also apply though approval is on a case by case basis.

Every year, the student loan aid program disburse nearly 60 billion dollars so it is a good choice for get a student loan from the government. The interest rates on federal loans are pretty low.

Private student loans are funded and administered by banks and other financial institutions. These lenders provide student loans at a higher interest rate compared to federal student loans. Some common student loans available are from Citibank and Sallie Mae

You are allowed to apply for both private and federal student loans for your education needs although I would not recommend it.

For some students who have a few student loans to repay concurrently, it can be a financial drain on their family finances. That is where student loan consolidation comes in.

Student loan consolidation basically consolidates all your student loans into one loan so that it is easier to manage and make payments. When you are getting a student loan consolidation whether from the government or the private market, your existing student loans are paid for and erased by the student loan consolidation lender. The balances are transferred to the new student loan consolidation. Thus you start a new loan and only needs to make a single payment each month.

There are many advantages to using student loan consolidation. The interest rates will be lower since it takes the average interest rates of your previous student loans. Thus due to government legislation, the maximum interest rate cannot be higher than 8.25 percent.

It becomes a lot easier to manage a single student loan and payment are easier. The repayment options are quite flexible. For federal student loan consolidation, you can opt to start repaying after you have graduated from school. There are also several other options.

Another beneficial side-effect of student loan consolidation is that it can also improves your credit score. Since you are effectively clearing all your old student loans and taking a new one, your credit score will increase and is important if plan to take other types of loans in the future.

You can apply for a consolidated loan here.

Whatever your choices may be, remember the words of Benjamin Franklin: “Knowledge pays the best interest”.

For more information on student loans in general check out my post about Types Of Federal Student Loans.

The Time Value of Money and Inflation

To make a point, I’ll start this blog entry in an unusual way, that is, by talking about vectors. A vector is basically an ordered row of numbers. Consider this expression for example:

(12, 3, 5)

This vector could represent a lot of things. For example a point in a three dimensional coordinate system, with the vector components being the x-, y- and z-values respectively. Or for a company offering three products, it could stand for the sales of these products in a certain year.

Why this talk about vectors? You were probably very surprised when you heard grandma say that she paid only 150 $ for her first car. It seems so amazingly cheap. But it is not. Your dear grandma is talking about 1950’s money, while you are thinking of today’s money. These two have a very different value.

If you want to specify the costs of a good precisely, merely giving an amount of money will not be sufficient. The value of money changes over time and thus to be absolutely precise, you should always couple this amount with a certain year. For example, this is what grandma’s car really cost:

(150 $, 1950)

This is far from (150 $, 2012), which is what you were thinking of when grandma shared the story with you. Using an online inflation calculator, we can conclude that this is actually what the car would cost in today’s money:

(1410 $, 2012)

Not an expensive car, but certainly more than 150 $ in today’s money. Now you can see why I started this chapter using vectors. They allow us to easily and clearly couple an amount with a year. A true pedant would even ask for one more component since we are still missing the respective months. But let’s not get too pedantic.

How can we justify saying that 150 $ in 1950’s money is the same as 1410 $ in today’s money? We can look at how much of a certain good these amounts would buy in the given year. With 150 $ in 1950 you could fill your basket with about as many apples as you can with 1410 $ today. The same goes for most other common goods: oranges, potatoes, water, cinema tickets, and so on.

This is inflation, goods get more expensive each year. At a later point we will take a look at what reasons there are for inflation to occur. But before that, let’s define the rate of inflation and see how it is measured …

This was an excerpt from the ebook “Business Math Basics – Practical and Simple”, available for Kindle here: http://www.amazon.com/dp/B00FXB8QSO.

Guns per Capita and Homicides – Is There a Correlation?

Here’s a statistics quicky. A while ago, just after the tragic shooting at Sandy Hook Elementary School, I wanted to produce a clear proof that gun ownership and homicide rates are correlated. It seemed logical to me that, plus / minus statistical fluctuations, the phrase “more guns, more violence” holds true. So I extracted the relevant data for all first world countries from Wikipedia and did the plot. Here’s the picture I got:

Graph2

Maybe you are as surprised as I was. Obviously, there’s no relationship between the two variables, more guns does not mean more violence and less guns does not mean less violence. So whatever the main cause for the violence problem in the US (see the isolated dot in the top right? That’s the US), it can’t be guns. And that’s a liberal European speaking …

Just in case anyone cares, I blame the gang and hip-hop culture. I can’t be guns (see above), but it also can’t be media or mental health or drugs (people in all other first world countries also play shooter games,  watch violent movies, have mental problems, buy and sell drugs).

Sources:

http://en.wikipedia.org/wiki/Number_of_guns_per_capita_by_country

http://en.wikipedia.org/wiki/List_of_countries_by_intentional_homicide_rate

The Probability of Becoming a Homicide Victim

 Each year in the US there are about 5 homicides per 100000 people, so the probability of falling victim to a homicide in a given year is 0.00005 or 1 in 20000. What are the chances of falling victim to a homicide over a lifespan of 70 years?

 Let’s approach this the other way around. The chance of not becoming a homicide victim during one year is p = 0.99995. Using the multiplication rule we can calculate the probability of this event occurring 70 times in a row:

 p = 0.99995 · … · 0.99995 = 0.9999570

 Thus the odds of not becoming a homicide victim over the course of 70 years are 0.9965. This of course also means that there’s a 1 – 0.9965 = 0.0035, or 1 in 285, chance of falling victim to a homicide during a life span. In other words: two victims in every jumbo jet full of people. How does this compare to other countries?

 In Germany, the homicide rate is about 0.8 per 100000 people. Doing the same calculation gives us a 1 in 1800 chance of becoming a murder victim, so statistically speaking there’s one victim per small city. At the other end of the scale is Honduras with 92 homicides per 100000 people, which translates into a saddening 1 in 16 chance of becoming a homicide victim over the course of a life and is basically one victim in every family.

 It can get even worse if you live in a particularly crime ridden part of a country. The homicide rate for the city San Pedro Sula in Honduras is about 160 per 100000 people. If this remained constant over time and you never left the city, you’d have a 1 in 9 chance of having your life cut short in a homicide.

Liked the excerpt? Get the book “Statistical Snacks” by Metin Bektas here: http://www.amazon.com/Statistical-Snacks-ebook/dp/B00DWJZ9Z2. For more excerpts check out Missile Accuracy (CEP), Immigrants and Crime and Monkeys on Typewriters.