Equinomics, bag fees, and leftover campaign dollars

Airlines have been raising baggage fees for years, and they keep getting away with it. Horse breeding is in a long-term decline that some listeners suspect might signal a coming recession. And the millions of dollars poured into political campaigns mostly end up in the pockets of media companies and political consultants, not local communities in the way donors might imagine. These three listener questions form the backbone of this episode of The Indicator, each revealing a different corner of economic behavior.

Why Baggage Fees Keep Going Up

Listener Danny Penny asked a deceptively simple question: if airlines need volunteers to check carry-on bags for free at the gate, why don't they just lower the checked-bag fee to encourage more people to pay for it upfront? The answer, according to East Carolina University economics professor Nicholas Rupp, involves a careful balancing act. Airlines have to find a "sweet spot" where the fee is high enough to be profitable but low enough that enough travelers still pay it rather than just carrying their luggage onto the plane.