Thursday, March 1, 2007

"Roll Up The Rim" but will you win?

Do you have an over whelming desire to buy a "double double"? Even the institutionalized know that it is once again time for Canada's most popular contest! We are like bulls running into Tim's big red cup! But what is the odds of winning?

Total number of cups: just over 27 million
Odds of winner:
A car: 1 in 9 million cups
A TV: 1 in 2.7 million kicks
Some Cash: 1 in 0.54 million rolls
An IPOD: 1 in 27,000 jolts
A coffee or donut: 1 in 9 purchases!

Now, Economists tend to value these types of odds in the following way: Value = (the odds of winning) times (Price of the item you can win)

For Example: The IPOD value
Chance of winning: 1 in 27K = less than one per cent (~0.04 %)
Value: (according to Tim's website) $261
Economic theory tells us to price the prize at: about 1 cent off the price of the coffee. Think of it as an discount.

How about for the coffee? Well, you have a 8.3% chance at winner a free coffee, and a 2.7% chance at winner donut (the 1/9 odds is split 75% coffee and 25% donut/muffin/cookie), and a coffee is worth $1.47 in Halifax. The answer: 12.2 cents!

Overall, your desire to play Canada's favorite game is because the price of the coffee, considering the prizes and the odds, is about 16 cents lower. Yes, Tim's is having a sale on 27 million cups of coffee, tea, or other.

Needless to say, I have been buzzing all day.


MadJenny said...

Very cool economic breakdown for my favourite beverage! That kind of thing is totally beyond my comprehension until someone like you breaks it down for me. Thanks!

This year, for the first time ever, I won a FREE COFFEE with my first Roll up the Rim cup! Soooooo exciting. And, they let you have any size cup for your free one, so of course I got an extra large - not double double though - I get single milk.

Canadian Economist said...

Thanks madjenny! I am glad to hear that you liked it (very glad that it made sense). I have yet to win but I will keep you posted!

Please everyone: share you Tim's roll-up the rim to win (or RTRTW) stories! I know one us can win a car, like 50 million people (give or take 49.99 million) read this blog!

Francis Wooby said...

The biggest drawback to life in Iqaluit is the lack of a Tim Horton's. Sure we can buy the coffee at the store and make it for ourselves, but it's just not the same thing.

The whole Roll Up the Rim to Win contest was soured in my eyes last year when the families of those two little girls bitterly disputed who owned the car won on the cup the kids found in the trash. Talk about turning a Canadian icon into something entirely against what I consider Canadian values.

Man, I just depressed myself...

Canadian Economist said...

Francis: thanks for the bitter reminder of an event that we all tried to ignore when it happened and then quickly forget (I almost did). blah.

An anonymous writer asked me what value should be assess chance at winning the car? Answer: well (with 1 in 9 million odds of winner), the value is about 0.4 cents cup.

MadJenny said...

Miracles of miracles!
I've won my second cup of coffee in only 6 cups! I'm beating the odds! For the time being. Now I'll get all cheeky and not win another in the whole roll up the rim time. But still! 2 in 6!

Also - Francis, I had put that out of my mind. What a horrible display of the dark side of human nature that was.