Peso Acceptance Rate Studied

August 19, 2008

By David Burge / El Paso Times
Article Launched: 08/19/2008 12:00:00 AM MDT

EL PASO -- A elite group of graduate economics students at UTEP was formed this summer with the mission of polling local businesses to see if they accept pesos from their customers.

The goal of this group, dubbed the E-Team in a takeoff on the 1980s television show "A-Team," is to do a scientific survey of restaurants, retailers, bakeries and other businesses in El Paso and the Borderland and determine the acceptance rate of pesos in the local economy, said University of Texas at El Paso economics Professor Tom Fullerton, who is directing the project.

E-Team Joseph Kababie, lower right, and other graduate students from UTEP department of economics are going out to local retailers to find out whether they accept pesos. The team members are clockwise from left: Azucena Moreno, Sergio Contreras, Raul Munoz, Associate Economist Angel Molina, Karen Fierro, Emmanuel Villalobos and Carlos Lino. (Rudy Gutierrez / El Paso Times)

So far, it's too early to draw any conclusions, but it appears that the peso is accepted less frequently by local businesses than what's observed in other border markets, Fullerton said.

"The study is important because it will quantify something about which a lot of opinions are expressed, but very little factual data exists," he said.

Angel Molina, an associate economist at UTEP who is helping Fullerton manage the project, said the survey is important because the economies of El Paso and Juárez are so intertwined.

"We have people living on one side (of the border) and consuming on the other," he said.

The results, which will eventually be published, could serve as a potential source of information for both consumers and Borderland businesses to help them identify new trends, Molina said.

The E-Team consists of honor students who are studying for their master's degrees in economics at UTEP. They were hired by Business College Dean Robert Nachtmann to be full-time researchers this summer, Fullerton said.

Sunset Heights resident Carlos Lino, 29, is a member of the E-Team and says it's been "very interesting" to meet with businesses and understand their thinking.

"Many people don't have experience with pesos," Lino said. "They have no idea about the exchange rates. They think it's risky and they might lose money if they accept it."

Sergio Contreras, another 29-year-old Sunset Heights resident, said businesses could make a small profit on the exchange rate if they wanted to, but most businesses he's talked to don't accept pesos.

"As you get farther away from Downtown, most businesses don't accept pesos; that's what I've noticed."

Joseph Kababie, a 25-year-old Westsider, said the study provides a great opportunity to break away from the "theoretical framework of the classroom" and gain real-life experience.

Kern Place resident Anton Muñoz, 22, said the study could increase understanding of the border economy.

"In economic theory, everyone wants to maximize their profit," he said. "But in real life, people put patriotism and other emotions above profit."

Some businesses may not accept pesos, Muñoz said, because they're afraid they might suffer a backlash from other customers or because they feel, "We're in America, we shouldn't accept pesos."

Socorro resident Emmanuel Villalobos, 22, said "most people are in the dark about the peso."

"Many people in El Paso grew up thinking the peso is weak and doesn't buy much," he said. "They don't realize it's actually at one of its strongest points."

Juarense Karen Fierro, 27, said businesses could possibly use the study they are working on to understand the border economy better and see what other companies are doing.

Eastsider Azucena Moreno, 24, said the project will help fellow team members by giving them experience in the field and the ability to work on a project from the start.

"This will help out in our careers whether it's in corporate America or in academia," she said.

Hector Heras Jr., vice president of operations for El Taco Tote, said his family's five El Paso restaurants don't accept pesos.

"We haven't perceived a need from the customers," Heras said. "We've never had the request from them. If we did, we would take pesos."

Cindy Ramos-Davidson, chief executive officer of the El Paso Hispanic Chamber of Commerce, said the study is a good way for the participating students to get "into the trenches," learn about how businesses operate and put on their "Real Life 101 hats."

The study could also provide some "invaluable information" to the El Paso business community, she said.

Martin Silva, the third generation of his family to own Silva's Supermarket in South El Paso, said his business has accepted pesos "forever and ever and ever."

"It's always been part of our business -- cash, check, money order or pesos, we'll accept them all," Silva said.

It's more of a convenience and courtesy service that he offers to his customers than anything he makes money from, Silva said.

He can't deposit pesos at his bank; he first has to take them to a currency exchange house and change them into dollars, he said.

"So, it is an inconvenience, but we do it for our customers," Silva said.

The students, who are making about $11.50 an hour, will continue to do research on a part-time basis after classes resume Monday. Preliminary results are expected to be available in late January and the report will eventually be published and distributed for free to interested businesses and the public, Fullerton said.

Students have surveyed more than 200 El Paso businesses so far and plan to eventually poll 600. They also plan to survey 150 businesses in Doña Ana County but haven't started work in New Mexico yet, Fullerton said.

The idea for the study emerged in 2002 when a telephone survey of border metro areas was done by a University of Texas-Pan American professor. According to this survey, 25 percent of El Paso businesses accepted pesos.

Fullerton and his Border Region Modeling Project, which develops and publishes two economic forecasts per year for the border region, decided to take an informal look at the topic. They went to 20 El Paso restaurants and none would accept pesos, Fullerton said.

This year, the organization decided to conduct more in-depth research and decided to do in-person interviews with business owners and managers to get a more accurate gauge of the peso acceptance rate, he said.

The students' survey will generate data from a stratified random sample of 10 business categories designed to ensure that results are representative and not biased in favor of one direction or another, Fullerton said.

David Burge may reached at; 546-6126.


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