Tuesday, December 06, 2005

Socially Approved Price Gouging

The favored game at the moment has to be price-gouging the natural way, riding the bandwagon of organic food...For example, in the UK, organic milk commands a premium of around 50 cents per quart, but the farmer sees less than twenty cents of this.
– Tim Harford, The Undercover Economist, p. 42-43. What does buying organic food say about you? It might say that you believe that it is healthier to ingest food grown in a certain way. But to Tim Harford, it also says that when it comes to price, you are a sap, willing to hand a store high profit margins. He ends his discussion of the organic food rip-off by issuing a plea to organic-preferring consumers to shop more price-consciously and "not let food retailers exploit your enthusiasm."

Many people pay premium prices for things, and only get what they pay for if they place a high value on social standing.

"Hybrid technology is not 'green' technology. Like heated seats or flashy exterior trim, it's merely an expensive option that generates large markups for the Toyota Corporation and its dealers."
I am not against hybrid technology, and it warms my heart to see other people sacrificing to help hold down the price of gas for me. But until the price premium comes down to the point where I can count the number of years of gasoline savings I need to break even without using my toes, I myself will stick with regular cars.

Likewise, recycling on a municipal level is very successful at reducing the amount of trash that makes it to landfill, but at what cost? When recycling pays, people automatically do it. Forcing people to recycle is a form of mandated price gouging – people are forced to donate their labor sorting recyclables out of their trash, labor they'd rather expend elsewhere.

2 comments:

Karl said...

"Golf clubs are unnecessary."
The associations, or the tools used to propel balls?

Dry Guy said...

"He ends his discussion of the organic food rip-off by issuing a plea to organic-preferring consumers to shop more price-consciously and "not let food retailers exploit your enthusiasm."

No data is presented though. I hope the book includes debunking proof that food produced in the minority (for the organic health consumer) versus food produced in mass majority (general consumers) is not in fact more expensive.

"Many people pay premium prices for things, and only get what they pay for if they place a high value on social standing."

And healthier eating? If a health-conscious eater chooses foods with unrefined sugars and salts versus the general brands content of refined sugars and salts, one can hardly argue if you have experience in eating and comparing those two differing food types. I find myself buying the more expensive versions because as a naturalist (and one who has sensitive teeth to refined sugars and salts) I already know the further away food is in its original, organic, produce state, it of course in worse nutritional quality. I know. This is a luxury to Americans while not even a consideration to unwealthy nations. But for those who tire of the mainstream brands, it isn't entirely about Tech Central's outlook.

"Hybrid technology is not 'green' technology. Like heated seats or flashy exterior trim, it's merely an expensive option that generates large markups for the Toyota Corporation and its dealers."

Data needed.

"I am not against hybrid technology, and it warms my heart to see other people sacrificing to help hold down the price of gas for me. But until the price premium comes down to the point where I can count the number of years of gasoline savings I need to break even without using my toes, I myself will stick with regular cars."

Isn't this again the nature of supply and demand on a micro/macro level? Those items supplied on the micro of course will be higher because they are not produced in the mass quantity (time and money saver) that the macro products will.

"Likewise, recycling on a municipal level is very successful at reducing the amount of trash that makes it to landfill, but at what cost? When recycling pays, people automatically do it. Forcing people to recycle is a form of mandated price gouging – people are forced to donate their labor sorting recyclables out of their trash, labor they'd rather expend elsewhere."

Or laziness? I'm with you on the price gouging though (and I wouldn't have been a year or two ago).

I'm afraid though from an alternative point of view it is the same thing its always been. The right and left disagree largely because they need to not do what the other party represents. Granted I gravitate more towards conservativism. Not to the degree I use to. Anyhow, on the environment it is overwhelmingly the left. If you peel off all the over-regulations and extremism, the left are the ones who are more caring and passionate about the environment. They may be going about it in many wrong ways, but they are the conservatives on the topic. The right are the liberals on the matter. In fact I think they've lost the plot really because the topic to them is one of economics and not spiritual. They don't seem to be able to comprehend that in fact a certain amount of environmental protections do help humanity in the form of spiritual healing. Also the powerful who control land agendas are overwhelmingly in my mind metropolitan dwellers. Because if they were rural dwellers they probably wouldn't be nearly as unappreciative of its merits living amongst it. Rurals simply live more whole lives because the money element isn't as strong. Chaos is more closely associated with dense populations and a loss of what matters (principle from a spiritual source, aka natures healing properties).