I see you wrote this a decently long time ago originally. In the modern world, it might be worth considering that we have different substitute goods than we did 20 years ago.
Consider a lowley pound of hamburger. The cost per pound scales with the number of adjectives. By that, I mean: "Pastured grass-fed locally raised organic Kobe-style" will be significantly more expensive than the "industrially farmed" grass-fed beef.
For the people who were doing well enough to buy Magic Beef before, they were never price sensitive to begin with. But everybody else can shift down the cost stack and still get the same outcome, but potentially with less health benefits or more guilt. It's the same choice we used to have, except it was "Laura's Lean" or "Name Brand" or "Store Brand".
Now there's at least a dozen tiers of every commodity grocery, from pasta, through eggs and beef, to chocolate. Personally, if I got into a pinch, I would continue shopping at the same store but would strip some adjectives from my choices, specifically related to how much they reduce my sense of guilt.
For example, I won't compromise on genuine cage-free eggs, which are pushing $8 a dozen now - frankly, absurd. And I acknowledge the absurdity. But I will buy my ground beef from a different local farm that's maybe not quite as pastured. I won't substitute my favorite apples (Cosmic Crisp!) for inferior apples. But I'm happy to substitute the hand-raised organic orange cauliflower for the pedestrian store brand with the black spots on it.
I sound like a rich, smug jerk, but I cheap out all over the place in the rest of my life. My truck is a 2006. But given all that, am I going to go to a different store? Hah! Not a chance.
I suppose it's important to differentiate between the elasticity for carrots in general and carrots from this store. But is that how economists think about elasticity of demand?
While I would probably buy the carrots if I were already in the store, if they got too expensive, I'd be making fewer recipes requiring them going forward, and then planting more in my garden going forward to ensure my own supply. However, carrots, even when the price doubles, are not that expensive (so far). It's not the same for beef, though - I no longer buy beef at the grocery store. It's too expensive. I harvest the deer on my back 40 for red meat, or we do without. So in that case, elasticity.
I have definitely walked on products (these days, cuts of meat), because I was unwilling to pay the price once I got to the meat counter.
I expect everyone but Paris Hilton and KK have had the experience of walking into a store intending to buy something and walking out empty handed, appalled at the price.
Only the low income are very price sensitive. That’s why baby formula is so expensive, everyone who is low income gets free formula. We need the poor to keep prices down for everyone.
I see you wrote this a decently long time ago originally. In the modern world, it might be worth considering that we have different substitute goods than we did 20 years ago.
Consider a lowley pound of hamburger. The cost per pound scales with the number of adjectives. By that, I mean: "Pastured grass-fed locally raised organic Kobe-style" will be significantly more expensive than the "industrially farmed" grass-fed beef.
For the people who were doing well enough to buy Magic Beef before, they were never price sensitive to begin with. But everybody else can shift down the cost stack and still get the same outcome, but potentially with less health benefits or more guilt. It's the same choice we used to have, except it was "Laura's Lean" or "Name Brand" or "Store Brand".
Now there's at least a dozen tiers of every commodity grocery, from pasta, through eggs and beef, to chocolate. Personally, if I got into a pinch, I would continue shopping at the same store but would strip some adjectives from my choices, specifically related to how much they reduce my sense of guilt.
For example, I won't compromise on genuine cage-free eggs, which are pushing $8 a dozen now - frankly, absurd. And I acknowledge the absurdity. But I will buy my ground beef from a different local farm that's maybe not quite as pastured. I won't substitute my favorite apples (Cosmic Crisp!) for inferior apples. But I'm happy to substitute the hand-raised organic orange cauliflower for the pedestrian store brand with the black spots on it.
I sound like a rich, smug jerk, but I cheap out all over the place in the rest of my life. My truck is a 2006. But given all that, am I going to go to a different store? Hah! Not a chance.
I didn’t realize how long ago this was written--I wasn’t even born yet!
I suppose it's important to differentiate between the elasticity for carrots in general and carrots from this store. But is that how economists think about elasticity of demand?
Gee, I'm going to have to think about this :).
I believe this is called introspectception.
I believe this is called introspectception.
Isn't the main problem with introspection that it's a survey of one, and a survey of one sucks?
No it's great. With one data point, I can draw any curve I like.
While I would probably buy the carrots if I were already in the store, if they got too expensive, I'd be making fewer recipes requiring them going forward, and then planting more in my garden going forward to ensure my own supply. However, carrots, even when the price doubles, are not that expensive (so far). It's not the same for beef, though - I no longer buy beef at the grocery store. It's too expensive. I harvest the deer on my back 40 for red meat, or we do without. So in that case, elasticity.
I have definitely walked on products (these days, cuts of meat), because I was unwilling to pay the price once I got to the meat counter.
I expect everyone but Paris Hilton and KK have had the experience of walking into a store intending to buy something and walking out empty handed, appalled at the price.
An Introspection Guide: If you see something you really like, buy it. If you have to ask about the price, you can't afford it.
Sometimes you don't have any other viable alternative. For example, other stores are too far off. That's a kind of monopoly I guess.
Only the low income are very price sensitive. That’s why baby formula is so expensive, everyone who is low income gets free formula. We need the poor to keep prices down for everyone.