Tossing and Tortured 'Till Dawn

I come back to you now, at the turn of the tide.

Wednesday, June 14, 2006

Hotmail is down again, but this is such a regular “feature” of the “service” that it doesn’t even merit a pet peeve of the day. Perhaps we should spent our time at href=http://www.homtail.com instead. Gotta love those "common typographical error-targeting spam pages."

What does earn my pet peeve is this: the incredible shrinking package. It has a little bit to do with an economics term called “Sticky Prices,” but I’ll get to that.

The thing is, yesterday I went to the grocery store, and bought a few things whose package sizes conformed to the old English system of measurement since the dawn of time. At least since I was born.

When you buy milk, it’s in a gallon, right? Or half a gallon, 64 ounces, or a quart, half of that. The point is that these arbitrary measures are part of our culture. I bought some ice cream – well, all right, some fat-free frozen yogurt – in the typical “half-gallon” size.

But it wasn’t a half gallon at all. It contained 58 ounces. This was a major brand of ice cream; I don’t buy it all that frequently but I’m quite certain it was once really a half-gallon, not "1.75 quarts.". I started checking. A brand of salsa and a tub of vegan mayonnaise, their “pint” containers were an ounce short – 15 ounces and 14.8, respectively. I was fairly certain the package hadn’t shrunk, either, just that it had been filled with a bit less product and a bit more air.

Pretty tricky, hosers.

What are sticky prices?

One problem with inflation is that it’s not balanced. For example, if everything inflated at a one-time rate of 100%, nothing would happen except that money would be worth less. You would earn twice as much money, everything you purchased would cost twice as much, and no one would care.

But that’s not what happens. Prices are a little sticky sometimes. People tend to attribute the 10% more money they’ve made over the past two years as something they’ve earned, but they retain the idea of what something “should” cost. How many times have we heard, “back in my day, a candy bar cost a quarter (a dime, a nickel)!” Nevermind that minimum wage at that point was $1.25 an hour. So, if people get an idea of what something “should” cost, they’ll buy less of it if the price increases, (presuming it’s an elastic good – most food products are) even if the “real,” inflation-adjusted price, has not changed.

Instead of absorbing the losses that may occur, companies are taking it upon themselves to shrink the package of their goods and hope no one notices. If you had a bag of flour, you certainly wouldn’t notice the 10th part of it vanishing. But that’s going to become unsustainable in a hurry.

So stop the slick tricks, a’ight?









Aside – I just checked the wikipedia entry on inflation, it’s actually quite decent.

1 Comments:

  • At 12:03 PM , Blogger ryan said...

    We really must split the ticket in 2020.

    Word Verif.: bxgggee!

     

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