Tuesday, July 21, 2015

thinking on the margin

They say economic thinking is thinking on the margin, and that's very true, in fact so true our brains sometimes ignore everything else except the current margin. As I've recently discovered, I don't even know what my preferences are away from the margins I have experience with.

I try to be "mostly vegetarian" which in the U.S. led me to basically never cook meat except for a $9 loss-leader thanksgiving turkey once a year. I really love vegetables and fried tofu and lentils and TVP anyway so I thought the high price of meat was basically irrelevant to those habits, at best a handy way to keep delicious overpriced steak out of mind.

Then I moved to Australia where fresh produce costs about three times what it does in California (where it is unusually cheap and varied and wonderful), and even though meat costs more as well, the relative price has plummeted. Without thinking about it, and without abandoning my conscious aversion to buying meat in the first place, lo and behold I find myself grilling chicken every couple of months. And putting $3.50/kg chicken in my curries instead of $7/kg tofu.

My preferences didn't change, my expected consumption habits didn't change, but then in that moment at Costco when I can't turn down the $6 rotisserie chicken right after leaving the Asian grocery store with only one package of tofu in the hopes that I'd run into a better sale soon, somehow my actual consumption habits did change. That's the invisible hand in action, not caring that I'm not aware of the margin and forcing me towards the new one anyway.

(Overall it seems that the prices don't stop Australians from kicking butt in this department overall. Even compared to California.)

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