The Agenda

Scott Winship on Prices, Wages, Food, and Inequality

Scott Winship, one of my favorite social scientists, has written a thoughtful reply to Mike Konczal’s post on consumption inequality. I’m pleased to report that it is far less rambling and discursive than my post, and it addresses a potential misinterpretation of the Broda-Romalis research.

If it becomes cheaper to maintain a constant level of satisfaction, then one’s wages have effectively grown. So poor consumers may switch from Green Giant frozen veggies to generics when the latter go on sale, or they might buy their frozen veggies at the chain a couple of neighborhoods over rather than the local grocery store when the latter’s prices go up. Rich consumers, on the other hand, may be relatively unlikely to stop buying Whole Foods vegetables when the plebian chain’s prices are cut. They may not switch to generics as those products become cheaper relative to those on offer at the farmer’s market.

It’s not that we should be excited about how great the generic frozen veggies bought by the poor are compared with the Whole Foods produce. It’s that we should be excited that the poor are either more willing or more able to economize to maintain a constant lifestyle than the rich are, and so inflation eats into their quality of life to a lesser extent than it does among the rich, holding in check other forces that would increase inequality.

This has a number of interesting implications. Much depends on the evolving tastes and preferences of the households we describe as rich and poor. It seems to safe to assume that the rich have more of a taste for long hours engaging in market labor rather than household labor or leisure. And this preference seems to map onto a heavy emphasis on purchasing putatively status-enhancing goods and services, a category that could include foods widely — and not always correctly — assumed to be healthier than lower-cost alternatives. Are there interventions, like heavier progressive taxes, that could disrupt this pattern? And is there any good reason we’d want to disrupt this pattern? 

I can definitely see why we’d want all people to maintain a healthier diet. But I wonder if there are finer-grained interventions that could achieve that end at lower social cost than raising marginal tax rates, etc.

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