Tuesday, June 16, 2009

Silly government, Wal-Mart keeps us thinner

I was reading an article in Forbes June 8, 2009 issue called "Wal-Mart's Weight Effect"



The article said the following:



...Our evidence is indirect, but we think it shows that price changes can have subtle and sometimes hard-to-detect consequences. Any change in price results in two phenomena. The first is the substitution effect: a change in consumption mix due to a change in relative prices. If a bag of salad is $2 and a bag of potato chips is $1, then the price of salad in terms of chips is two bags and the price of a bag of chips is half a bag of salad. If a Wal-Mart opens and reduces the price of salad to $1 a bag and the price of chips to 75 cents a bag, the "salad price" of chips has risen (from 1/2 bag to 3/4 bag) and the "chip price" of salad has fallen from 2 bags to 4/3 bags. In short, salad has become cheaper relative to chips.


The other effect from a change in prices is the income effect, which is a change in consumption due to a change in purchasing power. If Wal-Mart sells food at lower prices--even if our incomes don't change--every dollar can buy more. Therefore, we're richer.



I find this awesome. Because while the government is spending a fortune trying to figure out how to make poor people healthier; the CHEAP and easy answer is staring them right in the face!



As the great author (Art Carden) of the article said:



Do you want to make poor people healthier? Then restricting the growth of discount chains is the last thing you should do. Instead, repeal programs that distort incentives- like agricultural subsidies that make junk food made from corn and soybean derivatives artificially cheap. Next, cut payroll taxes. With more take-home pay in their pockets, lower-income workers can afford to buy foods that are better for their health.



This guy is suggesting the opposite of what the government is doing. I find that fascinating. As if liberals don't screw up enough, they now make it more expensive for NYC residents to stay thin, or lose weight.

7 comments:

Child אִישׁ Behavior said...

You would have to know how big these effects were for them to be meaningful. Also, everyone is different. While relative prices may change, some people just like their food one way, no matter what the cost. Basically, it's not so simple.

frumskeptic said...

you're right, it's not so simple- but if you listen to liberals speak about obesity, or read what they say about it, they all whine about how "lower-income children are at a disadvantage, because soda and potato chips are cheaper than carrots and Juice."

that's one of the main arguments I've heard or "Poor people don't have a Whole Foods!"

bleh... bleh... bleh...

Jessica said...

I don't know much about how to fix the economy, so I'm not really replying to the point of this post. I just have to mention that I hate it that Wal-Mart has some of the lowest prices out there because they are such a terrible store. Two years ago my mother tripped, fell and broke her elbow at Wal-Mart. There was a big metal thing sticking out of the ground right in front of the exit and neither of us noticed it. My mother contacted them and made a complaint (or whatever it is that you do when stuff like this happens) and what did they say? There was no, "Sorry. Here's a $5 gift certificate", but instead they told her it wasn't their fault, it was obviously the shoes she was wearing that caused her to fall. Like I said, this has nothing to do with your post, I just hate Wal-Mart and think everyone else should too.

Moshe said...

Yeah, I go shopping and everything thats in any way healthy costs double.

Jessica, that's what you have lawyers for. I'm pretty sure that it's still not too late.

Jessica said...

Moshe - You don't know my mother...

Frustrated Frummie said...

Not really replying to the post just thought it would be an interesting bit of info to let you know that there are no Walmarts in the 5 boro's of NYC, in fact they aren't even allowed!!!

Mikeinmidwood said...

Good one FS, may the truth live on.