This article found in the Freakonomics blog illustrated an example of inferior goods in Cambodia: rat meat. As inflation is rampant in the country (37%), disposable income is reduced, the poor turned into rat meat as a substitute to more expensive meat. This increase in demand for rat meat has caused its price to rise despite an increase in supply (flooding is causing rats to go to higher grounds --> easier to catch).
Any thoughts on what other kinds of inferior goods could be found to experience the same demand boost in times of crisis? What comes to my mind is bread, vegetables in developing economies. How about in the US? Can you think of goods that could be considered to be inferior? Maybe fast food?
4 comments:
Fast food would be considered an inferior good for many and for example when the windstorm hit last weekend and we experienced power outages the lines in drive thrus around Delaware were pouring out on to the street. The inexpensive nutrition lacking meals became the only option for those with inoperable kitchens.
I think some examples of an inferior good in tough times would be groceries, and not groceries from the regular store, but from places such as Cost-Co or BJ's where you can buy your groceries in bulk. Items at these places are much cheaper since they sell them in such large quantities, thus cutting down trips to the regular store, while saving a few dollars each time.
Reading this post, I remember how North Korean government asked a German farmer for giant rabbit to feet its people. Check out this article. It's pretty interesting!
http://www.spiegel.de/international/0,1518,458863,00.html
Another inferior good that may see an increase in demand during harsh times would be cheap alcohol. Sometimes during a disaster people will drink to ease the pain of the disaster or just because there is nothing better to do. Usually it will be cheap alcohol because disasters can cause unforeseen expenses, and plus who wants to buy the expensive stuff when your car just got smashed by a tree?
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