6 ms·

They give 3 examples at the end: "The effect has been studied as it applies to illegal drugs and it has been shown that the potency of marijuana increased in r

by dyeje 8y ago

They give 3 examples at the end: "The effect has been studied as it applies to illegal drugs and it has been shown that the potency of marijuana increased in response to higher enforcement budgets,[2] and there was a similar effect for alcohol in the U.S. during Prohibition.[3] This effect is called Iron law of prohibition or Cardinal rule of prohibition. Another example is that Australians drink higher-quality Californian wine than Californians, and vice versa, because it is only worth the transportation costs for the most expensive wine.[4]"

andyjohnson0 8y ago
Thanks. I did read the article and noticed the examples that you referred to. To clarify: I just don't see where the evidence for any of these claims is accessible. Four of the six references don't appear to be available on-line. Of the two that are, one is a brief summary that leads to a paywalled FT article that I can't read, and the other is a ~200 pdf economics textbook. I'm happy to accept that a price differential changes when a constant is added to both prices. But I do question whether people in the real world will switch to a different type of coffee bean because the differential goes from x2 to x1.6. And I wanted to know more about the real-world circumstances in which it had been observed. I might be pursuaded that the market for illegal drugs/alcohol could exhibit this effect, but it would be interesting to know how how, given that illegal products are probably going to be subject to other effects not shared by legal products, biases and selectivities were compensated for. Edit: Made first paragraph clearer.
- zwaps 8y ago
  Here is a study in trade on this phenomenon https://krannert.purdue.edu/faculty/hummelsd/research/apples.pdf https://krannert.purdue.edu/faculty/hummelsd/research/apples...
- pc86 8y ago
  The fact that the sources are not easily accessible to you for free does not negate the fact that there are cited sources explicitly disproving your assumption (that this is just economists making things up). > Thanks, I also read the article. I'm not sure the extent to which you considered this, but in this context it's hard to read that sentence without making you sound like a jerk.
  - andyjohnson0 8y ago
    > > Thanks, I also read the article. > I'm not sure the extent to which you considered this, but in this context it's hard to read that sentence without making you sound like a jerk. Did you consider the possibility that I was simply thanking dyeje for their reply, and confirming that I had noticed the examples that they referred to? Assumption of good faith, etc? Nevertheless I've edited my reply to hopefully make my intended meaning clear.
srtjstjsj 8y ago
Those don't seem to be the same effect as buying fancier coffee because it seems like a comparatively better deal per pound. Prohibition makes a product hard to get in desired volumes, beyond just price, so you want as much as you can get when a window opens; you can dilute it yourself at home later. It may be the case that demand an't be satisfied by buying weak lots in low quantities.
- greggyb 8y ago
  In economics, "price" is pretty inclusive. Price is usually considered in terms of opportunity cost, and dollars (or other currency) are a nice proxy to use. But, the thing you think is a confounder here "prohibition makes a product hard to get in desired volume" is pretty much equivalent to an economist as saying "the price went up". There is no really meaningful difference. I have to expend more - either currency (to some bootlegger or intermediary, to cover their risk), time/effort (to find and get to a seller), or risk (I might get caught and go to jail - we can put a price on imprisonment).

by dyeje 8y ago

andyjohnson0 8y ago

Thanks. I did read the article and noticed the examples that you referred to. To clarify: I just don't see where the evidence for any of these claims is accessible. Four of the six references don't appear to be available on-line. Of the two that are, one is a brief summary that leads to a paywalled FT article that I can't read, and the other is a ~200 pdf economics textbook. I'm happy to accept that a price differential changes when a constant is added to both prices. But I do question whether people in the real world will switch to a different type of coffee bean because the differential goes from x2 to x1.6. And I wanted to know more about the real-world circumstances in which it had been observed. I might be pursuaded that the market for illegal drugs/alcohol could exhibit this effect, but it would be interesting to know how how, given that illegal products are probably going to be subject to other effects not shared by legal products, biases and selectivities were compensated for. Edit: Made first paragraph clearer.

zwaps 8y ago
Here is a study in trade on this phenomenon https://krannert.purdue.edu/faculty/hummelsd/research/apples.pdf https://krannert.purdue.edu/faculty/hummelsd/research/apples...
pc86 8y ago
The fact that the sources are not easily accessible to you for free does not negate the fact that there are cited sources explicitly disproving your assumption (that this is just economists making things up). > Thanks, I also read the article. I'm not sure the extent to which you considered this, but in this context it's hard to read that sentence without making you sound like a jerk.
- andyjohnson0 8y ago
  > > Thanks, I also read the article. > I'm not sure the extent to which you considered this, but in this context it's hard to read that sentence without making you sound like a jerk. Did you consider the possibility that I was simply thanking dyeje for their reply, and confirming that I had noticed the examples that they referred to? Assumption of good faith, etc? Nevertheless I've edited my reply to hopefully make my intended meaning clear.

srtjstjsj 8y ago

Those don't seem to be the same effect as buying fancier coffee because it seems like a comparatively better deal per pound. Prohibition makes a product hard to get in desired volumes, beyond just price, so you want as much as you can get when a window opens; you can dilute it yourself at home later. It may be the case that demand an't be satisfied by buying weak lots in low quantities.

greggyb 8y ago
In economics, "price" is pretty inclusive. Price is usually considered in terms of opportunity cost, and dollars (or other currency) are a nice proxy to use. But, the thing you think is a confounder here "prohibition makes a product hard to get in desired volume" is pretty much equivalent to an economist as saying "the price went up". There is no really meaningful difference. I have to expend more - either currency (to some bootlegger or intermediary, to cover their risk), time/effort (to find and get to a seller), or risk (I might get caught and go to jail - we can put a price on imprisonment).