4 ms·

You don’t see food costs in Walmart adjusted based on you income, even though supply and demand would also dictate that you’d be willing to pay more for milk if

You don’t see food costs in Walmart adjusted based on you income, even though supply and demand would also dictate that you’d be willing to pay more for milk if you have a higher income. It’s not supply and demand to allow once side to differentiate costs based on factors that shouldn’t matter to them, that’s rigging the system.

Balgair 6y ago
Nit: Food Stamps affect this a fair bit. ~10% of Walmart's gross income comes from food stamps (SNAP). https://www.huffpost.com/entry/walmart-food-stamps_n_4181862 https://www.huffpost.com/entry/walmart-food-stamps_n_4181862 https://www.statista.com/statistics/223080/government-spending-for-snap-benefits/ https://www.statista.com/statistics/223080/government-spendi... https://www.marketwatch.com/investing/stock/wmt/financials https://www.marketwatch.com/investing/stock/wmt/financials
perl4ever 6y ago
I think you underestimate the amount of price discrimination that is possible and practiced in grocery stores. And how much it matters. Any trade normally creates value, but that doesn't mean the two sides each capture half of that value. The whole business of business is trying to make sure 99% of it goes to them and not the consumer. Coupons are one obvious long-standing mechanism. Loyalty cards are another. Another is the stocking of similar products at different price points in different locations, either different stores or different places within a store. Many stores these days seem not only to have a store brand vs. brand name products, but may have two or more levels of store or economy brands. You can add products from local producers at a higher price; maybe they even come from the same source as the regular ones, but you label them to differentiate your customers. Yet another thing I've seen (granted, it could be an error, but who knows) is pricing a larger size product or one that is labeled as an "economy" size at a higher per-unit cost than a smaller one. Or even pricing it at the same per-unit cost, which helps extract more money from people. The basic principle you use to discriminate when you can't do it directly is to exploit a correlation - an obvious way to charge people with money more is to use the fact that they probably value their time more and are more impatient. But if someone who is poor is impatient, and is stuck paying more, all the better for the business. People are far from ideal economically rational actors and every aspect where it's normal to use heuristics can be targeted to improve profits.

Balgair 6y ago

Nit: Food Stamps affect this a fair bit. ~10% of Walmart's gross income comes from food stamps (SNAP). https://www.huffpost.com/entry/walmart-food-stamps_n_4181862 https://www.huffpost.com/entry/walmart-food-stamps_n_4181862 https://www.statista.com/statistics/223080/government-spending-for-snap-benefits/ https://www.statista.com/statistics/223080/government-spendi... https://www.marketwatch.com/investing/stock/wmt/financials https://www.marketwatch.com/investing/stock/wmt/financials

perl4ever 6y ago

I think you underestimate the amount of price discrimination that is possible and practiced in grocery stores. And how much it matters. Any trade normally creates value, but that doesn't mean the two sides each capture half of that value. The whole business of business is trying to make sure 99% of it goes to them and not the consumer. Coupons are one obvious long-standing mechanism. Loyalty cards are another. Another is the stocking of similar products at different price points in different locations, either different stores or different places within a store. Many stores these days seem not only to have a store brand vs. brand name products, but may have two or more levels of store or economy brands. You can add products from local producers at a higher price; maybe they even come from the same source as the regular ones, but you label them to differentiate your customers. Yet another thing I've seen (granted, it could be an error, but who knows) is pricing a larger size product or one that is labeled as an "economy" size at a higher per-unit cost than a smaller one. Or even pricing it at the same per-unit cost, which helps extract more money from people. The basic principle you use to discriminate when you can't do it directly is to exploit a correlation - an obvious way to charge people with money more is to use the fact that they probably value their time more and are more impatient. But if someone who is poor is impatient, and is stuck paying more, all the better for the business. People are far from ideal economically rational actors and every aspect where it's normal to use heuristics can be targeted to improve profits.