The other day, my 9 year old came to me with an issue.
"Dad. Did you know that a juice cup at the tuckshop at school is now half the size but costs the same as before?"
"Is that so?"
"Yes, and it is not just that. The pasta has halved in size and the prices of Sunnyboys [a frozen ice pyramidal thing] have gone up."
"So what's the problem?"
"Well, everyone is talking about it. It is pretty unreasonable. I want to do something about it."
As an economist, it is hard not to be supportive at this point. Here we have a child complaining about the price of a purely aspirational good sold by a monopolist. "Aspirational" because she, in fact, is never allowed to buy anything at the tuckshop. Regardless, I can't imagine a social cause with "Gans family" more stamped on it.
"So what do you want to do?"
"I think we need to complain."
"How about a petition?"
"Oh yes, they tried that with the school bell. But nothing ended up happening."
"Maybe it will this time."
"And if they don't maybe, I'll open up my own shop. I can sell more for less and still make money."
"Good thinking but let's not get ahead of ourselves here."
And so she set out to craft a petition for students at school to sign. Here is what she wrote before I took a look:
"Well, people say that they are more expensive than other places."
"OK, you need to find some examples of that and put them in here. That will make it much more convincing."
It turns out that we had the price list of the tuckshop -- they send that home to parents every year. Now, what to compare them to? We talked about various options and decided to look for stuff you could buy in the supermarket as a good starting point. She found out that you could buy a six pack of Sunnyboys for $6 at the supermarket whereas they cost $1.20 a piece at the tuckshop.
She ran away to write this great example into her petition. A little while later she came back.
"I don't think the Sunnyboy one works."
"Why?"
"Well, when you buy more of something at the supermarket they often cost less than smaller things. That might be the case here. Also, the tuckshop freezes them and that probably costs something."
So it was back to the drawing board. We decided to search Safeway on-line for products that were comparable. We came across a 600ml Big-M flavoured milk. It was refrigerated at both places so was a good candidate. The tuckshop price was $2.70 and Safeway's price, $3.55! Oh oh.
"Now what am I going to do?"
"Well what things did you think were priced too high?"
"How should I know? You never let me buy anything at the tuckshop."
"True. How about asking around at school?"
And so that is what she resolved to do although I suspected the revolution was soon to be over. But then she came back with one final question.
"Dad, why are prices at the supermarket so high?"
"Dad. Did you know that a juice cup at the tuckshop at school is now half the size but costs the same as before?"
"Is that so?"
"Yes, and it is not just that. The pasta has halved in size and the prices of Sunnyboys [a frozen ice pyramidal thing] have gone up."
"So what's the problem?"
"Well, everyone is talking about it. It is pretty unreasonable. I want to do something about it."
As an economist, it is hard not to be supportive at this point. Here we have a child complaining about the price of a purely aspirational good sold by a monopolist. "Aspirational" because she, in fact, is never allowed to buy anything at the tuckshop. Regardless, I can't imagine a social cause with "Gans family" more stamped on it.
"So what do you want to do?"
"I think we need to complain."
"How about a petition?"
"Oh yes, they tried that with the school bell. But nothing ended up happening."
"Maybe it will this time."
"And if they don't maybe, I'll open up my own shop. I can sell more for less and still make money."
"Good thinking but let's not get ahead of ourselves here."
And so she set out to craft a petition for students at school to sign. Here is what she wrote before I took a look:
We the undersigned wish to protest the high prices in the tuck shop. Recently we have noticed that things in the tuck shop have been getting smaller for the same price, getting smaller and for more money, and/or just going up to unreasonable prices. For example: the frozen juice cups [as we call them] are now almost half the size they use to be, and they still cost 80c. There are many similar stories just like that."That's great. Now, why are the prices unreasonable?"
We say this because some people don’t have time to pack lunches, and they suddenly come to school with too little money. For everybody they would be spending unreasonable amounts of money.
"Well, people say that they are more expensive than other places."
"OK, you need to find some examples of that and put them in here. That will make it much more convincing."
It turns out that we had the price list of the tuckshop -- they send that home to parents every year. Now, what to compare them to? We talked about various options and decided to look for stuff you could buy in the supermarket as a good starting point. She found out that you could buy a six pack of Sunnyboys for $6 at the supermarket whereas they cost $1.20 a piece at the tuckshop.
She ran away to write this great example into her petition. A little while later she came back.
"I don't think the Sunnyboy one works."
"Why?"
"Well, when you buy more of something at the supermarket they often cost less than smaller things. That might be the case here. Also, the tuckshop freezes them and that probably costs something."
So it was back to the drawing board. We decided to search Safeway on-line for products that were comparable. We came across a 600ml Big-M flavoured milk. It was refrigerated at both places so was a good candidate. The tuckshop price was $2.70 and Safeway's price, $3.55! Oh oh.
"Now what am I going to do?"
"Well what things did you think were priced too high?"
"How should I know? You never let me buy anything at the tuckshop."
"True. How about asking around at school?"
And so that is what she resolved to do although I suspected the revolution was soon to be over. But then she came back with one final question.
"Dad, why are prices at the supermarket so high?"
