#Why is everything so expensive?

1 messages · Page 1 of 1 (latest)

sullen maple
#

Corporate greed, tariffs, inflation, etc - what do you all believe is the reason(s) as to why everything is so expensive, or has had large % increases in price. For instance - pre COVID, a 5 layer beefy burrito was less than a dollar before becoming $1.69 - now it’s almost $4

silent fossil
lofty blaze
#

Short answer, crony corporate globalism.

Long answer, a variety of factors.

echo bronze
#

That said your burrito probably isnt just inflation. Fast food prices have risen faster than other food prices, and haven’t come down the way others have in the same period. With doordash becoming more common and people generally being lazier, these companies know that they can charge more now without losing customers. They know they can charge 4$ for this burrito and that you’d still buy it

#

Generally speaking a whopper’s gone up more than a box of cereal and a box of cereal’s gone up more than an apple has. I would personally recommend eating more apples

lofty blaze
#

Im going to eat so many apples the landlords will have to lower rent!!!

wicked eagle
#

The short answer globally is "because it can be". The power differential between regular people and those with power is so great now that there is no effective resistance to those with power arranging things so that they benefit the most. The demand remains the same or increases, so those that control the production can dictate terms and everyone else has to abide by them.

The local answer for the US, is that for many decades the US has been exploiting the rest of the world and using threats of violence to gain cheap prices for things for US citizens, and that that system is starting to break down as the rest of the world comes to rely less and less on the US. So people in the US are starting to have to pay closer to normal prices for things, which seems expensive by comparison to the insanely cheap prices they had before.

echo bronze
#

I was going to say they dont cure cancer but if you’re eating junk then they actually kinda do

#

Housing prices are high because zoning restrictions make it difficult for supply to meet sharp upticks in demand. This is why you see the highest rent spikes in places with increasing population and a lot of red tape (Canada, California, Ireland)

lofty blaze
echo bronze
wicked eagle
# echo bronze The first part has obvious flaws - if they can charge whatever they want, why do...

Why don't they go higher immediately? Because that would create resistance, because people get more upset about sudden changes than gradual ones, and that would lead to regular people organising against those who have power currently. It's the boiling frog situation. So they increase prices slowly, extracting the maximum benefit for themselves without provoking a strong response that could cause the situation to end.

Prices are just adjusting to follow the power imbalances. The reason prices aren't already high is because in the past there was less of a local power imbalance, and so the local exploitation levels (and therefore prices) were lower. Now that the imbalance is higher, prices are increasing. That's how capitalist economics works.

I agree, the US still doesn't have realistic prices for most things. But I think it is gradually moving that way.

echo bronze
echo bronze
#

I promise you you will learn more from 10 minutes on google but if you really need video content to follow this topic Kyla Scanlon’s probably the way to go

#

Or if you like podcasts Noah Smith has a weekly show called Econ 102

lofty blaze
echo bronze
#

Its not an accident that the guy isn’t educated. This content relies on being made by people who are poorly educated on what they’re talking about because experts in a field tend to care about being correct

#

The incentive for consuming bad information is that good information won’t be as good at telling you what you want to hear

wicked eagle
# echo bronze Is that your explanation for inflation in general? The reason mcdonalds charge...

I think inflation is a different issue from price gouging.

I agree that McDonalds would sell fewer big macs if they suddenly started charging $50 for them. People would think that was an unfair price because of the sudden jump, and refuse to cooperate. That's why companies are usually very careful to only put prices up gradually, so people don't think it's unfair. The exception being periods of crisis, where people either aren't paying attention, or when you think you can claim there is justification for the price increase (which is independent of whether or not there actually is justification).

We don't only need to consider why McDonalds charges $15 instead of $50, but also why they charge $15 instead of $10. The answer to both is because they want to make the most money possible, considering different pressures on price.

dusty roost
#

To be clear I haven't watched it or know anything about the video in question.. just agree with that one comment this guy said~

lofty blaze
#

True he's not an expert. Let's go get Jordan Belfort in here to explain economics to us.

#

You know, im something of an expert of the price of things. I've been studying prices my whole life. I even watched the price is right a few times. And because of the power of the internet, I can look back in time and see what prices for things use to be and what comparable wages use to be.

The conclusion I came to is, things cost too much right now. I dont know if im enough of an expert for you though.

echo bronze
# wicked eagle I think inflation is a different issue from price gouging. I agree that McDona...

Your last paragraph is basically my opinion so I’ll leave it there

Only part I disagree with is justification. If there’s some outside reason to make big macs 50$, I still think you arent buying a big mac because there’s just other food you can buy. I gave the reason it cost 15$ instead of 10$ - people love junk food, demand for fast food as a whole has gone up partially because of laziness, partially because of financial irresponsibility, and partially because of food delivery services

echo bronze
#

Being aware of prices rising could mean something! At the very least it’ll show you inflation exists. If you have it well graphed you can even connect it to other global events

silent fossil
silent fossil
echo bronze
# silent fossil What does Lots want to hear? For that matter what do I *want* to hear?

As Byz mentioned before, people generally want to hear what they already believe - confirmation bias. But the things that it confirms and the things that it tells you arent always the same thing. Lets say for example you're really frustrated about something. You don't want to be told you're frustrated about something that doesn't exist, or isn't important.

What you want is: To be told your frustration is valid, and that you're correct or even smart for being aware of the perceived problem.

What you get is: A scapegoat, a person to blame. You're happy to learn that not only is it not your fault that you're frustrated, but that its someone else's fault, and they totally knew what they were doing. They do this to us. Its a fact of human psychology that quite near everybody gets drunk on defining in-groups and out-groups. Its a fact of social media (and news media in general) that outrage sells more and spreads more than any other emotion. So you'll see this explanation more often than any other because it doesn't only satisfy you're original frustration but it does so in a way that lights up some other silly circuitry in your brain

#

One funny factor here is your social group. If all of your friends are bitching about the traffic, you will likely start complaining about the traffic (and maybe even get frustrated by it), even if you don't have a car. The opposite also happens - if there's a person in your group that you don't like, lets say a guy who speaks up a lot in class, you will redefine your political beliefs to specifically exclude that person. You will find some reason to say you're not that type of trump supporter ( / liberal, lefty, whatever)

echo bronze
woven crag
sullen maple
#

Ai is lame

#

I prefer *ppl

#

And reading yalls comments

#

I’m under the opinion the major motivations are corporate greed

woven crag
#

Briefly though : it's a natural consequence of our current economic system and how we handle it (printing money etc.). Prices rising (inflation) is normal and even wanted by central banks, to a certain degree. We don't want deflation. I think why now it feels worse is just a matter of our relationship with numbers. 6% on 0.20$ seems better than 5% on 2$. As time goes, by simple multiplication, numbers will rise higher and higher, but it's been this way for a while. Also, if we speak for very recently, a lot of uncertainty has made the inflation higher (tarifs) as well as big events (Covid, war, tensions.
But I wouldnt really blame it on corporate greed : you have to put yourself in their shoes : what is their goal? Make money. And until people think the price is too high, they won't stop upping it.

#

You can read a lot about this, there is a lot of content regarding this, the only catch is that economy is still young as a field of research and economists very often disagree with one another so you might strugle to see who's right and who's not, but there are some topics where most agree

woven crag
# sullen maple Ai is lame

Sure, but it can save you a lot of time if you use it well. You shouldn't be adverse to new technologies; you might be left behind while the average productivity increases thanks to it

woven crag
#

Also u guys (This guy and Arklar) are overthinking things imo.

How are companies deciding prices? It's simply a question of valorisation. And you could also introduce the concept of elasticity. A fascinating concept in economics in my opinion. And you can literally calculate what price you should put x thing at by using the elasticity.

I suggest you look it up, but basically : if Consumer (C) thinks X product is worth 5$ and Producer (P) valorises it at 4$, P will obviously go to the valorisation of C. That can change depending on the type of economic system however (monopoly, oligarchy, pure and perfect competition, etc.).
Now, if P wants to maximise their Profit, they will apply a marginal thinking and use the elasticity to know, at what point is it not worth to up the price.
Ex : if C wants 5$, I offer 5,5$, so only half of C is willing to buy my product, do I make more profit? If no, I will go down and then take back a part of C = have higher demand. So you can predict what price C wants (valorisation) and what price maximises your profit based on that (elasticity).

A (efficient) company will never price something if no one is willing to buy it. They can increase prices because they know/predict that you, or at least a large amount of people, will still buy it

silent fossil
#

For example, why would I in the same breath push you to be more exact and critical and at the same time criticize Lots as 'it sounds like you aren't' (an expert) if what I was aiming for was to validate my own beliefs, avoid disagreement and conflicting accounts, or to avoid high quality information?

#

I dislike narrative dogma. That's the very first thing that you will find me fighting.

echo bronze
# silent fossil You didn't answer the question. You just preached about human behavior. What do ...

No, I answered the question, but it was in a way you didn't like. If you don't care to hear what I have to say about humans in general, then you don't care to hear the answer I can give you. The general answer is the correct answer. I'm not a mind reader, I won't speak on the specifics of your thoughts or Lots' (at least not without more information), but I have no problem saying the broad trends probably apply to both of you (and to anyone else reading this)

#

Also at what point, before this statement here, did I ever say you were looking for things to validate your beliefs? I have no problem expanding it to you, because again my answer is broad and lends itself to being expandable, but its weird that you took something I said about Lots and are defending yourself as if I said it about you

echo bronze
silent fossil
#

That said, you gave the right answer as far as I'm concerned. You don't know what we think and you didn't fully walk into my trap there.

#

That said I do think you take the confirmation bias angle a little too seriously.

echo bronze
#

Do you know why you have the beliefs you have?

silent fossil
#

I can provide reasoning for my beliefs generally and express their limitations, exceptions, and caveats. The burden of a claim of "confirmation bias" is on observers this is why that, although it is a well established concept in cognitive science, is hard to make it practical or actionable. There's generally no valid basis to just go around throwing out claims of confirmation bias in real world interactions.

Maybe @dusty roost can weigh in on this topic?

wicked eagle
# echo bronze As Byz mentioned before, people generally want to hear what they already believe...

I agree with the point you're making. But I do want to add one qualifying statement to it, which is that the psychology involved in confirmation bias introduces only a slight tendency to favour things that support your existing views. It doesn't override all the other factors involved in decision-making, it's just one factor among many that go into making decisions. So the examples you're giving do illustrate the point you're making well, but they are massive exaggerations for most people.

wicked eagle
# woven crag Also u guys (This guy and Arklar) are overthinking things imo. How are compani...

That's a massive over-simplification. You're talking about one (quite minor) factor that's involved in determining prices, out of many.

In reality, there are at least two factors that override the simplistic principle you've outlined. The first is that the value that someone places on a product is manipulable. A big part of advertising involves manipulating people's evaluations to make them view a product as being worth more. Indeed, since advertising by the suppliers is the main way consumers learn about products, the value that consumers assign to products is quite heavily influence by those suppliers.

The second is that of availability, because it doesn't matter what a consumer thinks the true value of something would be if it's not available for that amount anywhere. If they need the product then they are forced to pay whatever the asking price is.

Suppliers always have more power than consumers.

tepid prairie
#

Really you should look at the real income that adjusts income changes for inflation (e.g. https://fred.stlouisfed.org/series/MEHOINUSA672N)

During COVID the real income took a hit, but according to that data the purchasing power is now up from 2019. Obviously it can differ for individual products.

Producers aren't inherently more powerful than consumers. If at some point people just don't want to buy a certain product at a certain price (the elasticities that have been mentioned before come into play) firms will be forced to adjust their pricing.

tepid prairie
#

The argument of availability doesn't really hold though. To some extent maybe, but most products are not ''necessary'' so if the price is too high people will just not buy them.

#

Of course companies will try to maximize profits, and by doing so they ''screw over'' consumers by setting prices as high as possible - but there are definitely limits to that (e.g. if McDonalds were to charge $50 for a burger, no one would buy it)

wicked eagle
# tepid prairie Really you should look at the real income that adjusts income changes for inflat...

If at some point people just don't want to buy a certain product at a certain price (the elasticities that have been mentioned before come into play) firms will be forced to adjust their pricing
It simply doesn't work that way in reality, because that is ignoring half the pressures involved.

most products are not ''necessary'' so if the price is too high people will just not buy them.
Products don't need to be "necessary" for the idealised market processes to collapse entirely. It doesn't have to be life or death, any desire whatsoever creates a 'need'. And as soon as there is any desire whatsoever from the consumer for a product, then everything breaks down, because there is obviously no free choice at that point. Changing your mind takes time and energy. Finding alternative products takes time and energy. Having a desire that is almost met and then not, takes up your time and energy too. There is just no such thing as a free choice between products for a customer.

What happens instead, is that someone has a need for something, so they go to try and buy it. They get to the shop, and find out that it is more expensive than they thought. They say "Wow, that's expensive", but they need it, and there isn't a cheaper option available, so they have to buy it anyway.

I'm sure we can all name tons of products that we think are unnecessarily expensive. Going to the cinema. German cars. Anything in Harrods. Fuel. Music. Clothes. University. Public transport. I mean, there's an argument that any product from any business that is making a profit is too expensive, if they're getting back from us more than they put in. But whatever your view on the economics of capitalism, the idea that at least some stuff is too expensive is common to the point of being nearly universal. And yet loads of people still buy all that stuff. Sometimes because advertising works, sometimes because there are no alternatives, and sometimes for a variety of other reasons.

wicked eagle
# tepid prairie Really you should look at the real income that adjusts income changes for inflat...

Fundamentally, supply firms can more afford to wait to sell, than individual customers can wait to buy. If all their customers joined together for collective bargaining then yes, firms would be forced to adjust their prices. But since that's fundamentally impossible with the current system, firms can just wait safe in the knowledge that the position for the customer gets worse the more time passes without them getting what they need.

echo bronze
# silent fossil I can provide reasoning for my beliefs generally and express their limitations, ...

Being able to rationalize your beliefs after you've decided on them is nice for your own peas of mind but it doesn't change what I've said here. In my experience very very few people adopt their beliefs off of evidence or reason, at best people get happy when evidence or reason happens to line up with what they already believe

I disagree strongly with your burden of proof logic. I dont like the idea of ignoring a common problem just because its technically less absolute of a point in an argument. I see this problem mostly with hate crimes - "How do we know the perp was racist? Maybe he just likes lynching people!". It brings basic problems with theory of mind to an absurd extreme to the point that we ignore problems we know exist because we "cant know for sure"

echo bronze
# wicked eagle I agree with the point you're making. But I do want to add one qualifying statem...

I didn't say it had a tendency in your decisions. I said it had a tendency in the formation of your beliefs, which is different. Anyway, where do you see that its only a small difference? I have this study here but I can't tell what the degree of change is https://pmc.ncbi.nlm.nih.gov/articles/PMC9038198/

PubMed Central (PMC)
Humans actively sample evidence to support prior beliefs

No one likes to be wrong. Previous research has shown that participants may underweight information incompatible with previous choices, a phenomenon called confirmation bias. In this paper, we argue that a similar bias exists in the way information ...

dusty roost
# silent fossil I can provide reasoning for my beliefs generally and express their limitations, ...

I haven't really been following, tbh xD. I think confirmation bias describes a behavioral/cognitive tendency, but probably shouldn't be applied to people without sufficient, personalized evidence. I think confirmation bias can play a role if someone appears to dismiss evidence presenting contrary to their argument solely for the fact of it being contrary to their argument, but I think to get to that point you really need to dive into someone's perspective. Dismissing it outright as "confirmation bias" without understanding someone argument is probably, ironically, an example of confirmation bias lol.

Does that help? 🤷‍♂️

silent fossil
echo bronze
#

People's words and actions reflect their thoughts and feelings. We have good data on how those thoughts and feelings work. It is absolutely an absurd attempt at skepticism to pretend like you can't make inferences on other people's beliefs and where they got them from, and in fact if you arent regularly making inferences like this then you're deliberately hamstringing your understanding of a lot of situations (both your personal social situations and broad political trends)

silent fossil
silent fossil
# echo bronze I didn't say it had a tendency in your decisions. I said it had a tendency in th...

Okay I mostly skimmed this study and we have to be careful because there's a considerable amount of framing but when you get into the details of how the study works it's a lot more nuanced. In either case this study is about decisions in a very limited context of visual perception of quantities of dots where the results of the first round of decisions is seen to bias to the second round. I wouldn't say it is generalizable to much broader conclusions about human behavior but there are some difficult technical details that make the study hard to interpret at a glance.

silent fossil
# echo bronze People's words and actions reflect their thoughts and feelings. We have good dat...

Okay, ultimately this is out of context. Confirmation bias is about beliefs and judgements you already having biasing a) information you receive that relates to these beliefs, b) biasing future beliefs and judgments, and c) in both cases to support or maintain the prior belief system. You're getting side tracked here into some kind of epistemological view of understanding each other. It's offtopic.

echo bronze
echo bronze
silent fossil
warped lagoon
#

The best price to put an item is the highest price they can give it thay you would still be willing to buy it.

#

Today people are a lot more likely to pay 4$ for basic fast food items

#

Than they used to be a few years ago

#

Same reason for old phones models and old car models to become cheaper, because people won't buy them at the higher price.