Friday, December 8, 2017

Prices

A lot of Economics boils down to prices. If prices were perfect, reflecting all the costs associated with a given product, then all it would take is rational consumers (admittedly not as easy as once thought) to get society to the "right" AKA socially optimal level of consumption. The problem for today is that prices aren't as perfect as we'd like: they really ought to include the costs of associated pollution, and they don't, as you may have learned in your microeconomics or environmental Econ class. That's not a big deal if that additional cost is small, but in today's news:

Cost of pollution is higher than we think

There are particular applications to food. We want an agricultural production system that produces food with costs as low as possible, including all costs. So, agriculture that creates pollution should have that cost factored in. Also, governmental subsidies hide some of the costs, but as noted by this author, maybe not as much as we think when it comes to some products. Prices are unfortunately hard to get right!

Oh, another one! Cool. Check this out: if we could change the prices of 7 foods by just 10%, we could save 23,000 lives per year in the USA. Prices MATTER!

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