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Other Factors

Comment a comment by Anonymous, published on 18 September 2006
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I saw this article at /. and people have been making the observation that a lot of the hype that goes along with gasoline comes from the fact that demand for gas is inelastic. No mater how much the price goes (within reason) I still have to drive. These other products are much more flexible. I don’t really need red peppers, soda, chips or ice cream. Gas is a necessity, especially since so many Americans live in the suburbs and have to drive a considerable distance to get into work. In my experience I pass five to six gas stations along my daily route. It just makes sense for me to buy gas at the least expensive station. A lot of the other items you compare gasoline to are almost luxury items (not all), and I can do without them. Gas keeps my attention because right now I can’t do without it.

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RE: Other Factors by Anonymous :: NR0

Another thing worth looking at is the different dynamics involved in purchasing gasoline as opposed to other items (e.g. peppers, shampoo, etc.) When you buy gas, you usally just buy gas. Shopping for peppers is generally a part of a much larger shopping trip. The savings involved in a shopping trip like this are much more complicated than the simple one item purchase of gas at the pump. Can you really compare these two activities in a straightfoward manner? I’m not so sure.

Posted 18 September 2006, Hide, Parent, Reply
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RE: Other Factors by Anonymous :: NR0

Well, there’s another "other factor" not being considered (though I should tip my hat to the author for an excellent article): effort! The effort required to find the cheapest gas is relatively small. The average (suburban) American spends a lot of time driving around and the very prominent gas price signs are everywhere! It doesn’t take much effort to keep the lowest price and its location in my mind. However, to buy red peppers at the best price, I need to spend some time digging through ads from the newspaper.

There is a corresponding assumption in the analysis which I would like to dispute and that is that the effort required to save money on gas and all the other items combined is the same. That’s silly, if you buy my suggestion (above) that the effort to find cheap red peppers is more than the effort to find cheap gas. Multiply that effort by [12 or however many goods you buy from the corner store] and you start to see my point.

I guess part of it is how you value your time :)

Posted 18 September 2006, Hide, Parent, Reply

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