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guslPrices and Earnings: A Comparison of Purchasing Power Around the Globe Data on about 70 cities x (9 categories of goods & services + wages). Includes economic explanations for different patterns between different categories, e.g. the price of urban housing is anomalously heteroscedascitous (did I invent a new word?) given the local income because it's such a static good: you can't export it, quickly adapt to changes in demand, etc.
It's interesting to notice that income plays such an important role in prices i.e. the richer you are, the more you pay. This means, of course, that producers are more interested in richer consumers.
If exports were fluid, the discrepancies in prices would mostly disappear: you could simply order all your clothing from Brazil and all your food from Eastern Europe. Likewise, if we had fluid transportation, everyone could live cheaply in the Australian desert and commute to our favorite places, but that's too far away (in the future).
Anyway, I really enjoy thinking about economics, finding common-sense constraints, reasoning about which equilibria are reasonable, etc
One common sense thing about the above report is that there is a positive cost-intersect: even in Africa where people earn nothing, it still costs something to buy things (in fact probably more than in slightly richer places, since almost everything in poverty-stricken places has the status of "special order": even shipping to such a place will be almost a "special order"). The point is that there is a real, positive production cost, which tends to get overshadowed by the demand in places like Oslo and Tokyo. In such places, the difference in price between the price of apples and oranges should be almost entirely due to taste: the cost of production is almost completely irrelevant (assuming equal exportation costs and perfect local competition). My hypothesis could be tested across Western European populations: the places where the average person likes oranges more, oranges will be more expensive; whereas in 3rd world countries, the prices will be more closely associated with the cost of production. Make sense?
But something feels wrong about my reasoning: since there is enough variation in taste in rich countries, it doesn't matter if only 5% of Britain likes oranges, since that's enough for mass exportation. So now that I've changed my mind, the question is: do differences in prices (e.g. apple/orange ratio) of imported goods EVER reflect differences in taste across nations (I'm looking for a positive correlation here, not a negative one like "eccentric consumers pay more")?
Another complicating factor: people end up liking things they consume for too long, so poor people will end up liking cheap things.
Some day I need to get around to writing a dynamic systems simulator. My imagined application is modeling feedback loops in sugars, hormones, organ function, etc in the human body (one could be about "why dieting is hard"), but I can see it modeling economics too.
It's interesting to notice that income plays such an important role in prices i.e. the richer you are, the more you pay. This means, of course, that producers are more interested in richer consumers.
If exports were fluid, the discrepancies in prices would mostly disappear: you could simply order all your clothing from Brazil and all your food from Eastern Europe. Likewise, if we had fluid transportation, everyone could live cheaply in the Australian desert and commute to our favorite places, but that's too far away (in the future).
Anyway, I really enjoy thinking about economics, finding common-sense constraints, reasoning about which equilibria are reasonable, etc
One common sense thing about the above report is that there is a positive cost-intersect: even in Africa where people earn nothing, it still costs something to buy things (in fact probably more than in slightly richer places, since almost everything in poverty-stricken places has the status of "special order": even shipping to such a place will be almost a "special order"). The point is that there is a real, positive production cost, which tends to get overshadowed by the demand in places like Oslo and Tokyo. In such places, the difference in price between the price of apples and oranges should be almost entirely due to taste: the cost of production is almost completely irrelevant (assuming equal exportation costs and perfect local competition). My hypothesis could be tested across Western European populations: the places where the average person likes oranges more, oranges will be more expensive; whereas in 3rd world countries, the prices will be more closely associated with the cost of production. Make sense?
But something feels wrong about my reasoning: since there is enough variation in taste in rich countries, it doesn't matter if only 5% of Britain likes oranges, since that's enough for mass exportation. So now that I've changed my mind, the question is: do differences in prices (e.g. apple/orange ratio) of imported goods EVER reflect differences in taste across nations (I'm looking for a positive correlation here, not a negative one like "eccentric consumers pay more")?
Another complicating factor: people end up liking things they consume for too long, so poor people will end up liking cheap things.
Some day I need to get around to writing a dynamic systems simulator. My imagined application is modeling feedback loops in sugars, hormones, organ function, etc in the human body (one could be about "why dieting is hard"), but I can see it modeling economics too.