Spamming Recessions
If you thought this post was going to be about junk e-mail, I am sorry to disappoint you.  Instead this is about the other spam, the gelatinous, blood-pressure raising mass of mystery meat in a can, Hormel’s Spam. As many of my students are aware, I spend a bit of time at the beginning of the term in my introductory economics classes discussing normal and inferior goods. Normal goods are things we tend to buy more of when our incomes improve, while we buy more inferior goods when our incomes deteriorate.
I usually tell students that just because we name things we buy more of when our incomes drop “inferior goods” does not mean that they are really inferior in some objective sense, and I use shoe repair services as a possible example. Spam would not be a good example of this point. I am not sure that my dog, who eats aluminum foil would even eat the stuff.
Well, here is an article from the New York Times by Andrew Martin about how the downturn in the nation’s economy is affecting Hormel’s Spam business. This is the perfect story for understanding about how income affects the demand for an inferior good.
On the other hand, the recession has affected the demand for gasoline by pushing it down, which has pushed prices to half of their July levels. Certainly, lobster qualifies as a normal good. As we see in this article by Daniel Gross in August’s Slate, the price of lobster in Maine has fallen off a lot this year because of the recession pushing incomes down, and so, the demand for normal goods, especially luxury goods. In some places in Maine, it was as inexpensive to buy a one pound lobster meal as a quarter pounder from McDonald’s.
My suggestion, is to go against the tide. Go for the inexpensive lobster instead of the expensive Spam.
-MC