Categories:
Behavioral Economics
Of course Arnold’s right that outrage over rising gas prices reflects anti-market bias. But in my defense, I was trying to explain why people are especially freaked out by rising gas prices. Why do people seem angrier about losing .8% of their income to higher gas prices than they would to losing .8% of their income to inflation? In both cases, they tend to blame suppliers’ greed, but the former tendency is much stronger than the other.
I stand by my explanation for the disparity, though Arnold’s helped me to see that I should have stated the puzzle more clearly.
READER COMMENTS
Brad Hutchings
May 4 2006 at 12:13pm
I don’t think people are all that freaked out. Politicians, yes. Witness Republicans floating $100 rebates and passing anti-gouging legislation. Media, yes. Can’t bag on the strong economy, so focus on price at the pump. But I don’t see people getting freaked out over the higher prices. They’ll go down. Maybe you have a few less dollars for Starbucks at the end of the week. Other than that, $48 to fill your tank vs. $42 isn’t a huge hit.
liberty
May 5 2006 at 5:10pm
Here is a great example of government creating a cartel and blaming those who try to buy and sell freely as the bad guy: http://blog.mises.org/archives/005005.asp
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