Monday, March 2, 2009

What Does "Doing Without" Mean in 2009? Perhaps More Trips to the Movies and More Big Macs

In economics, "inferior goods" are goods that consumers buy less of as their incomes rise, instead opting for more desirable alternatives. For example, many college students swear they will never buy mac and cheese, or ramen noodles, ever again once they have their first "real" job. For them, macaroni and cheese, and ramen, are inferior goods. They plan to buy less as their incomes grow.

As incomes fall, the opposite happens: inferior goods begin to look more appealing than they did during times of higher income. For example, soup has often been identified as a product that does well during poor economic times. (And during good economic times, the marketing folks at Campbell soup have needed to work extra hard to remind us to buy their red and white cans: you may remember the "Soup is good food" campaign from headier economic times.)

Well, evidence is growing that fast food, and even trips to the movie theater, may be the new inferior goods. Even though they are hardly "necessities," and not that long ago were considered a bit of a treat, it seems that American consumers are turning to them as they become more concerned about their current and future income prospects. And it is certainly possible that "getting by on less" nowadays means eating at Burger King instead of Applebee's.


  1. Interesting commentary (all of them, not just this one) ... it does have a 'Freakonomics' feel to it, but with more warmth, or regionalism at least.

    I read a story about people flocking towards fast food, because as you say, you can get a hamburger for 99 cents, while real fruits and vegetables are much more expensive.

    My fear are the unintended or unexpected consequences. What happens to our already obese society as we rely more heavily on fast food as an option. And perhaps I'm moving into a rather big stereotype, but my guess is that the poorer folks on the socio-economic ladder are some of the exact people we as a society are concerned about. I feel an even greater 'supersized' America coming from this.

  2. Thanks, Brian. Great comment. And you're not the only one concerned that a lot of cheap food isn't that good for you. Check out this article that links both ideas: