Over the past few weeks I explored some core concepts in development economics. Last week, I discussed the concept of nonseparability. The week before, I discussed heterogeneity. In both cases, my goal was to show that those two phenomena, though they are not completely absent in developed economies, are important in developing countries in that they can cause persistent poverty.
This week, I wanted to talk about nonanonymity. In the stylized Walrasian model, a consumer is a consumer is a consumer and a producer is a producer is a producer, and provided we are talking about a single good, it does not matter who buys what from whom–the price will be the same whether consumer 1 or consumer 2 buys from producer 1 or producer 2. “Anonymity” is a bit of a misnomer here, but it refers to the fact that the identity of the parties to a transaction do not affect the price of that transaction.
In developing countries, however, it is often the case that one’s identity does affect the price of a transaction. For example, in many African cities, it is not uncommon for taxi rides to have two prices: one for locals, and one for foreigners. Continue reading →
Last week, in a post titled “The Great Avocado Freak-Out of 2016?,” I commented on a Guardian article whose apparent aim was to make Western/Northern/developed-country consumers cut back on their consumption of avocados because it led to deforestation and allegedly financed organized crime in Mexico.
But the flip-side of increased avocado consumption is, of course, a booming avocado industry. In fact, the Guardian’s reporting on the environmental problem points out that Mexican avocado farmers are now earning sums of up to $500,000 per year on the yield provided by a single plot of land …
Blythman is aware that Mexican farmers may be very pleased with the current demand for their product. But she says that: “It’s a moot point whether the Mexicans who actually grow these on-trend fruits eventually harvest their fair share of the economic benefits.” But surely it’s the most important point. An argument that our love of avocados is actually hurting the Mexican people should deal centrally with the question of whether our love of avocados is actually hurting the Mexican people …
[T]the real problem with arguments like Blythman’s [is that] they treat systemic problems as if they are the product of narrow individual consumption choices, and can therefore be fixed through changes in those choices. Blythman warns that cartels in Mexico take a portion of avocado profits. But the cartels aren’t going to go away, or be affected much at all, if Brits go back to using jam on their toast.
Elsewhere around the Internet, the Pacific Standard’s Kate Wheeling summarized a conversation she and I had a few weeks ago as follows, in an article for containing a nice overview of some of the research I have been doing these past few years: Continue reading →