Tuesday, May 12, 2009

Place Utility? Time Utility? Conspicuous Consumption?

The quote below is from Phil Mushnick's sports column in The New York Post from a few days ago.

Reader Gary Cicio, NYC podiatrist, did the research, and asks us to choose one of the two options to see a Mariners-Yankees game this season, and from the very best seats:

Option 1: Two tickets to Tuesday night, June 30, Mariners at Yanks, cost for just the tickets, $5,000.

Option 2: Two round-trip airline tickets to Seattle, Friday, Aug. 14, return Sunday the 16th, rental car for three days, two-night double occupancy stay in four-star hotel, two top tickets to both the Saturday and Sunday Yanks-Mariners games, two best-restaurant-in-town dinners for two. Total cost, $2,800. Plus-frequent flyer miles.
The question for your students, “Why would anyone pay to see the Yankees play the Mariners in NY?”

One might be able to make a case that it is somehow more valuable to see the game on June 30 than to see it on August 14. That would involve time utility - the satisfaction gained from a good or service being available a time the consumer prefers. One could also argue the time involved in travelling to Seattle can be used better for another purpose. That also may be true, and it would also be an example of time utility.

This could also be a case of place utility. Place utility is the satisfaction gained from a good or service being in a place the consumer prefers. Clearly, some people are willing to pay a premium to see the game in NY. The number of people willing to do that, given the smaller size of the new Yankee Stadium, may crowd out other Yankee fans, but the choice is up to the individual consumer.

This also can serve as an possible case of conspicuous consumption.

That concept was first introduced by economist Thorstein Veblen in his book, The Theory of the Leisure Class. Veblen pointed to lavish spending as a method of displaying status. There is a certain amount of pleasure one receives from being able to tell others that one can afford Yankee tickets at this level.

What do your students think?

This post relates to the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
5. Incentives produce “predictable” responses.
7. Economic thinking is marginal thinking.

and
9. Prices are determined by the market forces of supply and demand…and are constantly changing.

2 comments:

teachcivics said...

I heard about this on the radio yesterday and I am glad you posted it. I will definitely share with my class tomorrow and let you know what they think.

Mike Fladlien said...

i think people who would watch a baseball game have low cost of time and incur little opportunity cost. i think they gain utility from just being at the game and all of the utility there.