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I guess economists would wiggle out of this one by pointing out that, unless price rises happen in non-substitutable staples, people can always switch to other foodstuffs.

They could, but they'd also admit that the switch was being forced and not a matter of choice. Whereas if prices dropped while wages rose, buyers would have increased choice.

I think if you use choice as the bottom-line criterion a lot of the conceptual confusion disappears.

The problem becomes quantifying that choice. And it's possible a simple one-line model may not be the  best way to do that - and also that choice will vary for different groups, and optimising choice for one demographic may lower the choice of another.

As usual it's a political problem, not an econometric one. You can't create good metrics until you decide what you're trying to achieve socially and politically.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Oct 11th, 2007 at 07:42:29 AM EST
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