Our Sunday Chart
Imagine someone tells you a t-shirt is $5.00. During class, my students figured out a seemingly endless list of messages that $5.00 conveys. Some said the price indicated poor quality. Others spoke of affordability. Status came up also.
The message that a price conveys came to mind when I read about NFL secondary-market ticket prices. In the following graph, I showed the teams with the highest percent increase in secondary-market ticket prices.
According to Barron’s, a substantial increase in secondary-market NFL ticket prices tells us which team is more likely to have a winning season. Looking at the past 2 seasons, they point out that 4 of the 5 teams with the biggest jumps in secondary-market ticket prices were Super Bowl champs and/or made the playoffs.
Our bottom line: When consumers’ prices and businesses’ costs fluctuate because of supply and demand, we have the price system. Reflecting what New Yorker financial writer James Surowiecki called The Wisdom of Crowds, the price system is a group phenomenon in which many individuals and businesses make buying and selling decisions for the same good or service. The result? Price conveys a message.
By contrast, when government establishes a price or prevents price from moving too high (a ceiling) or too low (a floor), then price gives consumers, sellers and producers little if any useful information.
Our Sunday Chart
Elaine Schwartz has spent her career sharing the interesting side of economics. At the Kent Place School in Summit, NJ, she has been honored through an Endowed Chair in Economics and the History Department chairmanship. At the same time, she developed curricula and wrote several books including Understanding Our Economy (originally published by Addison Wesley as Economics Our American Economy) and Econ 101 ½ (Avon Books/Harper Collins). Elaine has also written in the Encyclopedia of New Jersey (Rutgers University Press) and was a featured teacher in the Annenberg/CPB video project “The Economics Classroom.” Beyond the classroom, she has presented Econ 101 ½ talks and led workshops for the Foundation for Teaching Economics, the National Council on Economic Education and for the Concord Coalition.