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Larks comments on Economics, prioritisation, and pro-rich bias   - Effective Altruism Forum

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Comment author: Larks 04 January 2018 02:32:39AM 0 points [-]

Not only is it not necessarily true that actual willingness to pay determines consumer preference, it is not even usually true. Differences in willingness to pay are to a significant extent and in a huge range of cases driven by differences in personal wealth rather than by differences in consumer preference. Rich people tend to holiday in exotic and sunny places at much higher rates than poor people. This is entirely a product of the fact that rich people have more money, not that poor people prefer to holiday in Blackpool. I think the same holds for the vast majority of differences in market demand across different income groups.

This is probably empirically true between income groups, but I don't think it's true between individuals, even of different income levels. Most people have zero demand for most goods, due to a combination of geographic location, lack of interest and diminishing marginal utility, and this is the main determinant of differences in demand between individuals.

For example, I have 0 demand for sandwiches right now - hence why sandwiches can be bought all over the world by people with incomes <1% of mine. This sort of case, where markets do correctly allocate sandwiches, strikes me as being the norm in markets, rather than the exception.

(I realise this does not directly contradict your point but wanted to ensure readers did not draw an unnecessarily strong conclusion from it)