Wednesday, May 02, 2012 9:24am

Price Gouging

Connecticut should pass its Senate Bill 60, which states that during a “severe weather event emergency, no person within the chain of distribution of consumer goods and services shall sell or offer to sell consumer goods or services for a price that is unconscionably excessive.”

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel
Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Did Not Answer
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Uncertain 2
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Disagree 6
Bio/Vote History
         
Autor David Autor MIT Disagree 7
It's generally efficient to use the price mechanism to allocate scarce goods, e.g., umbrellas on a rainy day. Banning this is unwise.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Disagree 4
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 1
Bio/Vote History
         
Chetty Raj Chetty Harvard Uncertain 5
Bio/Vote History
         
Chevalier Judith Chevalier Yale Strongly Disagree 8
Need to stimulate supply
Bio/Vote History
         
Currie Janet Currie Princeton Did Not Answer
Bio/Vote History
         
Cutler David Cutler Harvard No Opinion
Without defining "unconscionably," I don't know what to think about this.
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Agree 9
Efficiency is less important than distribution under such transitory conditions.
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 1
I'm unsure how the courts will define "unconscionably excessive." Efficient allocation by market prices is good, absent monopoly effects.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 7
statute is vague. also statute could put goods in hands of those with limited need who hoard them.
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 4
Bio/Vote History
         
Fair Ray Fair Yale Strongly Disagree 10
Alas, I live in this state.
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Uncertain 6
Torn about this. The term "unconscionably" seems too loose - is it a 20% or 500% markup? But the goods need to be allocated somehow.
Bio/Vote History
         
Goldin Claudia Goldin Harvard Uncertain 7
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Did Not Answer
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Disagree 6
unconscionably excessive is VERY imprecise. extreme weather can disproportionately hurt poor and this could be efficient redistribution.
Bio/Vote History
         
Hall Robert Hall Stanford Disagree 3
Goal is to allocate suddenly scarce goods optimally. Prices are only a tool, but often the right tool. Law doesn't have a good alternative.
Bio/Vote History
         
Holmström Bengt Holmström MIT Did Not Answer
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Disagree 10
I sympathize w the intention but goods must be allocated in some way & prices are better than first come or fights breaking out among people
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Disagree 8
The vagueness of the law means more businesses will shut down, which is the same as setting price to infinity, a legal price.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Disagree 5
Seems like pandering, "post-storm cleanup or repair services" are included. It seems like those prices could reasonably soar after a storm.
Bio/Vote History
         
Klenow Pete Klenow Stanford Disagree 5
Would presumably lead to misallocation and lower supply than optimal. There are better ways to redistribute.
-see background information here
Bio/Vote History
         
Lazear Edward Lazear Stanford Disagree 8
Inefficiency from short term monopoly that results in "gouging" is secondary to losses in efficiency from a getting items to right users.
Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 6
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 9
At best, symbolic. At worst, would return to price controls of the 1970s.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley No Opinion
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 2
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Did Not Answer
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Disagree 8
Seeks to prevent prices from clearing markets; never a good thing. Standard is hopelessly vague so increases risk for affected businesses.
Bio/Vote History
         
Shin Hyun Song Shin Princeton Uncertain 5
Bio/Vote History
         
Stock James Stock Harvard No Opinion
Bio/Vote History
         
Stokey Nancy Stokey Chicago Disagree 5
State legislatures should focus on more important questions.
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 5
Not needed. Big firms hold prices firm. "Entrepreneurs" with trucks help meet supply. Are the latter covered? If so, bad.
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Disagree 7
The "unconscionably excessive" language may be a way to rescue this - maybe any price at which S=D is ok. Then sb60 is just a waste of time.
Bio/Vote History
         
Zingales Luigi Zingales Chicago Did Not Answer
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

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