We all like to think that we are individuals. We like to think that we grow and that our tastes develop and mature. We begin to appreciate different things in life, and among other behaviors, our spending habits change.
But what would you say if I told you that your maturing tastes didn’t cause your maturing consumption patterns? Indeed, what if it’s the other way around? Maybe, you’re just a bumbling ball bearing bouncing about and pinging off of various stimuli in a very predictable fashion. What if the prices that you face changed over the course of the past two decades, adjusting your optimal bundle of consumption, and then you contrived reasons for your new behavior in an elegant post-hoc fashion.
Have you *really* taken a liking to whole wheat bread and pasta over the past decade because your tastes have developed? Or maybe it’s because you found that scrumptious New York Times recipe that turned you away from potatoes and toward rice. Whether it’s a personal experience, a personal influence, or a personal development, we like to think about ourselves as complex organisms with a narrative that makes sense of the way in which we interact with the world.
On the other hand, we have price theory. Price theory still accepts that you are special and that you have preferences. Then, it asserts that your preferences remain fixed and that your changes in behavior are merely responses to changing costs and benefits that you perceive in the world. Maybe you’re not any more inclined to eat healthily than you were previously, but the price ratio of whole wheat bread to white bread is 10% less than it use to be. Maybe your east-Asian inspired recipe didn’t cause you to spurn potatoes, but instead the price ratio of rice to potatoes fell by 20%.
It could be that we are complicated creatures who make economic decisions that reflect our internal developments. But, it could also be that we simply respond to relative prices. Maybe our great skill as a species is not explaining the world around us, but is contriving an intricate story about our role in the world based on our own behaviors that even we don’t fully understand. The fancy word is confabulation. Often, we just fabricate seemingly plausible reasons for our actions so that we can tell ourselves that we are reasonable beings.
Below are two graphs: the affordability of various starches and the affordability of produce.*
Now ask yourself:
“When you were younger, did you eat more of the goods that are now less affordable and do you now eat more of the goods that are more affordable?” Do you find that you now have multiple go-to recipes that include pasta or rice and fewer that include potatoes? Do you now purchase more whole wheat bread and less white bread? While it might hurt our ego and feelings of exceptionalism, being rational means optimizing our behavior in response to relative prices.
Have you heard about modern children eating so many berries? When I was a kid, strawberries were an infrequent treat, largely relegated to holidays and birthdays. Raspberries and blackberries were the stuff of novels and movies. Nobody actually ate them in real life. Now, on a per serving basis, berries are one of the cheaper fresh fruits that I buy. My kids get strawberries and blueberries almost weekly, and blackberries and raspberries are merely a fruit that we have sometimes. Maybe my generation is systematically spoiling our kids… AND, strawberries are about 20% more affordable than they were twenty years ago. Coincidence?
*Affordability is the median wage divided by the retail prices. The percent change is measured since 2000. See also Twenty Years of Animal Protein Affordability. I didn’t choose the types of produce. I used what data I ha available. I seasonally adjusted Lemons, Strawberries, & Tomatoes.
Economist Writing Every Day 
When I was growing up, sugary cereal was a normal part of a Complete Breakfast(TM), and fruit was something that grandma pushed. There’s definitely been a change in people’s preferences.
Also, fruit comes from overseas now (especially out-of-season fruit from South America), so maybe that’s part of the pricing story?
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I’m not sure how your first statements imply that people’s preferences have changed. Eating healthy is much cheaper than it used to be. maybe peoples preferences are constant, and they are just changing the consumption given the change in relative prices.
Fruit coming from overseas is the means by which relative price is changed. I’m not sure how that plays a role in preferences.
Regardless, the model of humans with stable preferences provides different insights and changing preferences. Fundamentally, it’s axiomatic. Neither set up assumptions is any more or less true. It matters for how we interpret the evidence.
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I’m not sure how your first statements imply that people’s preferences have changed. Eating healthy is much cheaper than it used to be. maybe peoples preferences are constant, and they are just changing the consumption given the change in relative prices.
Fruit coming from overseas is the means by which relative price is changed. I’m not sure how that plays a role in preferences.
Regardless, the model of humans with stable preferences provides different insights and changing preferences. Fundamentally, it’s axiomatic. Neither set up assumptions is any more or less true. It matters for how we interpret the evidence.
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I see the correlation, but I’d argue that causation goes the other way: people’s preferences change, which causes companies to change production, which affects prices.
I’m not sure how you’d be able to tell the difference. But I think back to the food choices of my family and the people I know. The margin of people who a) eat unhealthy food, b) *want* to eat healthy, and c) don’t switch only because of price sensitivity, seems really small.
Interestingly I asked my wife about her thoughts about this (she is in the medical field) and her take is that people are *definitely not* eating better over time, and rising obesity rates are the proof.
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( A ) Very interesting data and discussion
( B ) Any reason why white potatoes and dry beans have bucked the trend and gotten more expensive? Is is just that preferences have shifted so less is supplied and so lost economies of scale? Or the other starches were better able to benefit from productivity or imports?
( c ) re expensive berries, two suggestions. First, I find frozen blueberries in largish bags to be much less costly than frest. Second, try putting in a raspberry patch in the backyard, if you have one. Pretty easy to grow, relatively pest free, productive. Super way to teach kids where food comes from (not from the store).
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(B) I don’t know. But I suspect that it has to do with water content. Like concrete, it may be that potatoes face overlapping regional markets and less of a single international market (due to weight and spoilage).
Both Beef and potato production has stagnated over the past 20 years. Potato yields per acre have been rising while acreage has been falling. So, potatoes are losing the domestic land value competition – to what competitors IDK. Far from higher MC, the remaining domestic acres are even more productive. Global potato output is rising, so…. Global demand rose?
(Cite: https://phe.rockefeller.edu/publication/potato-prius/ )
All of the same details are true for Wheat production, except the price is up by less. Maybe because it has closer substitutes?
(C) We buy frozen also. We plan to move soon, then we’ll be all over the backyard fruit seen. We plan on grapefruit & limes here in sunny SWFL. I’ll investigate raspberries. We’ve picked wild ones in VA before, but IDK how they’ll do here.
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There may be strains of raspberries that do OK that far south, you’d have to check. Some strains require a certain about of cold x days . But blackberries should thrive!
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