You love the blog, so subscribe to the Beervana Podcast on iTunes or Soundcloud today!

Friday, October 05, 2007

On Economics and Beer

Turns out this cheater-pint thing isn't just an irritant to beer drinkers. Even economists don't like it. A newly-founded blog by an OSU econ prof describes the problem:
Which finally brings me to the economics point: a classic market failure for which government intervention is appropriate is what is known as 'asymmetric information.' One of the most classic economics papers of all time is a fairly simple story of used cars and shows that since owners of used cars know much more about the true quality of the car than prospective buyers, market inefficiencies can result. Thus governments can step in an enact truth in advertising laws, anti-fraud laws, etc. In my current example, most customers do not know they they are being served considerably less than a pint and when informed of this, often react in outrage.
In a second post, he offers an obvious solution:
The British have been requiring a government stamp on pint glasses used in pubs since 1699 to assure the 'punters' that they are getting a right measure of the best bitter. (Something by the way that is changing due to the vagaries of the EU) There you have not only an economically correct government regulation, but one that works beautifully - all parties are immediately satisfied that a full imperial pint is being served and the government has little to do, but licence glass manufacturers and verify on occasion that they are meeting the 20 oz requirement. So why not in the US?
Why not indeed. In the meantime, we have the Honest Pint Project...

1 comment: