Snyder also attack’s Zwolinski’s “nonworseness claim” and suggests rules for ethical rationing of necessary goods after a disaster. The “nonworseness claim” asserts that because us gouging someone is better than neglecting them altogether (i.e. closing shop or refusing to sell at any price), and neglecting them is within our rights, it must also be within our rights to gouge them.

But I think there is more than just this anchoring heuristic going on in this case. It isn’t just the price increase relative to a reference transaction, but a price increase during a period of presumed increased hardship – the “large snowstorm.” I’d bet if they posed this alternative version, they’d get a significantly different answer:

A hardware store has been selling snow shovels for $15. The morning after Memorial Day, the store raises the price to $20.

Or:

A hardware store has been selling snow shovels for $15. The morning after a new store manager arrives, the store raises the price to $20.

To me, these versions don’t seem to trigger a sense of unfairness. On this topic, I still think the Kling conjecture is right: price increases in times of increased hardship are perceived as morally wrong by some people (not merely unfair), because of an embedded moral principle that says it is wrong to take advantage of people in distress (and price increases on necessary items during times of hardship is seen as ‘taking advantage of people’ unless there is a cost basis for the increase).

Labels: price gouging

1. Q&A about gasoline shortages in northern Georgia.

   Q: Why does it seem that there’s more of a shortage now than after Hurricane Katrina?
   
   A: The stockpiles of gasoline and other products are lower now than after Hurricane Katrina. So current shutdowns are mainly due to power outages in the areas where there are refineries. The good news is they’re starting to come back online. Production will be restored faster than it was after Katrina and Rita because the refineries weren’t damaged as badly. As of Friday, only four of 56 Gulf Coast refineries remain closed.

   Well, there's another pretty salient reason, too:
2. A rather jarringly oblivious article about the state's price gouging laws.

   However, state officials are getting fewer complaints about gas gouging than they did after Hurricane Katrina three years ago.
   
   “I think part of that may well be that the stations are much more attuned to the price-gouging laws than they were before Katrina,” Cloud said. “It sunk in with enough people that we don’t go away on this.”
   
   The agency learned a lot from the aftermath of Hurricane Katrina in 2005, when there was a run on gas because of fears of fuel shortages.
   
   Cloud’s office received 6,000 price-gouging complaints, including reports of jacked-up hotel rates and gas prices.
   
   In the end, Consumer Affairs wound up getting settlements in 83 cases. The next highest state for gas gouging settlements was New York, which had 14.

   Which would suggest why Georgia is particularly hard hit by stations running out of gas:

   He delayed buying gas in the hopes of finding cheaper fuel in Georgia. After crossing into the state from Tennessee, he couldn’t find an open station.
   
   “I went back to Chattanooga and filled up there,” he said.

Labels: price gouging