Loneliness or Cheap Wine

DESCRIPTION

I’m alone in Europe, living in an apartment and cooking for myself. I bought a bottle of decent red wine for the remarkably low price of $2.99 and am consuming about one-fourth of it with each dinner (instead of the one-fifth or one-sixth of a bottle I would drink with each dinner at home).

Have I substituted toward wine, moving down the demand curve because the price is lower than at home? Or am I drinking more because I am alone and miss my wife? has my demand curve for wine merely shifted out due to my solitary lifestyle?

This question illustrates a general problem in economics: when quantity consumed increases, is it because relative price has dropped or because demand has increased? One needs more information than I have here; but being a Chicago-type economist, I’m convinced the relative price has altered my behavior.

Unfortunately, I am too foggy from the wine to sort out the answer!


Eric W

Do you really need an excuse to drink more wine?

Mike

It could be a larger glass. 1/4 a bottle isn't much to begin with, much less substantially different than 1/5 or 1/6.

Fritz Mills

Maybe you just have a bigger glass, and you're filling it to the same relative point.

John

maybe the original bottle cost 5/4ths or 6/4ths as much and somehow your satisfaction comes from drinking a certain financial amount of wine? you could enjoy really expensive wine with an eyedropper.

Douglas Warren

Oh, to think like an economist. Both a blessing and a curse.

Thijs Poorthuis

Maybe the wine you got in Europe is better.

Either way, there are a lot of variables in this matter.

Dave

Are the two explanations necessarily mutually exclusive?

Joe Smith

Maybe it's the elimination of your wife's disapproving scowl as you reach for the third glass that liberated your behavior - one particular non-monetary cost has been eliminated.

William

I'm going to give you the benefit of the doubt here and assume you drink 1/6th of a bottle of wine at home. So you're drinking 1/12th of a bottle more now, assuming a standard 750ml bottle, thats about 63ml more wine for you per evening.

You shouldn't be noticable more tipsy from a shot and a half of wine.

Go whine (harr harr) to another crowd.

Lucas S.

Assuming that the quality is exactly the same, you will definitely move down the demand curve. All things equal (imagine you're still at home, etc) with a lower price you would probably drink a little more wine (assuming you don't have a perfectly inelastic demand), so there's basically no point in discussing that.

The only thing that could be discussed is whether your demand curve expanded or not. Assuming that it expands but keeps its slope (the new demand curve and the old one are parallels), and assuming that your demand is not perfectly inelastic, you would drink more wine keeping the higher price, but as the price is lower you drink even more. So, your demand curve is expanding, but you're also moving down the curve.

In both cases, you're substituting towards wine. There's no point in discussing if one happens and the other doesn't, the only one that could be not happening is the demand curve expanding. It could even be smaller than the first demand curve -you would drink less at the same price- but because of the lower price now you drink more.

In any case, the relative price effect is happening. What you should try to sort out is if the demand curve is moving in the same direction, if it hasn't moved or if it has moved in the opposite direction.
If a bottle was 2.99euros back home, ?would you drink more or less?

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Grant

hmm...I rarely open a bottle of wine and fail to finish it. I admire your restraint.

Corey

"It could be a larger glass. 1/4 a bottle isn't much to begin with, much less substantially different than 1/5 or 1/6."

Exactly - the difference between 1/4 and 1/5 of a 750 mL bottle is only 37 mL, or 1.2 fluid ounces - a little less than a shotglass. I would have a hard time noticing that little of a difference, but then again I usually drink the whole bottle in one sitting.

Majnun

9,12: Psst, you missed the point

Karen

It's not that you miss her or that the wine is cheaper. You're drinking more because you're not talking.

I'm assuming you might "talk" like I do---while waving my hands around energetically in order to make my multiple points!

For me, holding a wineglass and holding forth are incompatible.

doug

You have comsumed more, thereby increasing not only your drunkeness but your utility. Hehe.

Mark S.

I have had a similar experience but as I am not an economist I did not ponder the significance at first. I like to go out to salsa venues to dance about 3 nights per week. Two of the venues recently dropped their price of a glass of beer from $5 to $3. When I was at the first venue, which is a relatively long 30 min drive from my house, I did not increase my consumption from my typical one glass/night to two glasses/night because I did not want to risk falling asleep and dying in a fiery crash on my way home. The second venue is only a 5 min drive from my house and I did increase my consumption from 1 glass of beer to 2 glasses. So the answer for me is: a social setting, a nearby venue and a lower price meant that I moved to higher consumption at a lower price.

Sidenote: I did feel a little guilty of spending so little at the first venue that I made it up with a 50% tip, so the bartender was the beneficiary.
Sidenote2: Lowering the price of drinks at a salsa dance venue generally does not generate higher per person sales as salsa (as well as tango, ballroom and swing) dancers drink a lot less than other clubgoers. The equation only works out if there are a lot of "viewers" who don't dance but come to watch others do so. The dance community blogs have endless discussions about this but apparently economists don't dance or if they dance, they don't participate in these discussions.

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Christopher

How many glasses do you drink? That's the key here.

A glass is usually what, 1/5 or 1/6 of a bottle?

(It could be 1/4 if you do a real heavy pour, but I doubt you do that, as you seem to appreciate wine and aren't just looking to get drunk!)

Craig

depends on your income

When I lived in a small east German town last summer, where a 1.59 euro wine was on par with a standard (read: not carefully chosen) $6-10 wine, we downed them left and right.

But we are poor students/recent graduates - the drop from $6-10 to 1 - 2 euro was very significant. It changed the question of "should we have a bottle of wine with dinner" from a fiscal question to a mood question.

Verdict: As I see it, price is only the dependent if the level changes your decision-making framework. No need to get into the math behind a 1/4 or 3/37ths or whatever - without seeing it, I'd guess you have a different size glass that favors a different poor. Or a slightly longer evening from higher latitude. Do the cents really matter at this scale (if you really think about it, rather than reflexively applying an economic analysis)?

Or maybe I'm just not a creature of habit.

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dal

1/4 bottle is not for loners its for ladies!!!!!!!

Nick Robinson

Can't we get him some friends to drink with instead?

Whereabouts are you Daniel? We're a friendly lot us Europeans and, especially if you're buying, we might even drink with an economist...