The Strangest Price Discrimination You'll Ever See?

Adriano Dutra Teixeira, a Brazilian economist, sent us this photo from a restaurant. As he translates:

“Social Responsibility: 50% discount on meal for clients over 70 or bariatric surgery (stomach reduction).”

He adds:

I thought it was hilarious! So I wrote a blog post with a microeconomic approach to the promotion, using price discrimination.

I had to chuckle, in part because we’re finishing up a podcast about commitment devices, in which Levitt offers some bizarre alternatives to bariatric surgery (which we wrote about here), since it is such a drastic commitment.

Further thoughts:

  • I wonder what proof, if any, the restaurant requires to prove bariatric surgery — a doctor’s note? a receipt? a visual scar? And how will people game the system?
  • Who tends to eat less: the median 70-year-old or the median bariatric patient? And especially: what do they each eat less of? Since the restaurant is offering such a hefty discount, I’d  assume it’s meat or some other high-cost food.
  • I can understand why the restaurant touts its “social responsibility” for feeding 70-year-olds at a discount, but what is the social responsibility factor of the bariatric discount? On the other hand, I guess you can’t just put up a sign that says “half off for the people we suspect won’t eat very much.” (FWIW, Brazil is getting pretty obese.)
  • Does a 70-plus person who also had bariatric surgery eat for free?

 


James

It also seems to ignore the fiscal realities of the restaurant business (at least as I understand them), which is that the cost of raw materials is a small fraction of the price of a meal.

Katie Cunningham

Doctor's note, actually.

A friend of the family got one, and was given a card that allowed her to purchase meals off of the children's menus. She never used it, being too embarrassed to admit she had gotten the surgery, save for one time. It was a buffet that was outrageously expensive, so that time, she pulled out the card. The waiter didn't even blink, and charged her the children's price.

Kiaser Zohsay

It has been several years ago, but I once saw a woman with her family at a buffet restaurant pull out a similar card. Rather than getting the children's price, she was getting a take out box (which is priced by weight) even though she going to sit at a table with the rest of her party.

Érica

I am Brazilian and I can help you. This is a steakhouse. An all-you-can-eat one.
Odd discoung as you said...

Gangstead

I think a 70+ bariatric surgery person eats for 25% (the discounts multiply, but don't stack)

Érica

Oh, I am going to write them and ask what kind of proof they want. As soon as they reply I will tell you, if they reply someday.

Matt

If it's a prixe fixe restaurant, which many Churrascaria are, you could posture that those who have had stomach reduction will eat significantly less... or at least will eliminate the risk that they will consume more than their paid share.
Sure, it's strange to see in print, but there is a logic.

polk

A 70-plus person who also had bariatric surgery would surely qualify for a 75% discount? or maybe only 25 %... I have to think about that.

Violet

It says "or" so I think they'd just get the 50% discount.

Amber

My dad had bariatric surgery and he was given a little card to show at restaurants. Most restaurants honored it either through discounts or letting him order off the kid's menu or order lunch portions (even for dinner, when they would otherwise be charging more even for lunch portions).

I think psychologically it was helpful for him, because there are many people (him included) that force themselves to finish a meal instead of letting part of it go to waste. I think by paying a discounted cost and receiving smaller portions (kids'/lunch), he felt less inclined to have to "clean his plate."

Tim

One word: Leftovers!

If I order food at a restaurant, I'm getting a minimum of 2, and often times 3, meals out of it. Restaurants give WAY too much food to be eaten in one sitting.

Tina Tse

Hmm this would be an interesting example to study Hotelling's model...

Rodrigo

I think it's not about age or bariatric surgery. It's ok if the house gives discounts for any reason they like. It's odd call it Social Responsibly.

melanie

But it isnt true price discrimination. that would be if customers with the same costs are charged different prices. These clientele are charged different prices based on food cost.

It does make you wonder about amount of bariatric surgery though

Neel

No, a 70+ person with the surgery eats for half of half. 25%. Not free...

Lastexposfan

"Does a 70-plus person who also had bariatric surgery eat for free?" 50% off of 50% off would not be free, it should leave the customer paying 25% of the original price. Your remark may be funnier, but it perpetuates bad mathematical reasoning.

colin

This is hilarious.
An 'innovative' way for this restaurant to create incentives.

The management is implying that 'Social' means the consumers that eat at their restaurant?
Which will increase meat sales and thus harvesting more animals and thus increase demand for the abattoirs and thus breeding more animals that produce greenhouse gasses...etc etc...

Feeding 70 year olds is not social responsibility in this context. Nonetheless, I would still take my grandparents here!

Stephen Vakil

The word Rodízio should have been included in the translation because we use that in the US sometimes to refer to this style of restaurant. As mentioned, it's an all-you-can-eat style place. Why do they care WHY someone eats less? The message is murky socially: get as fat as you want here and risk your life eating poorly; but as soon as you take DRASTIC measures to lose weight, we will give you a discount so you don't destroy your own intestines. It would make more sense to generally charge less if a customer eats under a certain threshold. Then the people who already are trying to reduce intake would be rewarded as well.

Of course, I have no idea why anyone trying to monitor their weight would go to a Rodízio.

Saulo Kutner

I think that a clarification is needed. In Brazil, "Rodizio" is not a regular "a la carte" service. The customer pays a fixed amount (usually a high fixed amount!) and eats as much as he/she can. It seems, from the restaurant name (....Grill), that they serve mostly meat, an expensive meal nowadays. So, probably the restaurant's owner noticed that older people and those with reduced stomach tend to eat a lot less than regular customers. Anyway, I'm not sure what's required as surgery proof, and calling this marketing action as "Social Responsability" is, well, a bit pretentious.

Jeff Butler

An example of a wrong thinking correlation. "Social responsibility" has nothing to do with reducing prices for someone who eats less. It has everything to do with the ability to pay. What good does a discounted price do for someone that is, say, in the upper two or three population fifths incomes?
This is what's wrong with a sales tax versus a progressive income tax. In my value system, at least, people should not pay significantly larger shares of their incomes for necessities or services in return for their taxes.
One of my favorite stories is the one of the widow's mite in the gospel. Self-righteous, well-to-do people donated lot's of flashy, jangling change to be heard and seen by all as they entered the temple. The old woman put in only a penny ("mite"). Jesus told his disciples that the poor widow cast in the most because the others gave out of their abundance, while she gave all she had to her name.
Temple donations were the tax system of the time. I think the story makes a point of the unrighteousness, unfairness, and injustice of the proportionally small amount the rich paid contrasted with the excessive amount paid by the poor. Regardless of religious or political persuasion, the story is a timeless, universal lesson. Those who have the most should pay the largest proportion, while those who have the least should pay the smallest proportion.

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