An Alcohol Tradeoff

Fifteen years ago, on a visit to Peru, I drank many pisco sours and decided I had to buy a duty-free bottle of pisco. It has sat unopened in our liquor cabinet since then. A colleague mentioned he had bought a number of bottles of a South African liqueur, Amarula Cream, that tastes a lot like Baileys Irish Cream, which we love. Chatting, we suggested a trade, since he’s a pisco sour fancier, as is his wife.

The trade is now consummated, and both we and our wives are happier for it. No monetary transaction, but I am convinced that everybody is better off—this is a real Pareto improvement.

(HT to LL)

Michael Fisk

Can't really go wrong with either. I'm able to buy Amarula from the liquor section of the grocery store across the street, so I'd be a bit more partial to the pisco myself, but Amarula is quite tasty indeed.


Not this again...

What about the Pisco and Amarula Cream distillers/venders? They would have benefited more had you each bought another instead of trader.

What about the wine/beer/soda/Bailey's manufacturers? You will drink the Amarula Cream instead of one of those.


Parito improvements are, by definition, measured against a limited set of participants. While not explicit in the description the implied set is Daniel, Daniel's wife, friend, friends wife.

To be a parito improvement at least one member must 'improve' and no other members can be 'worse off' whatever those mean.

Daniels friend expressed a desire for Pisco so we can expect that he and his wife improved. As long as Daniel and his wife didn't come away unhappy that's parito improvement.

Even if we add in the distillers we still seem to end with a parito improvement. None of the distillers were relieved of inventory or had to expend labor on behalf of Daniel or friend. Their situation did not degrade, although they also did not improve.

David Clayton

I know nothing about pisco, but I also picked up Amarula in South Africa 12 years ago. I like Bailey's quite a lot better - the very slight fruitiness of Amarula doesn't work for me.

I can also tell you that it does not keep well. Don't let it sit in the liquor cabinet for years.


Interesting that, even though Pisco is a city in Peru, and Peru is a known maker if not the originator of pisco, that the country of Chile has a designation of origin over this liquor.


But, isn't this just a simple barter? Or are all barters Pareto improvements by definition?

Eric M. Jones.

Isn't that the swill they make by having toothless grandmothers chew-up something and spit it into a bowl to ferment? I thought so.


this is a pareto improvement in the way that any voluntary transaction is an improvement.

if all parties didn't have more utility after the transaction, then the transaction wouldn't happen (voluntarily).