This American Life/planet Money and Market Dynamics

Lynne Kiesling

I’ve mentioned NPR’s Planet Money before, specifically their story on the history of employer-provided health insurance. They do a good job (not perfect, but good) of exploring economics topics for a general audience; they did some very good reporting on the underlying macroeconomic issues in the financial crisis earlier this year (although they didn’t discuss Hayek or any business cycle ideas other than Keynes, but it was still better than most).

In a recent episode of This American Life on nighttime activity, the Planet Money team spent time and did interviews in the Hunts Point produce market in the Bronx. It’s full of trenchant observations on the dynamics of supply and demand and the time structure of supply and demand. For example, one buyer is in the market for pears, and early in the night he is having a hard time negotiating a lower price with a seller … but later in the night, toward morning, the seller will be more likely to accept a lower price rather than return home with unsold inventory. But if the buyer takes the risk of waiting a few hours, he might find all of the pears have been purchased at a price higher than he was willing to pay — he doesn’t know the preferences of the other buyers in the market, so he has to evaluate that tradeoff. Similarly, the “hot item” varies from day to day; one day it’s fancy carrots, another day it’s tomatoes, and it all depends on the interaction of what the wholesalers have available and what the buyers who are in the market on that precise day want and are willing to pay.

I liked this story so much that I have listened to it about 4 times in total. Especially if you are teaching a principles course or want to make market dynamics and the time structure of those dynamics more real for your students, this story is extremely useful and well done.