The Price of Everything


"According to Eduardo Porter of The New York Times editorial board, prices are more interesting than most of us realize. And the prices that never appear on a price tag are the most fascinating of all. In his new book The Price of Everything: Solving the Mystery of Why We Pay What We Do (2010, Portfolio), Porter explores the surprising ways prices affect every aspect of our lives, including where we live, who we marry, how many kids we have, and even how religious we are."

Here is the introduction to Porter's book.


Anybody who has visited a garbage dump in the developing world knows that value is an ambiguous concept. To most people in the developed world, household waste is worthless, of course. That's why we throw it away. Apparently, Norwegians are willing to pay about $114 a ton for somebody else to sort their recyclables from the general garbage. A survey of families in the Carter community of Tennessee several years ago found they were willing to pay $363 a year, in today's money, to avoid having a landfill nearby.

But slightly beyond our immediate experience, waste becomes a valuable commodity. In Kamboinsé, outside Ouagadougou, Burkina Faso, farmers pay municipal trash haulers to dump unsorted solid waste on their sorghum and millet fields as fertilizer -- bits of plastic included. The going rate in 2003 was 400 francs per ton. In New Delhi, a study in 2002 found that waste pickers earned two rupees per kilo of PET soda bottles and seven rupees per kilo of hard plastic shampoo bottles. A child working on foot on Delhi's dumps could make twenty to thirty rupees per day.

Waste, in fact, confronts us with the same value proposition as anything else. The price we put on it -- what we will trade to have it, or have it go away -- is a function of its attendant benefits or costs. A bagful of two-rupee PET bottles is more valuable to an Indian child who hasn't eaten today than to me, a well-fed journalist in New York. What she must do to get it -- spend a day scavenging among the detritus of India's capital, putting her life and health at risk -- is, to her, not too high a price to pay because life is pretty much the only thing she has. She has little choice but to risk it for food, clothing, shelter, and whatever else she needs. I, by contrast, have many things. I have a reasonable income. If there's one thing I have too little of, it is free time. The five cents I could get for an empty PET bottle at the supermarket's recycling kiosk are not worth the trouble of redeeming it.

The purpose of this comparison is not to underscore that the rich have more opportunities than the poor. It is that the poor choose among their options the same way the rich do, assessing the prices of their alternatives. The relative costs and benefits of the paths open to them determine the behavior of the poorest Indian girl and the richest American man. These values are shaped by the opportunities they have and the constraints they face. The price we put on things -- what we will trade for our lives or our refuse -- says a lot about who we are.

The price of garbage provides a guide to civilization. Pollution is cheapest in poor countries. Their citizens are more readily willing to accept filth in exchange for economic growth. Yet the relative price of pollution rises as people become richer. Eventually it be comes expensive enough that it can alter the path of development. China is a dirty place. Yet underlying its dismal air and foul water is a choice that balances the costs of pollution in bad health, poisonous rivers, and so forth against the cost of cutting back production or retooling plants to control their effluvia. It is a different choice from that of Switzerland, where preserving environmental assets -- clean air, trees, wild animals -- is considered more valuable than providing manufacturing jobs to unemployed farmers. Twice as many Swiss as Chinese are members of environmental organizations. More than a third of the Swiss population believes environmental pollution is the most important problem facing the nation; only 16 percent of Chinese feel the same.

But as China grows, the price of building one more coal-fired power plant, measured in terms of its contribution to acid rain, global warming, and the rest will one day exceed the value the Chinese place on the extra output. As it keeps growing, it will likely evolve out of the most noxious industries, like steel and chemicals, into less polluting sectors, like medical and financial services. It may even one day buy its steel and chemicals from poorer countries with a higher tolerance of foul water and air. In other words, it will behave more like Switzerland or the United States. One study concluded that emissions of sulfur dioxide peak when a country's income per person reaches around $8,900 to $10,500. In the United States, sulfur-dioxide emissions soared until the passage in 1970 of the Clean Air Act. Since then, emissions have fallen by half.

HEREIN LIES THE central claim of this book: every choice we make is shaped by the prices of the options laid out before us -- what we assess to be their relative costs -- measured up against their benefits. Sometimes the trade-offs are transparent and straightforward -- such as when we pick the beer on sale over our favorite brand. But the Indian scavenger girl may not be aware of the nature of her transaction. Knowing where to look for the prices steering our lives--and understanding the influence of our actions on the prices arrayed before us--will not only help us better assess our decisions. The prices we face as individuals and societies--how they move us, how they change as we follow one path or another--provide a powerful vantage point upon the unfolding of history.


Nearly two decades ago, when he was chief economist of the World Bank, Lawrence Summers, President Barack Obama's former top economic adviser, signed his name to a memo suggesting it would make sense for rich countries to export their garbage to poor ones. Because wages are lower in poor countries, he said, they would suffer a lesser loss if workers got sick or died. "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that," it said. Moreover, pollution mattered less in a poor country with other problems: "The concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under 5 mortality is 200 per thousand."

Leaked a few months before the 1992 United Nations Earth Summit in Rio de Janeiro, the memo confirmed to critics that the World Bank believed poor countries were dumps. The reasoning "is perfectly logical but totally insane," wrote the late José Lutzenberger, then Brazil's environment minister, in a letter to Summers. Furious, Vice President Al Gore torpedoed Summers's chance to become chairman of then-president Bill Clinton's Council of Economic Advisers. Summers apologized, explaining the memo as an attempt to offer "sardonic counterpoint" to sharpen analytical thinking about the trash trade.

Lutzenberger had a point. Wages are not the only benchmark of people's value. The price of dealing with garbage in impoverished countries is often zero not because their citizens care nothing about pollution, but because their governments don't enforce pollution-related laws. But Summers had a powerful point too: in poorer countries, an untainted environment is less valuable than other things that are more abundant in richer nations--schools, for instance. Many developing nations would serve their interests best by trading trash for the chance to build an extra one.


Most of us think of prices in the context of shopping expeditions. In the marketplace, prices ration what we consume, guiding how we allocate resources among our many wants. They prompt us to set priorities within the limits of our budgets. Just as prices steer our purchasing patterns, they steer the decisions of the companies that make what we buy, enabling them to meet our demand with their supply. That's how markets organize a capitalist economy.

But prices are all over the place, not only attached to things we buy in a store. At every crossroads, prices nudge us to take one course of action or another. In a way, this is obvious: every decision amounts to a choice among options to which we assign different values. But identifying these prices allows us to understand more fully our decisions. They can be measured in money, cash, or credit. But costs and benefits can also be set in love, toil, or time. Our most important currency is, in fact, opportunity. The cost of taking any action or embracing any path consists of the alternatives that were available to us at the time. The price of a five-dollar slice of pizza is all the other things we could have done with the five dollars. The price of marriage includes all the things we would have done had we remained single. One day we succumb to the allure of love and companionship. Years later we wonder what happened to the freedom we traded away at the altar. Economists call this the "opportunity cost." By evaluating opportunity costs, we organize our lives.

Just to be born, the scavenger girl in Delhi had to overcome Indian parents' entrenched bias against girls -- which has led to widespread abortions of female fetuses. The Indian census of 2001 recorded 927 girls aged six or less per 1,000 boys. This compares to 1,026 girls per thousand boys in Brazil and 1,029 in the United States. The bias is due to a deeply unfavorable cost-benefit analysis: while boys are meant to take over the family property and care for their parents in old age, daughters must be married off, which requires an onerous dowry. To redress the balance of incentives, regional governments across India have been experimenting with antipoverty programs aimed at increasing parents' appetite for girls. In 2008, Delhi launched a program to deposit 10,000 rupees into the account of newly born girls in poor families--making subsequent deposits as they progress in school. The objective is to build a cushion of resources for them to marry or pursue higher education. A social insurance program launched in 2006 in Haryana pays parents who only have daughters 500 rupees a month between the age of forty-five and the age of sixty, when it is replaced by the general public pension.

I remember a conversation I had a few years ago with an illegal immigrant in Stockton, California. I worked at the Wall Street Journal writing about the Hispanic population of the United States. The immigrant was educating me about the relative merits of having his two young children smuggled from Mexico "por el monte" -- a grueling hike across the desert -- or "por la línea," across a regular checkpoint using forged documents. The choice was hard. He couldn't have made more than $8 or $9 an hour, picking asparagus, cherries, and everything else that grew in California's San Joaquin Valley. He would have to pay about $1,500 each for a "coyote" to guide his kids across the desert. Yet he figured that getting a smuggler with fake documents to bring them across a border checkpoint would put him back about $5,000 per child. The conversation laid in stark relief the type of bare-knuckle cost-benefit analyses that steer people's lives.

Over the last decade and a half, the Border Patrol's budget has grown roughly fivefold. Average coyote fees increased accordingly, to about $2,600 in 2008. Yet the price that rose most sharply is measured in the odds of dying on the way, as a border crossing that used to take less than a day around San Diego became a three- to four-day trek through the Arizona desert, evading thieves and the Border Patrol, lugging jugs of water. In 1994, 24 migrants died trying to cross the border. By 2008, the death toll was 725. The calculation of the immigrant I spoke to was straightforward enough. To bring his children into the United States through a checkpoint, he would have to work longer to earn the price of passage. But it would lower the risk that his children would perish along the way.

The debate among Americans about illegal immigration is itself a discussion about prices. Critics charge that illegal immigrants lower the price of natives' labor by offering to do the job for less. They argue that immigrants impose a burden on natives when they consume public services, like education for their children and emergency medical care.

These arguments are weaker than they seem. Most illegal immigrants work on the books using false IDs, and have taxes withheld from their paychecks like any other worker. They can't draw benefits from most government programs. And there is scant evidence that immigrants lower the wages of American workers. Some industries only exist because of cheap immigrant labor -- California's agricultural industry comes to mind. Absent the immigrants, the farm jobs would disappear too, along with an array of jobs from the fields to the packing plant. We would import the asparagus and the strawberries instead.

Illegal immigrants do affect prices in the United States. One study calculated that the surge in immigration experienced between 1980 and 2000 reduced the average price of services such as housekeeping or gardening by more than 9 percent, mainly by undercutting wages. Still, it had a negligible impact on natives' wages because poor illegal immigrants compete in the job market with other poor illegal immigrants.

Immigration policy has always been determined by who bears its costs and who draws its benefits. Illegal immigrants are tolerated by the political system because their cheap labor is useful for agribusiness and other industries. It provides affordable nannies to middle-class Americans. This suggests that despite presidential lip service to the need to reform immigration law, nothing much is likely to be done. Creating a legal path for illegal immigrants to work in the United States would be politically risky and could provide a big incentive for more illegal flows. By contrast, cutting illegal immigration entirely would be prohibitively costly. The status quo is too comfortable to bear tinkering like that.

The ebb and flow of immigration will continue to be determined by potential immigrants' measuring the prospect of a minimum' wage job -- perhaps a first step up the ladder of prosperity -- against the costs imposed by the harsh border. The price may occasionally be too high. As joblessness soared following the financial crisis of 2008, many potential immigrants decided to stay at home. The Department of Homeland Security estimates the illegal immigrant population dropped by 1 million from its peak in 2007 to 10.8 million in 2009. But this will prove to be no more than a blip in the broad historical trend.


Considering the capacity of prices to shape people's choices, it is rather surprising that governments do not use them more often to steer the behavior of the governed. For instance, public-health campaigns might be a nice way to educate people about the risks of certain behaviors, such as smoking and drug abuse. But they are nowhere near as effective as prices when it comes to making people stop. Four decades after President Richard Nixon launched his "War on Drugs," drug abuse remains stubbornly popular. Between 1988 and 2009, the share of twelfth graders who admitted having done drugs in the last month increased from 16 to 23 percent. The share of teens who had smoked a cigarette in the same period fell from 28 to 20 percent.

This is a paradox. Though it is illegal for minors to purchase cigarettes, adults can readily get them. Drugs, by contrast, are illegal for everybody. Being caught with even a smidgen of cocaine in the state of Illinois can lead to one to three years in jail. Yet the difference is less paradoxical considering how the price of these vices has evolved. A battery of city, state, and federal taxes has roughly doubled the price of a pack of cigarettes since 1990, to about $5.20 on average. On July 1, 2010, the minimum price of a pack of cigarettes in New York City rose $1.60 to $10.80--of which $7.50 are taxes. By contrast, the retail price of a gram of cocaine on New York's streets cost $101 in 2007, about 27 percent less than in 1991. The price of heroin collapsed 41 percent to $320 a gram. Falling prices refltect the failure of policies to stop the supply of illegal drugs into the American market. But it also suggests a potential solution: at a sufficiently high price, teens would cut back. Compared with a failed drug war, legalizing, regulating, and taxing drugs might be the more effective route to curtail abuse.

Consider what we could achieve by tinkering with the price of gas. In the United States, cheap gas allowed people to move to bigger homes farther from work, school, and shopping. Just in the last decade or so, Americans' median commute to work rose from nine to eleven miles. The typical home grew from 1,750 to 1,807 square feet.

Europe rarely sprawled so. Its cities were constrained by history. They were built hundreds of years ago, when moving long distances was costly in time and effort. During the French Revolution, it took King Louis XVI twenty-one hours to flee 150 miles from Paris to Varennes. Modern sprawl was contained by gas taxes. Europeans pay two to three times as much as Americans for gas. That's partly why Houston in Texas has roughly the same population as the German port city of Hamburg but 2,500 fewer people per square mile.

For all the differences between the configuration of American and Western European cities, they are both strikingly different from development in the Soviet bloc, where market prices played little or no role in allocating land. Seventy years of communist allocation by bureaucratic fiat produced an urban scene pockmarked by old factories decaying on prime locations downtown while residential housing becomes denser farther from the center, through rings of Stalin-era, Khrushchev-era, and Brezhnev-era apartments.

A study by World Bank urban planning and housing finance experts after the collapse of the Soviet Union found that 31.5 percent of the built-up area in Moscow was occupied by industries, compared to 6 percent in Seoul and 5 percent in Hong Kong and Paris. In Paris, where people pay a premium price to live near downtown's amenities, the population density peaks some three kilometers from the center of town. In Moscow it peaked fifteen kilometers away.

Prices make sense of many disparate dynamics over the span of human history. Advances in transportation technology that reduced the cost of distance enabled the first great wave of economic globalization in the nineteenth century. The obesity pandemic was bound to happen when bodies designed to survive in an environment of scarce food by gorging themselves whenever they could found themselves awash in cheap and abundant calories brought by modern technology.

There are few better ways to understand the power of prices than to visit the places where they are not allowed to do their jobs. During a trip to Santiago de Cuba a few years ago I was driven around town by a bedraggled woman who, to my surprise, turned out to be a pediatrician at the city's main hospital. She had a witchlike quality--knotty and thin as a reed. Two of her front teeth were missing. She told me they fell out during a bout of malnutrition that swept through the island after the Soviet collapse in 1991 cut off Cuba's economic lifeline. The doctor owned a beat-up Lada. She was very smart. But otherwise her life seemed no different from that of any street urchin, living off the black market at the limit of endurance, peddling a ride or a box of cigars that fell off the back of a truck. She charged ten dollars for driving me around town all day. I couldn't help wondering how the collective decisions that shaped Cuba's possibilities at the time could make it so a pediatrician found this to be a worthwhile deal.


As with anything powerful, prices must be handled with care. Tinkering can produce unintended consequences. Concerned about low birthrates, in May 2004 the Australian government announced it would pay a "baby bonus" of three thousand Australian dollars to children born after July 1. The response was immediate. Expectant mothers near their due dates delayed planned cesarean sections and did anything in their power to hold their babies back. Births declined throughout June. And on July 1, Australia experienced more births than on any single date in the previous three decades.

Taxing families based on the number of windows in their homes must have seemed like a good idea when King William III introduced the window tax in England in 1696. Homes with up to ten windows paid two shillings. Properties with ten to twenty windows paid four shillings and those with more than twenty paid eight.

The tax was logical. Windows being easy to count, it was easy to levy. It was fairish: richer people were likely to have bigger houses with more windows, and thus pay more. And it got around people's intense hostility to an income tax. But the king didn't count on people's reaction. They blocked up windows in their homes in order to pay less. Today, blocked-out windows in Edinburgh are known as Pitt's Pictures, after William Pitt, who brought the tax to Scotland in 1784.

Seemingly modest actions can reverberate throughout society by altering, if only slightly, people's evaluations of costs and benefits. Such is the case of the 55 mph speed limit imposed across the United States in 1974 as a way to conserve gasoline in the wake of the first oil crisis, when Arab countries proclaimed an oil embargo in response to the United States' decision to resupply the Israeli military after the Yom Kippur War.

Conserving gas was a reasonable objective at the time. The strategy, however, was fatally flawed because it ignored the value of drivers' time. At the new legal limit, a seventy-mile trip would take about one hour and sixteen minutes--sixteen minutes more than at 70 mph. Considering that the wages of production workers in 1974 averaged around $4.30 an hour, those sixteen minutes to commute to and from work would cost a typical worker about $1.15.

In 1974, a gallon of leaded gas cost fifty-three cents. To break even, an average driver would need to save 2.17 gallons per trip. For this to happen would have required a big leap in fuel economy: a 22 percent increase in the fuel efficiency of a Chevy Suburban, for example, or a doubling of the fuel efficiency of a Honda Civic. Of course, lowering the speed limit did not achieve this improvement. So drivers ignored the new rule.

In 1984, drivers on interstate highways in New York were found to flout the 55 mph limit 83 percent of the time. They dished out $50 to $300 to buy CB radios to warn one another about cops nearby. Between 1966 and 1973 there were about 800,000 CB licenses issued by the Federal Communications Commission. By 1977 there were 12.25 million CBs on the road. Cops then reacted to the reaction, installing radar. Drivers reacted with radar detectors. Some states passed laws making radar detectors illegal. I doubt the United States Congress expected this chain of events when it passed the 1974 Emergency Highway Energy Conservation Act. By 1987 it increased the maximum limit to 65 mph and in 1995 it repealed the federal speed limit altogether.


Archimedes of Syracuse, the great mathematician from the third century BC, said that to move the earth he needed only a lever, a fulcrum, and a firm place to stand. Moving people requires a price. The marriage rate has fallen not because of changing fashions but because of its rising price, measured in terms of the sacrifice it entails. We have fewer children because they are costlier. Economists suggest that the Catholic Church has been losing adherents not because people stopped believing in God but because membership became too cheap compared with evangelical Christianity, which demands a bigger investment in its churches from members and thus inspire more loyalty.

The Price of Everything will take us to the store, where we will discover how price tags operate on our psychology, subtly inviting us to buy. But we will endeavor beyond quotidian commercial transactions, to investigate how other prices affect the way people live. In many cultures, husbands pay for multiple brides to amass as many as possible and increase their reproductive success. In others, parents abort female fetuses to avoid the cost they would incur to marry off their daughters. Many behaviors that we ascribe to "cultural change" arise, in fact, as we adapt our budgets to changing prices. We will ponder why employers pay for workers rather than enslave them. We will discuss why it is that as we become progressively richer, the commodity that increases most in value is our scarce free time. And we will find that despite clinging to the notion that life is priceless, we often put a rather low price on our lives.

And we will find that prices can steer us the wrong way too. We still don't know how much we will have to pay, as a civilization, for the economic distortions caused by the upward spiral in the price of American homes between 2000 and 2006. A century down the road, the cheap gasoline of the 1900s might come to be seen as the cause of incalculable environmental damage. Prices can be dangerous too.

Copyright 2010 Eduardo Porter

Eduardo Porter has been on the staff of The New York Times since January 2004, covering economics, and joined the paper's editorial board in July 2007. He began his journalism career in 1990 as a financial reporter for Notimex, the Mexican news agency, in Mexico City. He was a correspondent in Tokyo (1991-1992) and in London (1992-1996). In 1996, Porter was appointed editor of the Brazilian edition of América Economía, a business and economics magazine based in Sao Paulo. In 2000, he became senior special writer for The Wall Street Journal, based in Los Angeles, covering the Hispanic population in the United States. He is a graduate of the Universidad Nacional Autónoma de México. He has an MSc in quantum fields and fundamental forces from Imperial College of Science, Technology and Medicine in London.


  1. Something’s gone bad with the whole layout. (And green on black? No, no, no!) If you wanna know how I managed to comment, send a buck to AAAAAAAAAAAARRRRrrrrrrrrrgggghhhhhhhhhh…….

  2. Worst posting EVER. Seems like you really don’t want people to read it given the horrible colors and the inability to comment.

  3. I hope the formatting is bad on this because it keeps loading to some external? site (but boing boing?) that has neon glowy lime green letters on a black background. This makes my eyes crazy with after-image feedback so that I cannot even see the letters. Then you have to trick the page to get *here* to leave a message. Hopefully this is a bug and not someone’s idea of “cool TRON design” ugh.

  4. I ended up copying the text into MS Word to be able to read it without going nuts. As for “tricking” the page… I eventually worked out that I should just click the stop button on the browser – though you have to get the timing just right.

    Anyway, onto article-relevant content: Were cities in Europe really constrained by history? King Louis XVI took a long time to flee, but the man was prone to indecision and depression. Hardly a worthy subject for comparison.

    I’m more inclined to suspect (though, as always, I’m happy to be proven incorrect) that although cost played a part, space would have been at least an equal factor. According to Wikipedia, you could fit the whole of Europe’s area into the present-day United States, and there are far more countries within Europe (and more territories still in 1791). While it’s true to state that the size of the American territory in the same year was only about a third of the present-day landmass, it’s still bigger than any single country within the Old World. And the Americans were forging across their territory with (probably) similar technology.

    The people didn’t have the room to manouevre that the Americans did, relative to the population at the time.

    1. The arguments seem to pretend to a coherence around price being the center of the human universe, but it’s really as you say, Astragali, space is the major factor in nations and their economies. I would stress that time is the major factor affecting the decisions of individuals: The speed of immigrating one’s children, the time spent driving to work, hourly wages or weekly salaries.

      Space and time. That is to say, opportunity. Saying these scenarios are about “price” seems an attempt to disguise that.

      Porter mentioned Nixon’s War on Drugs, but doesn’t seem to have thought Nixon’s price controls worth mentioning as relevant in his intro. They failed–failed infamously, except that no one in major media brings them up any more.

      Price is usually arbitrary but discoverable. That’s what a marketplace is. Opportunity is usually available but either disguised–or withheld. That’s what vested interests do.

      Withheld opportunities are what’s plaguing the world economy today.

      1. It really is just a lens that we can use to examine economics. No single lens can provide a truly informed perspective. Take this for what it is– a fascinating perspective on global econ.

  5. I feel sad that any previous error in formatting stopped people from reading this article. It is REALLY REALLY INTERESTING! The page looks fine to me and the points it raises about how COST drives BEHAVIOUR is really food for thought!
    Thank you for posting this!!

  6. “The price of garbage provides a guide to civilization. ”

    I like indexing civilization to an economic factor, much more reliable than the old fashioned morality things like how you treat others or stuff like that – and much less likely to make us look barbaric or feel uncomfortable about ourselves.

  7. Economics was one course I had to take in college that I found I really enjoyed because I found it applies to everything with opportunity costs. Thinking I’d hate it going in turned into loving it getting out of the course.

    On the original green text/ black background page: I personally didn’t have any trouble reading the green text on the black background, but I also was the kid who never cleaned his glasses growing up and could see fine through gunky glasses. So, together the interest in the subject and my high threshold for noise/distraction means you could have done it in blinking comic sans and I’d probably gotten through it – thats an idea for a future feature: readability of text. At what point is text so bad that it stops being text and is art at best or incomprehensible on any level at worst.

  8. The physical book can be bought for less than the price of the Kindle edition. It can then be sold when done reading it reducing the net cost of the physical edition even further. Of course, that requires clear cutting forests, mulching & bleaching paper, strip mining to make toxic inks and invading 3rd world countries for oil for shipping.

    So the artificially high price of the Kindle edition helps fund war, terrorism, destruction of the environment and all the murder that that entails.

    I hope you’re happy with the price of the Kindle edition and what the results of that choice.

  9. Combine this with ‘Predictably Irrational’ and you have some required reading for every human being living in the commercial world.

    I’ll be adding this to my order list!

  10. Mr. Porter has never heard the wolf cry to the blue horn moon or asked the grinning bobcat why he grins, I can tell.

    In the first place, it’s remarkable to me that the ‘price of everything’ is discussed as though it represents some amazing development in human history. That every thing>/> has a price, or if it doesn’t will, is absolutely true, however consider what needed to happen for that state of things to come about: in the 17th century, every thing did not have a price, it was possible for peasents to have a level of self-sufficiency through generating subsistence from land owned by no one, thus preserving a portion of their life for something other than earning and spending. Don’t get me wrong, I would never trade my PS2 for the life of a peasent, but it bears reflecting on that the ‘price of everything’ is contingent in the first place on the alienation of regular people from what they need to survive, meaning if one prefers to live another day, one must work some crap job, or more precisely, sell one’s time and labour-power to whoever is gracious enough to buy it.

    So, forgive me, Mr. Porter, your argument that all things have prices is correct, but I think you’re a bad person for making a virtue out of barbaric necessity. Not that I imagine you care.

    Additionally, despite this big book you’ve written about it, you don’t seem to know what a ‘price’ actually is, as demonstrated by your exploitation of a linguistic coincidence: that ‘cost’ or ‘price’ can mean both ‘amount of money needed to exchange for something’, when talking about a commodity and ‘consequence(s)’ when talking about an action. These are not the same thing. The most fundamental feature of price is that it sets things up as equivalents. It means one can compare apples and oranges, if one wants to: apples are €1.50 per kilo, say, and oranges are €2.00 per kilo. Apples are cheaper. One can compare space shuttles to aquaducts to cakes to unicycles. All of these are very different things, but because they have a price, they have a basis of equivalence: a unicycle is worth maybe 20 cakes. But when I make a decision, the consequences of either choice are not equivalent. If I choose between going on a date with an attractive woman or going skiing, I cannot say ‘Eight dates with an attractive woman are worth one ski holiday’. That’s absurd. The consequences of each choice are not only unpredictable but incomperable, because they lack the notion of equivalence.

    Additionally, if you think a poor Indian child rummaging through a rubbish tip for a bite to eat represents a choice, then, Mr. Porter, I don’t know what to say. You think she should have studied harder in school maybe? The contradiction stares you in the face and you ignore it. She goes to the rubbish tip because she has no other choice, just as none of us have a choice whether or not to sell our labour. Death or life is not a choice.

    Please allow me, however, to compliment you on your writing style. Let’s not mince words: it’s a very boring subject. And yet one seems to be able to read your work without too much bother. It’s written as though to be read by complete idiots and yet somehow that makes me feel flattered rather than patronised. All the more pity then, that your argument is wrong.

    1. I think I understand what you’re saying Scott, about comparing non-equivalent consequences of decisions being nonsensical, but I disagree. Everything we do involves resource allocation decisions (whether those resources are time, money, youth, physical labor, etc.). Allocating those resources is a transaction — even if no goods or services are involved — and can be associated with a price. The consequences of dating vs skiing are not as transparently comparable as apples and oranges, but we can design a metric that makes them comparable. Economics is human decision making, and humans can choose how to assign value.

      Skiing and dating are certainly different activities, but I can imagine benefits to each, and costs in time and money. I could define a weighting function. Use probability theory to assign values to uncertain payoffs and costs. I could arrive at final numbers. Would I have anticipated all consequences? Probably not. But I’m likely to do better in the decision making than if I hadn’t tried to assign a ‘price’ (in hours and dollars).

      Of course, who cares about my decision so ski or date? But pricing abstract decisions matters a great deal on a state/government level. How do you compare initiatives? How do you allocate limited government resources? How do you balance costs of legislation (be they direct costs in taxes, indirect economic impacts, or abstract limitations on freedoms) with benefits? You can assign a price.

      We have to be able to do this (how can you make responsible decisions without numbers?). It is unpleasant, though, because at some point you/the government has to be the hard-ass that says, “according to this mathematical formula we came up with, it is not a good use of resources to save your kid’s life”. Which governments and voters already do, to say nothing of doctors, insurance companies, and triage nurses. But most of us feel more comfortable not thinking about how we put prices on our neighbors’ lives, education, and health.

      1. Thank you, bkad, for your response, and it’s a gracious person indeed who is so curteous on the internet.

        I’m glad also that you appreciate my point about the barbarity of this world where life itself has a price and decisions are made every minute of every day as to whether someone will live or die based on their ability to generate wealth for someone else. I absolutely agree we all feel more comfortable not thinking about it, but it wasn’t me who brought it up, and I hope you share my conviction that this is not necessary and it is the task of humanity to discover how to abolish these conditions. At any rate, it is the ‘game’ I hate, not the ‘playa’.

        Even if you do not share this conviction, I think we agree that markets have pervaded our lives in advanced industrial societies (one can even say ‘post-industrial’ these days) to a scarcely credible extent. But I wonder, is it as total as you say? We are skimming the edges of a philosophical debate, which we will do well do avoid. You say:

        Skiing and dating are certainly different activities, but I can imagine benefits to each, and costs in time and money. I could define a weighting function. Use probability theory to assign values to uncertain payoffs and costs. I could arrive at final numbers. Would I have anticipated all consequences? Probably not. But I’m likely to do better in the decision making than if I hadn’t tried to assign a ‘price’ (in hours and dollars).

        I find this tautological. I would summarise your argument:’If one uses the conservation of dollars and hours as the criteria of one’s decisions (through various models) than one is likely to make decisions which conserve dollars and hours’. But I do not go on dates or go skiing in order to conserve hours and dollars, I go on dates and go skiing to have fun, which is irreducible to hours and dollars, or even particularly quantifiable.

        The condition of something entering the market and receiving the princely title ‘price’ is its commensurability with all the other things on the market. Virtually all items of consumption and utility are found only on the market. As a result, the business of going about life itself will tend to be mediated by the market. But I insist, being mediated by is not the same as reducible to!

        I would argue that one sets about life on a quest to experience pleasure, or at least, avoid pain. One learns very early on that money provides access to articles useful for this quest. But again, access to a thing is not identical to the thing itself, and that the thing itself is again separate from the enjoyment of it. Your theory is based on obscuring each of these distinctions, and it is the clarity of these distinctions which allows me to make decisions about how to enjoy life best.

        Well, that may seem overly philosophical, but you ask ‘how do we make responsible decisions without numbers?’ and you know, maybe I’m old fashioned, but there’s this body of knowledge about precisely the answer to this question: it’s called ‘ethics’.

        You bring up the usefullness of your theory for governments, but that is not relevant: what governments set out to do — govern, order, manage — is very different from what a person sets out to do — enjoy life.

        Anyway, we’ll have to meet again sometime, and see who’s won at life.

        1. “But I do not go on dates or go skiing in order to conserve hours and dollars, I go on dates and go skiing to have fun, which is irreducible to hours and dollars, or even particularly quantifiable.”

          You can’t assign a number to fun, but you do have a sense of which of two options will provide you with more fun. Moreover, you have a sense of how much money and time you are willing to spend in order to have that much fun. For $50 I can have a nice dinner, go to the movies, and have drinks with some friends for an evening. This costs $50 and ~6 hours. Or I can buy a new PS3 RPG for $50, and spend about 50 hours playing it. It cannot do both using the same dollars or hours. The price exists, even if it is hidden.

          1. AnthonyC,

            What fun you must be, running around with your TI-89 in hand, constantly making calculations. Do not be too proud of this technological model you’ve constructed; the ability to construct complex decision making models is insignificant next to the power of the mind to enjoy what it is not meant to and not enjoy what it is.

            Please understand what I argue price is: in order to have a price, something must be commensurable to all other things that have a price. In this sense, yes, 10 beers at a bar (at $5 each) are worth 1 video game (at $50). But one never knows how much one will enjoy those things. One can only say that the ‘price’, meaning approximately ‘how one feels about it later’, of one’s actions is hidden in the sense that it is unknowable until after the action. ‘Present mirth hath present laughter/ What’s to come is still unsure.’

            Consider cheese cake. You are at a coffee shop which sells cheese cake for $2 a slice. You buy a slice. It is delicious. You buy another. It is delicious. You buy another. It is still delicious. You buy another. It is still delicious but you vom. The last slice cost the same as the first and yet you do not enjoy it at all, which is also to say, from a certain point of view, $8 worth of cheese cake is less enjoyable than $6 worth. No matter how many people there are, there is always a point where more cheese cake is less enjoyable. This was sometime a paradox but now the argument gives it proof: price is a measure of something other than the enjoyability of the thing it describes or more relevant to the discussion, the use of a thing is qualitatively different from and incomparable to the price of a thing.

            Now, according to some thinkers, there is an exception to this, and these exceptions are more and more prevalent in the domain of cultural commodities. Often when buying cultural commodities, lacking any criteria for aesthetic appreciation (the enjoyment of culture), the purchaser will assume that the more expensive cultural commodity is the better. In this case, the price is actually performative of the enjoyability. It goes for classical concerts, fine wine, visual art &c. and it really is a remarkable phenomenon. Under those circumstances, there is a relationship between the price of something and its enjoyability, and your models apply, but as a society, we would tend to regard that sort of thing as really rather vulgar and uncouth.

    2. >> If I choose between going on a date with an attractive woman or going skiing, I cannot say ‘Eight dates with an attractive woman are worth one ski holiday’. That’s absurd.

      When you choose between the two, you put relative values on them. You price them. Presumably you’d rather have both, but that’s not the choice you are being offered.

      In this way, India chooses a society in which little girls work as rag pickers over one where they are ground up to become fertilizer. Presumably, they would prefer a society where neither happens, but they choose withing real world constraints of their resources.

      In the Western world we too have to chose between unpalatable choices given our constraints. We can either have (for example) lower drug use, or a low prison population. It’s not my personal pick, but through some complex mechanism, our society has priced these two options and picked one.

      Fortunately, as time passes those constraints change and societies have better and better options to pick from. We can all hope that the rag picker’s great granddaughter gets to choose between a ski vacation and an eight date hottie some day.

    3. Thank you, scottfree, for pointing out what needed to be pointed out.

      The reduction of the world to prices is not new. It’s affect is also not new; it makes people unhappy.

      This kind of thinking also leads to the presumption that price = value, a presumption which can be horribly wrong. This kind of thinking is what leads an investment banker to buy up a company like Mervyns, sell off all the stores and property which Mervyns had built up over the years to a created company, then lease Mervyns its own property at outrageous rates, sucking over 50 years of accrued value out of the company. 50 years worth of internal investment and capability and employees were sucked out in a matter of years – and I’m sure the investment bankers said they were creating value. The problem is, before them we had a functioning store with employees and capability and future potential for profits. After them, they had a one-time cash fix. Their business model is to use the cash to buy and clean out new companies. It’s sick thinking, and it’s bringing down our whole economy.

      Here’s a homework assignment for the author. Try reading The Gift It’s about the gift culture: it’s history, it’s separation from money culture, it’s connection with with art and interpersonal connection. There are things which can’t be bought, because if they are, it changes them. Try some non Wall Street thinking on for size and see what you think. Come join us in the real world.

      There is no appropriate price for your appreciation of a leaf, or of your wife’s laughter. The fact that you can find a way to experimentally put a price on those things doesn’t make that price any more valid than any number of other forced cost/benefit decisions your brain can make, and for the most part, the cost/benefit approach is not how we make the vast majority of our decisions. Reading up on neural network theory might help there.

      Or perhaps I’ve somehow gotten this all wrong from your article. Apologies if so.

    4. Absolutely brilliant, well said … I couldn’t help this gnawing feeling inside when I first heard the title of the book and then subsequently hearing Mr. Porter on NPR and Bloomberg presenting his work … my gut asked: what do you mean by ‘The Price of Everything’? Oh, I see, it’s because the millions of little girls and boys digging through Larry’s toxic waste don’t have enough greenbacks to pay someone else to do it for them … slow me, guess I skipped Econ 101 :))

  11. “The five cents I could get for an empty PET bottle at the supermarket’s recycling kiosk are not worth the trouble of redeeming it.”

    Odd stance this. And one taken by many people. We, in the Western world, have a serious problem when we are prepared to pay a price for something that has significant consequences. All well and good to pontificate on a blog regarding ‘price’ and ‘cost’ but, based upon this ‘throwaway’ comment in the article I would have to assume that any intent or attempt at hipster greenness and integrity through commenting upon this subject flies out of the window. Similarly, the PET bottle. Rather sad approach to how many live their lives.

    1. The alternative to bringing my bottles to the grocery store is not littering, or sending them to the landfill. It’s using my town’s curbside recycling program. They still get recycled, I just don’t get my nickels. Oh, except that lots of recyclables get collected curbside which don’t have deposits I can redeem them for at the grocery store.

  12. Thanks for fixing the formatting. I was coming back to post a complaint (I know — who gives a shit?) but saw that it had been remedied.

    So may I humbly suggest that you bump this item back to the top to give folks a second bite at this tasty apple?

    Thanks again for the fix!

  13. Just from the introduction, I’m wondering whether the book is worth reading at all if you’ve other pop economics books.

    Putting aside the issue as to whether price=value, or whether the price is an accurate reflection of the societal cost (something progressive economists have been arguing for), this book seems to just put the proposition that (1) everything has a price/cost, and (2) people make cost/benefit analysis when making choices.

    Isn’t that the whole point of the Freakonomics books? What’s new here?

  14. Imagine my surprise when the subject I was going to bring up in the thread was actually semi-addressed in the exerpt itself. I’ve for a long time been intrigued by the relative price stability of a) cocaine and b) weed. The price of both has remained the same since I was a teenager. Not that I was doing coke as a 13 year old, but I knew a lot of people then who did. A gram is still $100. And a 1/4 ounce of dope is still (approx) 30 bucks (with caveats, of course: sometimes it’s crappy weed, sometimes it’s awesome. And obviously, one can expect to pay hundreds of dollars per quarter for SOME stuff). But I’m still flummoxed over the fact that these prices have been more or less stable during my entire adult lifetime (I’m 45 now). 30 years of price stability? WHAT GIVES???

    Not that I’m complaining :)

  15. AH, the price is one thing, but the bill is something else again. Something of a reckoning, actually…a matter for a poet.

    And so, for your consideration, a poem:

    The Reckoning by Robert William Service

    It’s fine to have a blow-out in a fancy restaurant,
    With terrapin and canvas-back and all the wine you want;
    To enjoy the flowers and music, watch the pretty women pass,
    Smoke a choice cigar, and sip the wealthy water in your glass.
    It’s bully in a high-toned joint to eat and drink your fill,
    But it’s quite another matter when you

    Pay the bill.

    It’s great to go out every night on fun or pleasure bent;
    To wear your glad rags always and to never save a cent;
    To drift along regardless, have a good time every trip;
    To hit the high spots sometimes, and to let your chances slip;
    To know you’re acting foolish, yet to go on fooling still,
    Till Nature calls a show-down, and you

    Pay the bill.

    Time has got a little bill — get wise while yet you may,
    For the debit side’s increasing in a most alarming way;
    The things you had no right to do, the things you should have done,
    They’re all put down; it’s up to you to pay for every one.
    So eat, drink and be merry, have a good time if you will,
    But God help you when the time comes, and you

    Foot the bill.

  16. Mr. Porter must be one powerful cynic, having written an entire book titled after an Oliver Wilde quote–

    “The cynic knows the price of everything and the value of nothing.”

  17. Capitalism: where everything is permitted, but nothing is free.
    Communism: where everything is free, but nothing is permitted.

Comments are closed.