Diamonds VS. Water

[The_Q]

You guys are starting to annoy me with this. The questions are fine but "Evian is the nastiest bottled water of them all" has not place in the CT forums, let alone this thread (especially with the lack of evidence).

Why am I posting this? Because econ fascinates me. If I hadn't stumbled upon it one day I wouldn't be enjoying myself as much as I am. I also want more people to know more about the wonderful world of economics. Therefore, I will now start a weekly econ rant.

Ok, let's start off by pointing out that bottled water is a new phenomenon. Why is it that it's so expensive? Well, the brand name, of course. Also because of the filtration it's put through. You've got to pay for the costs of producing it and it's bottle. You also have to pay so that the company and many suppliers it goes through make a decent profit. Then you also have region (Angel mentioned it.) and cost benefit. I'm sure we'll get into a pricing thing eventually.

I think I had more but I'm pretty sure I forgot it.

Q

[MonkeyFoo]

It's crazy how marketers can fool us with the "purified using state-of-the-art reverse osmosis filtration" labels. It's a clever marketing device to confuse people who don't know what it is into believing that it costs a lot of money to filter water using that method. In case you don't already know, reverse osmosis is where they pressurize the water on one side of a semi-permeable membrane. Smaller molecules come out in a higher concentration on the other side than they were in the pressurized side. The pressure counteracts the general flow of osmosis, toward the less pure side of the membrane. How much can it cost to pressurize that water? A cent per gallon per hour or so, maybe. Some day, maybe I can take advantage of an uninformed public and make a million. That'd be the day, but I'd just feel so cruel...

Summary: It is likely less expensive for bottled water companies to use new filter techniques, and it may not even be more effective than before. So, the price of water should go down despite the cost of installing the new purifiers, but instead the business is booming because marketers have applied the magic formula: "state-of-the-art" + technical-sounding science terms = must-have product that people assume costs bundles to produce.

That's not a summary, but whatever.

Another common example of the formula being applied is with nutrition: "Fortified with Omega-3 fatty acids." = Nutritious! New scientific breakthroughs! Must have!

Omega-3 just means that there is a triple (double?) bond instead of a pair of hydrogen atoms, 3 carbon "links" in from the end of the fatty acid. (omega=greek for z=end) Of course, I don't mean to say that Ω-3's aren't healthy, it's just that writing that on the label makes consumers think that they are getting something new and special, when really Ω-3's are in lots of foods, and they have been there since before the invention of the wheel.

[eyespewgreekfire]

Part of this whole bottled water thing is that, when you buy it at a restaurant or some place like that, they can get away with charging alot. People are willing to buy the water because there is no cheaper alternative. If you go to a big store like cotsco, bottled water costs considerably less than soda. The principles of supply and demand only apply when there is sufficient competition for prices to change. Add consumer misinformation, and there quite often being only one brand of bottled water to buy at a restaurant, and you get these very high profit margins. If people somehow were allowed to sell water in other people's restaurants, we would get a dramatic decrease in the price.

[alainbryden]

I loathe monopolies with a passion. Monopolies over products / information / power.

Your next rant should be about monopolies, oligopolies, and collusions.

After that, another interesting thing to talk about would be Veblin and Giffen goods. Those fascinated me.

Economics was the most interesting course I ever took, it's a shame I hated the teacher & can't take it in university.