As we look at the world around us ahead of this year's Thanksgiving holiday, we find a lot of changes compared to last year. As of Monday, November 19, 2007, the average price of a gallon of regular gasoline in the U.S. costs $0.86 more than it did in 2006, which will affect an increased number of people travelling for the holiday this year. More importantly for the family feasts at the center of the holiday, the typical turkey in the U.S. will cost $0.12 per pound more than it did last year.
So what's behind these price increases in the things Americans seek to consume during the annual Thanksgiving holiday?
Not long ago, Environmental Economics' John Whitehead Tim Haab (as it turns out - we can never tell them apart!) spelled out the economic theory behind the changes in supply and demand that take place that result in changes in the prices of the things people buy, specifically focusing upon identifying the primary driver behind the increase in the price of gasoline, which turned out to be, well, drivers!
We thought that was cool, so much so that we thought it would be fun to distill that entire discussion into a tool that we could use to determine what's behind the increase in the price of turkeys in 2007, which we've created below. To use the tool, you'll need to answer just two questions:
- How has the price of the item changed over a given period of time?
- How has the available quantity of the item changed over that same time period?
We already know the answer to the first question, so we'll turn to the American Farm Bureau Federation economist Jim Sartwelle for the answer to the second question:
"The inventory of birds in cold storage is relatively small this year."
Which indicates to us that the quantity of turkeys has decreased compared to last year.
We've set the default responses for these questions in our tool below, so now, all that stands between you and the primary, but as yet hidden reason that turkeys cost more in 2007 than they did in 2006 is a click of the "Calculate" button!
So, there you have it! The price of turkeys has gone up in 2007 primarily because the supply of turkeys is down from where it was last year! (For an entertaining discussion of the economic dominoes that have fallen to produce this result, see Tim Haab's running series of posts on the topic, also at Environmental Economics!)
Best of all, you can use the tool above to find out what's behind the change in price of any item at any time, not just for gas or for turkeys, or just on Thanksgiving! And that makes for a lot more interesting Thanksgiving dinner discussion than talking about tryptophan. Again.
Labels: thanksgiving, turkey
Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:
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