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Jewish World Review Feb. 8, 1999 /22 Shevat, 5759

Thomas Sowell

Thomas Sowell Economic fallacies in the media: Part II

(JWR) --- (http://www.jewishworldreview.com) Economic fallacies are so widespread in the media that even advertisements are based on them. Post Office ads, for example, constantly claim that its two-day Priority Mail service is cheaper than the two-day delivery services of Federal Express or UPS.

The only problem with this claim is that almost all Federal Express or UPS two-day packages actually get delivered in two days, while little more than one-third of the long-distance Priority Mail arrives in two days. In other words, these ads are comparing apples and oranges.

Many things that seem to be the same are in fact quite different -- and have different prices as a result. For example, there have been many media stories "exposing" the fact that passengers going to the same places in the same airplane may pay radically different prices.

One obvious reason is that passengers in different parts of the plane have seats with different levels of comfort and receive different levels of service. But, even when passengers are seated side by side in the same part of the plane, what they bought when they purchased their tickets might be quite different.

One passenger, who had to be at a particular place at a particular time, bought a guaranteed reservation, while another passenger going on a pleasure trip could afford a standby ticket that would provide a seat if there happened to be one available when the plane was ready to take off. Again, these are apples and oranges, and comparing their prices as if they were the same thing is just spreading confusion.

Some camera buffs feel ripped off when they see a camera that they bought at a camera store selling for less at a discount house. But, again, physical similarity can conceal major differences is what was actually bought.

A customer who bought a camera at a discount house in California was disappointed when his local camera store was less than enthusiastic about helping him with problems he was having understanding how to use it. "Let him go back to the discount house for advice," one camera store man said to another after the customer had left.

One reason discount houses can sell cameras for less is that the people who sell them may not know very much about them -- perhaps no more than the order number used to get them from the storeroom. It costs more to hire knowledgeable people and that cost is passed on in the price.

Even though any given piece of photographic equipment may cost more at a professional camera store than at a discount, you can actually save money shopping there if you buy just what you need for your purposes.

A given manufacturer may sell different models of his camera for $200, $300, or $400. If you get advice from a knowledgeable photographic expert, you may find that the $300 camera is just right for what you want to do. But, at the discount house, you may end up buying the $400 model -- which is still not a bargain, even if you get it for $380 at a discount.

What the customer is really buying is a combination of a physical product and associated knowledge. If you have a lot of photographic expertise yourself, then you can buy what you want at a discount house and rely on your own knowledge. Or you may buy a camera or other product that is so simple that you don't need a lot of knowledge to figure it out.

Whatever the choice, the point here is that there are reasons for different prices for what appear to be the same thing. People in the media often overlook that fact and start to emote without knowing what they are talking about.

With quality, as with price, things that look the same are not always the same in reality. A given manufacturer may sell his product under his own label at one price and under another label at another price. Sometimes the manufacturer provides services for the product selling under his own brand name but not for the product sold by some store under the store's brand name.

Manufacturers of the very expensive Linhof camera go cherry-picking among the lenses produced by various lens makers, buying only the ones that meet Linhof's higher standards. When the customer is charged more for the "same" type and brand of lens when it is on a Linhof camera, there is a reason.

There are reasons for all sorts of apparent economic anomalies. But the media are seldom as interested in those reasons as they are in sensationalism.

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02/2/99: Warning: Good news
01/29/99: What is at stake?
01/26/99:Moral bankruptcy in the schools
01/22/99: Who is going to convict Santa Claus?
01/19/99: Seeing through the spin
01/13/99: A trial is a trial is a trial
01/11/99:Trials and tribulations
01/08/99: Rays of hope
01/04/99: Random thoughts
12/31/98: The President versus the presidency
12/29/98: The time is now!
12/23/98: World-class hypocrisy
12/21/98: The spreading corruption
12/17/98: Politically "contrite"
12/16/98: Polls and partisanship
12/14/98: The "non-profit" halo
12/11/98: Corruption and confusion
12/03/98: The health care "crisis"
11/30/98: Knowing what you are talking about
11/23/98: The impeachment legacy
11/23/98: Random thoughts
11/19/98: Tales out of bureaucracies
11/16/98: Scholarships based on scholarship
11/12/98: Forward march
11/09/98: Moral outrage
11/05/98: Will the Republicans ever learn?
11/02/98: A voter's duty
10/30/98: The poverty pimp's poem
10/29/98: Random thoughts on the election
10/27/98: "Partisan" and "unfair"
10/23/98: Ed-u-kai-tchun
10/21/98: McGwire, Maris and the Babe
10/16/98: Lightweight Boxer
10/14/98: A strange word
10/09/98: Impeachment standards
10/08/98: Alternatives to seriousness
10/07/98: Heredity, environment and talk
10/02/98: A much-needed guide
10/01/98: Starr's real crime
9/24/98: Costs and power
9/18/98: Are we sheep?
9/16/98: Judicial review
9/15/98: Hillary Rodham Crook?
9/14/98: Taking stock
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8/17/98: A childish letter
8/11/98: Hiding behind a woman
8/07/98: A flying walrus in Washington?
8/03/98: "Affordability" strikes again
7/31/98: Random thoughts
7/27/98: Faith and mountains
7/24/98: Clinton in Wonderland
7/20/98: Where is black 'leadership' leading?
7/16/98: Do 'minorities' really have it that bad?
7/14/98: Race dialogue: same old stuff
7/10/98: Honest history
7/09/98: Dumb is dangerous
7/02/98: Gun-safety starts with
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6/29/98: Are educators above the law?
6/26/98: Random Thoughts
6/24/98: An angry letter
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6/19/98:Dumbing down anti-trust
6/15/98: A changing of the guard?
6/11/98: Presidential privileges
6/8/98: Fast computers and slow antitrust
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5/29/98: The insulation of the Left
5/25/98: Missing the point in the media
5/22/98: The lessons of Indonesia
5/20/98: Smart but silent
5/18/98: Israel, Clinton and character
5/14/98: Monica Lewinsky's choices
5/11/98: Random thoughts
5/7/98: Media obstruction of justice
5/4/98: Dangerous "safety"
5/1/98: Abolish Adolescence!
4/30/98: The naked truth
4/22/98: Playing fair and square
4/19/98: Bad teachers"
4/15/98: "Clinton in Africa "
4/13/98: "Bundling and unbundling "
4/9/98: "Rising or falling Starr "
4/6/98: "Was Clinton ‘vindicated'? "
3/26/98: "Diasters -- natural and political"
3/24/98: "A pattern of behavior"
3/22/98: Innocent explanations
3/19/98: Kathleen Willey and Anita Hill
3/17/98: Search and destroy
3/12/98: Media Circus versus Justice
3/6/98: Vindication
3/3/98: Cheap Shot Time
2/26/98: The Wrong Filter
2/24/98: Trial by Media
2/20/98: Dancing Around the Realities
2/19/98: A "Do Something" War?
2/12/98: Julian Simon, combatant in a 200-year war
2/6/98: A rush to rhetoric

©1998, Creators Syndicate, Inc.