Update: Here is one from the archives that matches the recent pod. With an update at the end.
Sometimes being an economist makes life very simple (some might say overly simplistic) but I am amused by the frantic talk about the release of the Westvleteren 12 in the US. I'll riff off of Jeff at Beervana:
The cost is dear ($85 for six), but it goes to the monks at Sint Sixtus as a part of their capital fundraising effort to build a new roof. So you could think of it as a donation in which the monks give you a token for your support. I would strongly urge you to consider that when weighing the question of "worth." (You might also compare it against the price of a plane ticket to Brussels.)Fortunately, the question of worth is something long ago settled by economists. Worth is a function of supply and demand. There is nothing intrinsic to gold that makes it worth more except the fact that is is malleable, shiny and rate. So demand is high because of its good attributes and supply is scarce making it an expensive little item. Water is absolutely vital to life but not very scarce and so we buy it very cheaply and so on...
So is Westvleteren 12 worth $85 for six? Well that is for you to decide, for some it will not be and for others it will. This will be a function of how much enjoyment you'll get from drinking it, how much you cherish the opportunity to try it and your ability to pay for it (among other things). Whether the market thinks it is worth it depends on whether there are enough people who think so relative to the amount for sale. I suspect the answer will be a resounding 'yes.'
This is also apropos to the discussion in the previous podcast, is there a craft beer bubble. If it is the market and the market alone that establishes the market value of a good. In this sense if the market price of something seems absurdly high it is odd to call it is bubble.
But here is a thought question: Do you value something simply because of its scarcity? Would you, for example, be willing to pay extra for a bottle of beer simply to be able to say you have tried it? I think that for a number of consumers the answer is yes and this inflates the price? But is this any less of a reason to play for a beer than the actual quality of the beer inside? To an economist the answer is no. It doesn't matter. We are agnostic about where preferences come from. Which is why I say sometimes being an economist makes things simple - we tend to look at the world without any judgement, we just try and explain the phenomena we see - for better or worse.