Friday, August 21, 2009

News and Notes

On a short little getaway to Seattle, so a quick post today on a couple of little news tidbits.

First, The Oregonian reports that the OLCC is considering doing away with its prohibition on happy hours advertisements. Ads are an interesting thing in economics. Some types, like ones that say "this dish soap really cleans well" seem to be purely a waste of money - they all say it and the consumer is no better informed for having seen the ad. So why do they do it? (Scour this blog to find the answer). Another type of ad we call informational and their utility to consumers is obvious: they inform consumers about particular product features, prices, hours of operation, etc. This reduces search costs which is good for competition and usually results in more sales and lower prices - both good for consumer welfare. So in this case, were alcohol like any other good, this would be unequivocally good for consumers. To the extent that happy hours ads promote excessive drinking and this excess has a social cost, one could argue that the net effect is ambiguous. For my part, I think it is good. Happy hours are no mystery (bars and restaurants can advertise in the establishment all they want) so allowing outside advertisements I don't think is going to increase consumption much, but it will allow consumers to make more informed choices when it comes to happy hour, and this is a good thing.

Second, via the Beervana blog, comes news that craft beer sales continue to rise despite the recession, albeit as a slightly lower pace than a year ago. As I have mentioned a number of times before, it was not at all clear if macro-brews were seen by consumers as a close substitute to craft beer, so that when times got tight, coupled with rising prices, consumers would flee craft beer en masse. The answer appears to be nope. That is very good news indeed.

Enjoy the weekend.

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