Financial Daily from THE HINDU group of publications
Sunday, Jul 24, 2005
Financial Daily from THE HINDU group of publications Sunday, Jul 24, 2005 |
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Investment World
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Economics Columns - Simple Economics Potter economics? B. Venkatesh
J. K. ROWLING'S book "Harry Potter and the Half-blood prince" seems to defy the basic principles of economics! Why? You may have read reports about how teenagers stood in front of bookshops just to buy a copy on the day of the book release. Now, we all know that demand for a product is a function of its supply. By that logic, standing in a queue to buy a book seems to suggest that supply was lower than demand. But that cannot be the argument here. Bloomsbury, the publisher of the Harry Potter series, has printed enough copies to satiate the demand. And then there are pirated versions at possibly a third of the original price. Of course, the smart ones know that first editions are valuable. If you had bought the first edition of the Potter book for, say, Rs 800, chances are that might you get a higher price should you auction it on e-bay. But surely, expecting teenagers to stand in a queue so that they can auction the first editions at a higher price at a later date is too tedious an argument. Perhaps, we can use Thornstein Veblen's argument to explain the Potter mania. In his book "The theory of the leisure class" published in 1899, this American economist argued that individuals consume goods to display their social status and wealth. How can this explain Potter mania? It may be a symbol of respect for teenagers to be among the first to read the Potter books. That way, they can display their involvement with the most happening experience in the society. It is, perhaps, the same factor that drives fans to buy movie tickets at a hefty premium to watch the first show. Does that make economic sense to you?
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