Wednesday, May 7, 2008

More about M&Ms


In an earlier post, I wrote about the growth in variety of M&Ms as an indication of the importance of the consumer in a global marketplace. It might be worth following up on this idea a bit more.

When you buy a bag of Almond M&Ms, for instance, you are making a decision that your dollar is less desirable to you than that candy you happen to be purchasing. Similarly, the grocer would prefer your dollar to yet another bag of chocolate covered nuts.

This is in part an illustration of how value works. Rather than being something intrinsic to a product on the marketplace, it instead arises from the process of buyers and sellers reaching mutually beneficial agreements to trade something they desire less for something they desire more.

A product will only succeed if people like you and me decide that it is worth trading some of our limited funds for it. And how much any product is worth is in part dependent on what I and others are willing to sacrifice out of our wallets.

But these decisions are now taking place in a much larger context than simply at your local grocer's. What you can buy at Kroger or Speedway with that one dollar depends in part on transactions taking place elsewhere in your town, but also in New York, Tokyo, and all around the world. There is a tremendous interconnectedness to any exchange in our current economy.

Once you understand that you are impacted by the choices of others, you can begin to recognize that your choices similarly have repercussions that extend beyond yourself. You are relaying local, personal information back to that global economy. And, you are doing so in a far more important way than merely stating an opinion or a preference – you are putting your money where your mouth is.

In tomorrow's post, I will discuss how such revealed preferences can be seen as a form of voting. If it isn't clear how SRI fits in to this yet, hopefully it will be soon.

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