Markets in Everything and Incentives Matter

Markets in Everything

I was intrigued on Memorial Day weekend by a show on the Discovery and Science channels called Oddities.  The half-hour show features the owners, Mike Zohn and Evan Michelson, of an “antiques and oddities” shop in New York City called Obscura as they haggle with buyers and sellers of some mighty strange stuff.  Mighty strange.  I thought bloggers were strange.

Belly lint art.  Rotting teeth.  Articulated animal skeletons.  Diseased brain cross sections.  You name it.

A number of times sellers walked into the store with some strange thing and I thought, they’ll never want that.  But then the owners offer pretty good sums of money for it.

If they don’t know what it is, they call in experts who usually “are really into this stuff” to get a better opinion on the going market rate for such oddities.

It’s interesting to watch.  I appreciate getting the insight into the haggling process.  For example, a sideshow performer worked Zohn and Michelson down on the price of a bed-of-nails sandwich (performer lies on his back on one bed-of-nails and then places another bed-of-nails, tips to nips, on his chest for people to stand on) from an old Coney Island sideshow by laying on the bed of nails and letting  Zohn and Michelson stand on top of him while he was in the sandwich.

Generally the sellers seem to be folks who have somehow acquired something strange from an inheritance, garage sale or something like that, and don’t really know what it is.  The buyers generally seem to be artists, performers and very specific collectors.

Incentives matter

One artist, who specializes in art from body functions and parts, was looking for something new.  Zohn pulled a large glass jar filled with rotting teeth from a top shelf.  He explained that dentists donated teeth that they pulled from patients to dental schools so dentists-in-training could practice filling cavities.  Somehow they came across this jar.

The artist loved it.  She and I both thought they would be happy to get rid of the whole jar for a price.  While hugging the jar she asked, “How much for this?”

Apparently there is a healthy market for rotting teeth.  “We sell those by the tooth.  You can pick out five or six teeth for $100 or so.”

This made me think back to Russell Roberts’ book the Price of Everything.  After an earthquake, one big box retailer raised prices on flashlights.  Some consumers saw this as price gouging.

But, the other side of the story is the higher prices caused better resource allocation.

Stores that didn’t raise prices were sold out of flashlights soon after the earthquake.  The value of flashlights had increased, but prices hadn’t, so the first few customers bought out the entire stock whether they really needed them or not, leaving no flashlights for customers that came in later.  The flashlights were allocated on a first-come, first-serve basis with all the spoils going to those who got to the store first.  People who came in later and really needed a flashlight could feel good that the store didn’t raise prices on flashlights, but they still wouldn’t be able to to buy a flashlight.

When the big box retailer raised prices, it caused people to more carefully consider their purchase, resulting in some people who may have already had flashlights, to pass on the flashlight purchase leaving more flashlights on the shelves for those who truly needed them.

Apparently, the same principle was at work on the rotting teeth.