A short article by James Surowiecki in the New Yorker notes how the price of lobster has fallen in the supermarkets but not in restaurants. The reasons he gives for this are quite interesting.

The climate has lately been good for lobsters in the US. So much so that some fishermen are going broke. The price of Maine lobster off the boat has fallen from $6 per pound in 2005 to around $2.20. Yet restaurant prices haven’t changed.

The article cites three reasons for this:

1. Expense is linked to enjoyment. We enjoy some things more when we think they are more expensive. Blind tastings of wine often find the cheaper bottles to be superior to premium wines. Yet when the prices are already known, even experienced tasters rate the wines in line with their prices.
2. Suspicion. Restaurant owners fear customers will think there is something wrong with the lobster they serve if it is noticeably cheaper than the price at other restaurants.
3. Comparison shopping. Studies have shown that where there are two products, one cheap the other mid range, customers will buy similar amounts of each. But if a third product is introduced which sold at a premium to the other two, customers will have a much greater tendency to buy the mid range product. Lobster occupies the ‘premium’ role on the restaurant menu.

Another interesting point made in the article is that lobster was originally considered to be poor people’s food. It was abundant and cheap. But as the lobsters were over fished they became expensive and the high prices changed people’s perceptions of them and so they became a luxury.

Personally, I try to avoid shellfish. But I had some a little while ago when the restaurant held a promotion. I found I enjoyed the company I was with more than the lobster meat.

What other luxury items do you think are luxuries only because of their price? Let me know in the comments.