the economics of underserved audiences (part 2): “Who Benefits Whom” and Preference Minorities

Joel Waldfogel’s – The Tyranny of the Market published by Harvard University Press (2007)

It’s been some time since I posted the first part of this series of posts exploring the issues surrounding how I view my role as an educator and musician.  In this, part 2 of the series, I’m going to make some use of some of the research and theoretical insights by Joel Waldfogel that he published as a short book titled, “The Tyranny of the Market: Why You Can’t Always Get What You Want.”

The gist of the book is summarized well enough at its page at the Harvard University Press website (linked above):

Economists have long counseled reliance on markets rather than on government to decide a wide range of questions, in part because allocation through voting can give rise to a “tyranny of the majority.” Markets, by contrast, are believed to make products available to suit any individual, regardless of what others want. But the argument is not generally correct. In markets, you can’t always get what you want. This book explores why this is so and its consequences for consumers with atypical preferences.

When fixed costs are substantial, markets provide only products desired by large concentrations of people. As a result, people are better off in their capacity as consumers when more fellow consumers share their product preferences. Small groups of consumers with less prevalent tastes, such as blacks, Hispanics, people with rare diseases, and people living in remote areas, find less satisfaction in markets. In some cases, an actual tyranny of the majority occurs in product markets. A single product can suit one group or another. If one group is larger, the product is targeted to the larger group, making them better off and others worse off.

The book illustrates these phenomena with evidence from a variety of industries such as restaurants, air travel, pharmaceuticals, and the media, including radio broadcasting, newspapers, television, bookstores, libraries, and the Internet.

Waldfogel’s basic thesis is that given high fixed costs, those who are members of a preference minority are far less likely to get products they desire.  Through his research he demonstrates that as the population of a particular preference group increases, the members of that group are more likely to be satisfied by the range of choices available to them and vice versa if the population of a particular preference group decreases.

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