Recession provides boost to vitamin demand

A cyclical hat tip to Chris Freeman for spotting this excellent article in the New York Times which looks at the rising demand for vitamin pills and other health products as recession bites. “Sales of vitamins and nutritional supplements, which have grown consistently for years, have surged in recent months, rising as the stock market has fallen. People are clearly cutting back on many items, from bread and milk to designer jeans and flat-screen televisions, but they are stocking up on pills that they think can spare them expensive doctor visits.”

Lots of interesting economics here:

1/ The power of emotion in driving demand - are sales of fish oil tablets linked to how many times people read stories about the growing incidence of early dementia?

2/ Utility and price - is the utility that people say they get from nutritional tablets linked to the price they pay? Some behavioural economists have pointed to studies about the impact on perceived benefit that consumers report when they are told the price of a product - including placebos!

3/ Sales of vitamins are up but sales of pain-killers are down - what might this say about consumer preferences?

4/ Cross price elasticity of demand - the price of health care goes up - causing some consumers to look for supplements to reduce the risk of needing health treatments later on in life