The Edamame Economy and the New Goods Problem  

New(ish) goods!

Photo by Tim Boyle/Getty Images

David Brooks has a column out today where he’s at his observational best, riffing on the rise of boutique hotels and the paradoxical trend toward “mass boutique” chains. It’s all a bit frivolous, he writes, but these hotels:

… do exemplify a shift in the consumer market, which you might call the shift from the lima bean economy to the edamame economy. It’s easy to forget how much more boring the marketplace was a few decades ago—more boring cuisine, more boring restaurants, more boring hotels.

The edamame economy, though, isn’t just a joke. It’s a very real issue for macroeconomic statistics. It’s a version of the “new goods problem” in inflation statistics. You track inflation by looking at what something (men’s socks, chicken thighs) cost in December and comparing that to what it cost earlier. But sometimes people invent new stuff. We most often hear about this in terms of high tech gadgets—it’s not just that Blu-ray players are cheaper than they were five years ago, they didn’t exist at all 15 years ago.

Brooks’ point about edamame is that this extends well beyond the sphere of what’s typically called technology or innovation. Pho is not a new invention, but Vietnamese beef noodle soups are much more broadly available in the United States today than they were 15 years ago. And that’s broadly true throughout the service economy. There are more kinds of things you can buy in most places than used to be the case, thanks to a combination of idea diffusion and e-commerce. Now of course if you’re talking about a retired person getting by on the average $1,269 monthly Social Security benefit, the range of restaurants you can eat out at is less important than whether you can afford to go out at all. Conversations about “CPI bias” often obscure the fact that the Consumer Price Index is used for a range of different purposes and the extent (or even existence) of bias is highly sensitive to what the actual issue is. The point is really just that economic change is a good deal more complicated than a single summary statistic.