Tyler Cowen’s newish book, Create Your Own Economy: TPTPIADW*, has a big heart. It’s a passionate appeal for tolerance and understanding of autistics, a group he sees as unjustly stigmatized. He advocates for the autistic cognitive style in the name of societal and personal self-interest. He’s also simply offering a scientifically superior understanding autism than popular perception provides, but ultimately his aim seems to be more compassion and appreciation for a group our culture treats poorly. For a guy who could have written a book about literally anything, from the folk art of 18th century Peruvian chinchilla farmers to dynamic stochastic general equilibrium real business cycle models, I think his choice to fight this worthy fight is praiseworthy in itself…. Then again, perhaps the book was nothing more than an elaborate attempt to defend atonal music.
That said, Tyler Cowen has clearly never worked in a grocery store. In CYOE he argues that milk is placed in the back of the grocery store to “spur impulse purchases of candy and soda as you walk to get your dairy”, but to anyone** who has worked in a grocery store, this is clearly not the most plausible hypothesis. Having spent some teenage years working in a grocery store -albeit not in the dairy department, but in the nearby meat and seafood department-, I think I can debunk what I am going to term “the behavioral milk fallacy”.
The central facts are that milk is heavy, has a high turnover, and requires cold storage. Thus any intra-store transportation of the milk requires a lot of MPMPSS (milk pound meters per second-squared) of energy, which translates into more labor hours. This means that displaying milk far from where it is stored, or storing it far from where it is loaded, is expensive.
This answers the first part of the question: why you will rarely see milk on the interior of the grocery store, but rather on an exterior wall. This is done because it allows the rear of the display case have an adjoined a storage room. From this room milk can be loaded from cold storage directly into the display case from behind. Milk is therefore stocked while minimizing it’s expensive transportation costs.
In addition, the high cost of intra-store milk transportation explains the second part of the question: why, of all the exterior walls, milk is usually stored on the one in the rear of the store. This is not to force customers to walk past other food and lure them into impulse buys, but because the back of the store is where milk is unloaded from delivery trucks. It would simply be much more expensive to store milk on any exterior wall other than the one closest to where it is delivered.
In short, it is all about technology and transportation costs, not behavioral economics.
*For someone who has praised books for forgoing subtitles, this is a mouthful.
**I say anyone, but I mean anyone except the bakery workers, who quite frankly have no clue whats going on, am I right meat and seafood people?
5 comments
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Friday ~ December 11th, 2009 at 2:25 pm
Doug
So, if we want to hold down our impulse buying we should enter by the loading dock and check out there, too.
Saturday ~ December 12th, 2009 at 5:12 am
uprof
Interesting post. However, I wonder why you think Tyler Cowen would have anything interesting to say about DSGE modeling, an area rather orthogonal to what his work has focused on.
Sunday ~ December 13th, 2009 at 12:29 am
Rob
Is there a reason we have to believe this is an either/or scenario? It seems plausible to think it’s a combination of the psychology and simple operating cost that factors into the decision about where to place the milk in the store.
I’m also stuck because many grocery stores place soft drinks (Pepsi, juice, bottled water, etc.) on an isle in the middle of the store. Technically, these have the same MPMPSS as milk (they’re all liquid, after all). True, soft drinks don’t require refrigeration, but theoretically they require the same amount of labor hours as if milk were to be placed in the same location.
Sunday ~ December 13th, 2009 at 10:59 am
Adam Ozimek
Doug, that’s hilarious.
uprof, you’re right DSGE modeling is orthogonal to his work, but Tyler has written a book on real business cycle theory. I don’t think he would literally right that book, I was looking for a topic he could write about that would have the maximum contrast with the folk art. I should have considered that a bit more though, so point taken.
Rob, the first difference between soda and milk logistics is the refrigeration, as you point out. The second is that there are dozens of kinds of soda, which means it requires a lot more shelf space than milk, thus the restocking needs to be done less often. The turnover on large milk containers is also probably higher. These add up to higher MPMPSS.
Friday ~ January 8th, 2010 at 12:04 pm
Jonathan
Also, the MPMPSS costs aren’t borne by the stores. Soda is stocked by vendors.