Elasticity of Desire

First Thoughts
When I was a kid, maybe 9 or 10, I would buy a pack of candy for about P30.00, take it home, and sell them for P20.00 each to my younger brother. I used to wonder why he always bought them – even though he knew how much the whole pack cost (on other grocery trips he’d buy his own pack and still buy my pack at crazy prices). The few times he didn’t buy them was when he didn’t have any money, and even on those occasions, he was ready to borrow from his brother Shylock (my earliest experience of the world of money lending).
Candy Cane
As I got older, I realized, it was not so much the cost that affected his decision, as much as the value he placed on candy. To my 7 – 8 year old brother, money didn’t mean anything, but the sweetness of sugar did. So it didn’t matter how much money it cost him, because in the end he got what he wanted.
Elastic and Inelastic
Fast-forward to my university days studying Economics. We’re talking about the price elasticity of demand.
Note: In economics, the price elasticity of demand is an elasticity that measures the nature and degree of the relationship between changes in quantity demanded of a good and changes in its price.
So the idea here is, when goods are very elastic, small changes in price affect the quantity demanded greatly. Example, when the price of X goes up, the demand for X goes down since less people can afford it or are willing to spend so much for it. Good are considered inelastic when the quantity demanded does not change much with the price.
To Joshua, my younger brother, the relationship between candy and it’s cost was inelastic. Changes in the cost did not change his demand for candy.
The Secret to Happiness?
One thing I never understood when I was younger, was that no matter how much I cheated my brother on the price, and no matter how much money I made at his expense, he never seemed to care. He was happy with his candy.
Looking back I wonder, had my brother discovered the secret to happiness? And, like him, have I found something that makes the cost, no matter how much it gets, seem negligible?
Desire is inelastic. So what do I desire?

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David Bonifacio

David Bonifacio Entrepreneur, social worker, writer, artist, CEO of Bridge, CEO of Elevation Partners, Managing Director of New Leaf Ventures. #db

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