> This may be your misunderstanding. The 'equation', for lack of a better word, is supply and demand, not just supply. Market conundrums can normally be solved by change in either supply or demand.
> A shortage occurs when a situation prevents price from rising, thereby warding off a change in demand. This is where an alternative selection mechanism — examples including a lottery, needs-based, or first-come, first-served — will typically step in to solve the dispute given the constraints in supply.
Raising the price so high that demand disappears is not a way to alleviate a shortage. If 95% of the houses in the world disappeared overnight, that would cause an extreme housing shortage, even if it's a perfect free market where anyone with X amount of money can still get a house.
You can always find a point on the demand curve that fits any supply situation. That doesn't stop there from being shortages. "Shortage" is not a niche word that only applies when supply and demand has been prevented.
> Less information than what? As you can see, when we removed shortage in the above examples, the reader was left with the exact same information. No information was lost at all. Shortage added absolutely nothing.
This is like saying "If I give a three minute explanation, and also a 20 second summary, the summary added absolutely nothing."
The advantage of the summary is that you can use it in lieu of the full explanation and it's a lot quicker.
> Raising the price so high that demand disappears is not a way to alleviate a shortage.
Then this must mean that there is a shortage of jets? I most definitely am not paying that high price – you presumably aren't paying that high price – the price of jets is so high that demand has disappeared from almost all people. I'd certainly buy one if they were significantly cheaper. Who wouldn't? But at the prevailing price, no way.
Does that differ from a $1 plastic trinket? I'd take a plastic trinket if it were free, but for $1 my demand is lost. I'd rather spend $1 on something else. I guess that means the plastic trinket is also in shortage since I have decided not to buy due to the price tag being too high? And not just me. The average run for a plastic trinket is around 25,000 units, so we know demand disappears by the vast majority of people at the high price of $1.
What's not in shortage? Even literal garbage will see an increase in demand if the price goes low (negative) enough.
> If 95% of the houses in the world disappeared overnight, that would cause an extreme housing shortage
Agreed. The nature of lag would ensure that price could not react in a timely manner to such an extreme event. Eventually correction could take place, but a shortage would ensue for a period of time.
> "Shortage" is not a niche word that only applies when supply and demand has been prevented.
What on earth does "supply and demand being prevented" mean? You cannot prevent supply and demand. It's not a thing that can be manipulated, it's just the observation of humans (and sometimes animals!) interacting with each other in the face of scarcity.
> "If I give a three minute explanation, and also a 20 second summary, the summary added absolutely nothing."
Well, then, let's reverse it: "Housing, there is a shortage" and "Housing, there is not a shortage". What did I learn from those statements? We will assume I didn't learn that price is able to rise in one case and not in the other. But there is nothing else I can possibly learn from that. It doesn't say anything.
If I read you correctly, I am of the understanding you intend it to mean that housing costs more/less than some "reasonable" number range you've randomly come up with, but as you have not communicated the range held in your mind, it leaves me with nothing. The only way that can work is for you tell me the range, but once you've done that, "shortage" doesn't add anything. Why would you include it?
If you can't learn any information from "shortage" then that's your problem. Most people can.
> Agreed. The nature of lag would ensure that price could not react in a timely manner to such an extreme event. Eventually correction could take place, but a shortage would ensue for a period of time.
Even after the prices correct, it would still be a shortage.
Digging out of that pit of missing units would take orders of magnitude longer than the price adjustments.
> jets, trinkets
You could easily get a trinket at trivial cost if you wanted it, so it's not a shortage.
For jets, we need to consider the utility of them and the production cost. You can't get one, but having one is not important to you, and the price is not being inflated by supply problems. So it's not a shortage (For individuals, at least. Airlines or countries can experience a jet shortage.)
> What on earth does "supply and demand being prevented" mean? You cannot prevent supply and demand. It's not a thing that can be manipulated, it's just the observation of humans (and sometimes animals!) interacting with each other in the face of scarcity.
The stuff you said earlier about government intervention, lotteries, etc.
> If you can't learn any information from "shortage" then that's your problem.
I can learn information when used as people usually use the term. The dictionary definition conveying how most people use the word is quite clear. It is just your usage that doesn't seem to communicate anything. Although I keep asking what it is you are trying to say in an effort to figure out what your non-standard usage is attempting to communicate, but perhaps it is not explainable. I do wonder if your usage's intent is as a scare word? Do you hope we are frightened when you say "shortage"?
> You could easily get a trinket at trivial cost if you wanted it
Yeah, okay, it's trivial compared to my means, but exceedingly expensive to other people. $1 is a substantial chunk of the typical yearly income in Niger, for example. They flat out can't afford a $1 trinket. That is a shortage by what you're telling us, surely?
If not, I take it that shortage only applies when people are as well off or more well off than you? But how can we know how well off you are? And what makes you the benchmark? Why not, say, Jeff Bezos?
> but having one is not important to you
Says who? I would say it is quite important to me. My quality of life is severely diminished not being able to afford a jet. If I want to fly, I have to, <shudder>, rent space on a flight with other flightmates to get the cost down to something manageable, and even then it's still a substantial cost.
If that's not important, then buying a home isn't important either. You can equally find a group of housemates and rent a house. Everyone who wants a roof over their head can have one, even if it requires some compromise on comfort. Owning a home is not a necessity. In fact, historically, owning a home was quite unusual. Only in last ~75 years has it become 'normal'.
> The stuff you said earlier about government intervention, lotteries, etc.
I don't follow. How does that relate to "preventing" supply and demand? That is supply and demand.
I'm not seeing how "a state or situation in which something needed cannot be obtained in sufficient amounts" favors your description over mine.
And yes both "needed" and "sufficient" are partly subjective. Most concepts are.
> Why not, say, Jeff Bezos?
Is this a real question, in good faith?
Having a fuzzy line is different from "yolo, no lines, nothing subjective can decide" as you seem to be suggesting.
Bezos is not a reasonable benchmark.
> In fact, historically, owning a home was quite unusual.
It affects rent too. Keeping a roof is getting unreasonably difficult.
> I don't follow. How does that relate to "preventing" supply and demand? That is supply and demand.
Fixing the price or using a lottery to allocate "is" supply and demand? What? I can't understand your logic at all now, this isn't worth continuing if we're drifting this far apart.
> I'm not seeing how [...] favors your description over mine.
The difference is that I am speaking economically, you are speaking socially. We already covered this quite some time ago. Both are linguistically valid, but the gap is in that it's not clear what meaningful information is obtained by taking the social perspective?
The best we've been able to come up with is that it comes from an emotional perspective, where "There is a shortage of housing" ≅ "I feel housing is too expensive." I can gain information about how you feel in that, but why would I want to know how you feel in the first place? It doesn't really tell me anything. I mean, why not say "Housing, it makes me feel tired"? Because nobody cares if you're tired, of course. And they equally don't care if you think it is too expensive.
> It affects rent too. Keeping a roof is getting unreasonably difficult.
Pack in the people as tight as a plane and you'll be fine. It "is not important", so they say...
> Fixing the price or using a lottery to allocate "is" supply and demand?
Broadly speaking, yes. When observing supply and demand, things like price fixing are all part of the conditions that make up the (in the case of price fixing) demand you are able to observe. Again, supply and demand isn't a thing that exists out in the world, it's observance of the world. As said earlier, you can even observe supply and demand play out in animal populations. It is not a human invention. It's a fundamental property of the universe, so to speak.
I'm not trying to use personal emotions, I'm trying to invoke broad consensus for words like "sufficient", and reference both history and cost (as independent from price) to help detect shortages.
Needs are a part of economics even when they're socially defined/refined.
> supply and demand
It feels like you're not attempting to understand what I'm saying, though.
The concept you were talking about with "a situation prevents price from rising, thereby warding off a change in demand". That is the type of situation I am trying to refer to.
> I'm trying to invoke broad consensus and reference to both history and cost (as independent from price).
Perhaps I'm not interpreting you correctly, but trying to compare houses in history to houses today is like trying to compare modern jetliners to the Wright Flyer. Houses have changed dramatically.
For one, houses have more than doubled in size over the last 100 years. And while I don't have size data for the previous 100 years, to my eye the typical home from 200 years ago was probably half the size again. Those early homes were tiny – just one room – with an average of 7 children living in them! The bigger the house, the higher the cost.
Secondly, we have much higher building standards today. Build a home to 1800 standards and you could build it for a song. But you'll be in violation of all kinds of codes. Those standards are not free. Not even close. Even trying to build a home to a more normal size is a code violation in many jurisdictions.
> It feels like you're not attempting to understand what I'm saying, though
I'm just waiting for you to say it. When I asked you point blank what "shortage" added to a sentence, all I got back was "I have no more detail to give to my argument".
> That is the type of situation I am trying to refer to.
Got it. Yes, if price is able to rise then demand can adjust as the market needs. That is a normally functioning market. When price is not able to rise then something has broken down. That unique situation is deserving of unique identification – to have a word to describe it. What word do you suggest?
A normally functioning market doesn't mean you can get what you want, of course. "Normally functioning" is not in reference to quality of life, or ensuring that you have a roof over your head, or whatever, it just refers to behaviour matching a certain economic model.
That makes it easier to have a shortage, but doesn't disqualify there being one. It's not like I can buy a 200 year old house at a discount proportional to the difference in build methods.
> I'm just waiting for you to say it. When I asked you point blank what "shortage" added to a sentence, all I got back was "I have no more detail to give to my argument".
"Shortage" is the summary. It provides no value if you already explained the entire situation. It provides plenty of value if you're starting from a blank slate and want to describe the situation concisely.
> Got it. Yes, if price is able to rise then demand can adjust as the market needs. That is a normally functioning market. When price is not able to rise then something has broken down. That unique situation is deserving of unique identification – to have a word to describe it. What word do you suggest?
I'm not sure, but definitely not "shortage". Shortages are about the supply at a "reasonable" price, whether or not the market is functioning normally. You can have that kind of market error without a shortage, and you can have a shortage without that kind of market error.
Yes, economically it summarizes a situation where price is unable to rise. Your regional milage may vary, but I've seen a few shortages around town lately. Here are a couple of them:
1. Price gouging laws prevented the price of toilet paper from rising when supply stocks were low in 2020. Instead of them selling for thousands of dollars per roll (or whatever it would have taken to satisfy the market), people were running the store as fast as they could to cheaply buy up everything they could get their hands on, soon leaving the shelves bare. Eventually stores had to place limitations on how many rolls individuals could buy. Here, a price-based mechanism failed to manage resource allocation, so other mechanisms (first-come, first-served initially, followed by rationing) came into effect.
2. Laws intending to maintain fairness in the medical system prevent medical practitioners accepting any amount of money from patients (i.e. the price cannot rise above zero) as to not allow those with means to offer more money to pull a doctor away from surgery to look at their common cold symptoms. As a price-based mechanism is not available, we resort to a needs-based system. If you show up with cold-like symptoms and someone else shows up with a heart attack, and there is only one doctor available, you have to give up on seeing the doctor no matter how much money you have to spend. Sorry.
That's what shortages look like, from the economic point of view.
But what does "shortage" summarize socially? I respect that you have a social take, but you've still not explained it. You hand-wavingly say it summarizes supply at a "reasonable" price, yet fail to offer the mathematical formula for determining what is reasonable. No doubt because it cannot be described mathematically as it is just arbitrary judgement.
But if you accept that it is, indeed, just arbitrary judgment then how can it be summarized further? I can't read your mind. You have to explicitly tell me what judgment you have made. Once we have established what you have judged, why are you providing a secondary summary? All the information I need to know about your judgment has already been communicated.
"Shortage" works economically to summarize a situation as the conditions that define it are external. But socially, it seems the conditions are internal and thus needs to be communicated in full anyway, so there is nothing left to summarize. This so-called summary doesn't say anything.
> A shortage occurs when a situation prevents price from rising, thereby warding off a change in demand. This is where an alternative selection mechanism — examples including a lottery, needs-based, or first-come, first-served — will typically step in to solve the dispute given the constraints in supply.
Raising the price so high that demand disappears is not a way to alleviate a shortage. If 95% of the houses in the world disappeared overnight, that would cause an extreme housing shortage, even if it's a perfect free market where anyone with X amount of money can still get a house.
You can always find a point on the demand curve that fits any supply situation. That doesn't stop there from being shortages. "Shortage" is not a niche word that only applies when supply and demand has been prevented.
> Less information than what? As you can see, when we removed shortage in the above examples, the reader was left with the exact same information. No information was lost at all. Shortage added absolutely nothing.
This is like saying "If I give a three minute explanation, and also a 20 second summary, the summary added absolutely nothing."
The advantage of the summary is that you can use it in lieu of the full explanation and it's a lot quicker.