<story><title>The Importance of Price Signals</title><url>https://www.lynalden.com/price-signals/</url></story><parent_chain><item><author>jbay808</author><text>Price signals are an important part of ensuring that resources go where they&amp;#x27;re needed, but this also sort of assumes that everyone has an equal capacity to pay.&lt;p&gt;There&amp;#x27;s an extent to which, yes, in a gas shortage I&amp;#x27;ll pay 4x to drive my wife to the hospital but not to drive my kids to the pool, so the gas goes where it&amp;#x27;s needed.&lt;p&gt;But if I&amp;#x27;m very poor, I can&amp;#x27;t pay 4x even if my wife is in labour, and if I&amp;#x27;m very rich, I&amp;#x27;ll pay whatever to drive my kids to the pool because I don&amp;#x27;t even notice gas prices.</text></item></parent_chain><comment><author>ComputerGuru</author><text>It&amp;#x27;s not a perfect system, but it generally works. Yes, some people will be too poor to afford the gas to get the hospital at 4x the price. But some people are already too poor to afford the gas at 1x the price - and it similarly sucks.&lt;p&gt;The price going up means that &lt;i&gt;there is&lt;/i&gt; gas for someone that can afford to pay 4x to take their wife to the hospital. If it didn&amp;#x27;t go up, the gas would still be hoarded &lt;i&gt;only moreso&lt;/i&gt; and there wouldn&amp;#x27;t be gas for you to take your wife to the hospital at &lt;i&gt;any&lt;/i&gt; price.</text></comment>
<story><title>The Importance of Price Signals</title><url>https://www.lynalden.com/price-signals/</url></story><parent_chain><item><author>jbay808</author><text>Price signals are an important part of ensuring that resources go where they&amp;#x27;re needed, but this also sort of assumes that everyone has an equal capacity to pay.&lt;p&gt;There&amp;#x27;s an extent to which, yes, in a gas shortage I&amp;#x27;ll pay 4x to drive my wife to the hospital but not to drive my kids to the pool, so the gas goes where it&amp;#x27;s needed.&lt;p&gt;But if I&amp;#x27;m very poor, I can&amp;#x27;t pay 4x even if my wife is in labour, and if I&amp;#x27;m very rich, I&amp;#x27;ll pay whatever to drive my kids to the pool because I don&amp;#x27;t even notice gas prices.</text></item></parent_chain><comment><author>mr_toad</author><text>&amp;gt; Price signals are an important part of ensuring that resources go where they&amp;#x27;re needed, but this also sort of assumes that everyone has an equal capacity to pay.&lt;p&gt;Technically, neither of those things are true.  An efficient market only ensures that resources aren’t wasted - that they won’t be allocated in ways that are &lt;i&gt;worse for everyone&lt;/i&gt;.  There are still (infinitely) many efficient outcomes where some people could be better off at the expense of others.&lt;p&gt;Defining ‘need’, especially when it comes to trade offs between individuals is an extremely fraught and unsolved (and demonstrably unsolvable) problem in economics.</text></comment>