Latest / Trumponomics / 53: Why Are Weddings So Expensive? Blame Econ 101.

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53: Why Are Weddings So Expensive? Blame Econ 101. · Trumponomics

• 0:00
  Speaker 1: Am I god, seventy dollars a person. I say, okay,
• 0:03
  Speaker 1: and where you know, can we have the ceremony or
• 0:07
  Speaker 1: you know. I said something about the ceremony and the
• 0:09
  Speaker 1: guy says, whoa, whoa, wait a minute, this is a
• 0:11
  Speaker 1: wedding and I said yes, He's like, oh, that is
• 0:14
  Speaker 1: a hundred person. Hi, and welcome back to Bloomberg Benchmark,
• 0:26
  Speaker 1: I show about the global economy. It's Thursday, September one,
• 0:29
  Speaker 1: and I'm Keith Smith, an editor for Bloomberg News here
• 0:31
  Speaker 1: in New York. Dan Scott couldn't join us this week,
• 0:34
  Speaker 1: so instead I'm joined by a guest host, Brian Shapada,
• 0:37
  Speaker 1: a government bonds reporter here in New York as well. Brian,
• 0:39
  Speaker 1: thanks for joining us. Thanks for having mckate So. Brian
• 0:42
  Speaker 1: is has been very busy for the past couple of
• 0:44
  Speaker 1: weeks because he is planning a wedding for a few
• 0:47
  Speaker 1: saturdays from now right in addition to the crazy times
• 0:49
  Speaker 1: and treasuries and watching the Fed. Yes, planning our wedding
• 0:52
  Speaker 1: for about three and a half weeks from now. And
• 0:54
  Speaker 1: how long have you been planning that wedding for a
• 0:56
  Speaker 1: little over a year and are you excited to see
• 0:58
  Speaker 1: the planning come to an I'm psyched it's all coming together.
• 1:01
  Speaker 1: It's going to also, of course excited to be married. Yes,
• 1:05
  Speaker 1: of course. Well, Brian is actually the perfect co host
• 1:08
  Speaker 1: for this week's episode, because all we're talking about our weddings.
• 1:12
  Speaker 1: I spoke to David Wood, he's the president of the
• 1:14
  Speaker 1: Association of Bridal Consultants, and according to him, sorry, Brian,
• 1:18
  Speaker 1: you're not that unique. Almost two and a half million
• 1:21
  Speaker 1: couples get married every single year in the United States,
• 1:24
  Speaker 1: and the average cost of those weddings is a little
• 1:26
  Speaker 1: shy of thirty thou dollars, and so he estimates that
• 1:29
  Speaker 1: it's actually an eighty billion dollar industry. And that's that's
• 1:32
  Speaker 1: just ho. But Brian, I'm sure after your plus of
• 1:35
  Speaker 1: planning your own wedding, you're well aware of how expensive
• 1:38
  Speaker 1: these celebrations are. This is no news to you. Yes,
• 1:41
  Speaker 1: I am acutely aware of that. Um. A lot of
• 1:43
  Speaker 1: the reasons why weddings are so expensive, though, can sort
• 1:46
  Speaker 1: of really be explained by some of the economic theory
• 1:49
  Speaker 1: that I and I'm sure a lot of the people
• 1:51
  Speaker 1: listening to this podcast learned in their freshman year economics classes.
• 1:55
  Speaker 1: You have a range of textbook terms, price discrimination, supplied
• 1:59
  Speaker 1: demand and elasticity of demand, price in sensitivity, all this stuff.
• 2:04
  Speaker 1: And before you go any further, um, you know, for
• 2:06
  Speaker 1: some of those listeners who maybe a year or ten
• 2:09
  Speaker 1: outside of their college econ classes, we have a really
• 2:12
  Speaker 1: special guest to help us figure this all out. Austin
• 2:14
  Speaker 1: Goolsby is here with us. He's a former White House
• 2:17
  Speaker 1: economic advisor to President Obama and since he's been a
• 2:21
  Speaker 1: strategic partner at thirty two Advisors, leading their economic intelligence practice.
• 2:26
  Speaker 1: He's talking to us from Chicago, where he's also an
• 2:28
  Speaker 1: economics professor at the University of Chicago's Booth School of Business. Austin,
• 2:32
  Speaker 1: thanks so much for joining us. Yeah, thank you for
• 2:34
  Speaker 1: having me, of course, And so in addition to all
• 2:36
  Speaker 1: of Austin's very impressive accolades, he he's also a happily
• 2:40
  Speaker 1: married man. Congratulations, thank you. So he was married and
• 2:46
  Speaker 1: I read a little bit about this, but tell us
• 2:48
  Speaker 1: kind of how you learn firsthand some price discrimination and
• 2:51
  Speaker 1: ECON things at work when you're planning your own wedding. Well,
• 2:56
  Speaker 1: as anybody who's gotten married knows, planning your wedding as
• 2:59
  Speaker 1: a nightmare, and it's only gotten you know, I've been
• 3:01
  Speaker 1: married a long time. It was a nightmare then, it's
• 3:03
  Speaker 1: only a bigger nightmare now. And uh so we were,
• 3:07
  Speaker 1: you know, we were a little older, so we both
• 3:11
  Speaker 1: had my wife and I both had jobs, so we
• 3:13
  Speaker 1: were doing it on our on our own. Here. We
• 3:16
  Speaker 1: we had moved to Chicago, my wife from New Jersey.
• 3:19
  Speaker 1: So we're having the wedding here, and you know, there's
• 3:22
  Speaker 1: a hundred things you gotta figure out, and the chairs
• 3:26
  Speaker 1: and then do you want the cups to be taller
• 3:28
  Speaker 1: and shorter and what? And this just a thousand decisions.
• 3:34
  Speaker 1: We finally find the place, and it's a place the
• 3:39
  Speaker 1: Chicago Cultural Centers downtown. It used to be the public Library.
• 3:42
  Speaker 1: Is a really nice uh it's a really nice big
• 3:45
  Speaker 1: room and it's got a dome and it and entile
• 3:49
  Speaker 1: in this but it's run by the city, so it's
• 3:53
  Speaker 1: not it's not integrated. It doesn't come with food or whatever.
• 3:57
  Speaker 1: You have to arranged to have somebody coming to bring
• 4:00
  Speaker 1: the food and bring the chairs and bring the table.
• 4:02
  Speaker 1: So I'm talking to the food people and I say,
• 4:06
  Speaker 1: you know, there's gonna be whatever people there, and we're
• 4:11
  Speaker 1: gonna have these tables. We're gonna have a band and
• 4:13
  Speaker 1: they're like, yes, yes, And so we come to the
• 4:15
  Speaker 1: end and I said, uh, I said, how much is
• 4:17
  Speaker 1: that gonna be? And I can't remember what the orders
• 4:22
  Speaker 1: of man to do are, but let's say they said,
• 4:24
  Speaker 1: you know, but that'll be seventy dollars a person. I'm like, god,
• 4:28
  Speaker 1: seventy dollars a person. I say, okay, and where you know,
• 4:32
  Speaker 1: can we have the ceremony or you know. I said
• 4:35
  Speaker 1: something about the ceremony and the guy says, whoa, whoa,
• 4:37
  Speaker 1: wait a minute, this is a wedding And I said yes.
• 4:40
  Speaker 1: He's like, oh, that is a hundred forty a person.
• 4:43
  Speaker 1: I was like, what why But it's the same We're
• 4:46
  Speaker 1: in the same place. And he and that, the caterer said,
• 4:52
  Speaker 1: And I love it that that he said it that way.
• 4:54
  Speaker 1: He was like, well, people are willing to pay a
• 4:58
  Speaker 1: lot more if it's a wedding. He was He wasn't
• 5:01
  Speaker 1: even making he wasn't even pretending that there was some
• 5:04
  Speaker 1: other thing like oh, it's more costly and we have
• 5:07
  Speaker 1: to make the food better. He basically just said, um,
• 5:11
  Speaker 1: exactly what Brian said. People's willingness to pay is higher.
• 5:15
  Speaker 1: They don't want it to be best up. You know whatever, Um,
• 5:19
  Speaker 1: we're gonna we can get away with charging morph it's
• 5:21
  Speaker 1: a wedding, while Austin, that sounds like a really clear
• 5:23
  Speaker 1: textbook case of price discrimination totally. I was teaching micro
• 5:28
  Speaker 1: at the time, and so I'm teaching price discrimination. But
• 5:31
  Speaker 1: you were teaching microeconomics at the time that you had
• 5:34
  Speaker 1: to deal with price discrimination. Yes, And in fact, the
• 5:39
  Speaker 1: I was I had to teach on the weekend, and
• 5:41
  Speaker 1: I had to teach the morning of my wedding. And
• 5:43
  Speaker 1: there's this photo of me standing there in a tuxedo
• 5:48
  Speaker 1: teaching class. I finished the class, I go down and
• 5:52
  Speaker 1: I and I get married. And the day of that
• 5:55
  Speaker 1: class was the monopoly markup formula for anybody who's who
• 6:00
  Speaker 1: was into micro which is basically the center of all
• 6:03
  Speaker 1: price discrimination, it says, here's the formula you use once
• 6:07
  Speaker 1: you know how sensitive the customer is, here's how you
• 6:10
  Speaker 1: jack up the price on them, which is virtually exactly
• 6:13
  Speaker 1: what happened to you. Yep, that's just incredible, I mean,
• 6:17
  Speaker 1: and I think that's what kind of Brian and I
• 6:19
  Speaker 1: what we were so attracted to you about this show
• 6:21
  Speaker 1: is because so many things that happen in weddings can
• 6:24
  Speaker 1: be explained by these I mean econ one oh one
• 6:28
  Speaker 1: series and principles like price discrimination like what you're talking about.
• 6:32
  Speaker 1: But I think what's really interesting in Brian like kind
• 6:34
  Speaker 1: of talking. I mean, it's not that way in all markets.
• 6:37
  Speaker 1: It's and weddings are unique, right, I think there's definitely
• 6:40
  Speaker 1: an information gap between the buyers and sellers of various uh,
• 6:44
  Speaker 1: you know, wedding needs. Um you've got like flowers for example.
• 6:48
  Speaker 1: I mean, the people who are selling you flowers certainly
• 6:51
  Speaker 1: know the prices and certainly know how available the supply
• 6:54
  Speaker 1: of flowers is. And you, as a seller, you're coming
• 6:57
  Speaker 1: in and you're buying you know, thousands of dollars worth
• 7:00
  Speaker 1: of flowers for the first time to populate your venue,
• 7:03
  Speaker 1: and you just don't know how much each costs. And
• 7:06
  Speaker 1: you can't go item by item and comparison shop in
• 7:10
  Speaker 1: any sort of timely manner in Austin. Help us out here,
• 7:13
  Speaker 1: help us bridge the gaps. So typically post Internet, we've
• 7:16
  Speaker 1: been dealing with mostly transparent markets. I'm thinking of like
• 7:19
  Speaker 1: the airlines and now you have Kayak, you have orbits.
• 7:22
  Speaker 1: I mean, and even for you know, market markets, so
• 7:24
  Speaker 1: I mean fixed income our own company, Bloomberg pretty much
• 7:28
  Speaker 1: created the transparency to that market, but it's not the
• 7:31
  Speaker 1: same way in weddings. Can you kind of help us
• 7:33
  Speaker 1: frame how important transparency is for efficient markets? Well, I
• 7:38
  Speaker 1: guess I would walk it through in a couple of ways.
• 7:41
  Speaker 1: With any brice discrimination, what information you have about the
• 7:46
  Speaker 1: customers and their willingness to pay is one huge element.
• 7:50
  Speaker 1: And the second is you have to have the ability
• 7:53
  Speaker 1: to prevent people from arbitraging or reselling the thing somewhere else.
• 7:59
  Speaker 1: So if I can go buy a million tickets to
• 8:05
  Speaker 1: the movies at the student discounted price and then just
• 8:08
  Speaker 1: turn around and resell them to non students, you you
• 8:11
  Speaker 1: won't be able to get away with price discrimination. I
• 8:14
  Speaker 1: think part of what happens with transparency online is you've
• 8:21
  Speaker 1: got multiple sellers. Once you get into transparent market, everybody's
• 8:28
  Speaker 1: trying to undercut each other to steal the business. If
• 8:32
  Speaker 1: you live so my parents live in Abilene, Texas, they're
• 8:35
  Speaker 1: retired there. There's only one carrier that flies to Abilene, Texas.
• 8:40
  Speaker 1: It's American Airlines. So you can have kayak, you can
• 8:45
  Speaker 1: have orbits, you can have whatever you want. The fact is,
• 8:48
  Speaker 1: when you're flying to Abilene, you're gonna pay because American
• 8:52
  Speaker 1: Airlines they can be transparent, but they can charge you
• 8:55
  Speaker 1: a lot because they know if you're flying to Abilene,
• 8:57
  Speaker 1: you're not really going to have that many substitutes. The
• 9:00
  Speaker 1: substitute is get off in Dallas and go rent a
• 9:04
  Speaker 1: car and drive for four hours to get to my parents.
• 9:07
  Speaker 1: That happens with weddings. Okay, so Brian's right. They know
• 9:11
  Speaker 1: more about the flowers, they know more about what's rare.
• 9:15
  Speaker 1: They've got a package deal of a whole bunch of things,
• 9:19
  Speaker 1: and you can't find one. You can't separate out how
• 9:23
  Speaker 1: much are the ballroom chairs versus the folding chairs versus
• 9:26
  Speaker 1: the whatever. I mean, I guess you can. But there's
• 9:28
  Speaker 1: just a hundred things that you would pay money to
• 9:32
  Speaker 1: just not have the decide. And then you get the third,
• 9:37
  Speaker 1: which is whether it's because of the scale, whether it's
• 9:41
  Speaker 1: because there's only a limited number of vendors who want
• 9:46
  Speaker 1: to deal with the pressure of a wedding. But it's
• 9:50
  Speaker 1: hard to get a lot of competition. It's hard to
• 9:53
  Speaker 1: induce an auction for wedding photographers. There is no kayak
• 10:00
  Speaker 1: available of I'm going to go on here and figure
• 10:02
  Speaker 1: out if somebody will somebody will bring in the alcohol
• 10:06
  Speaker 1: separate from the food at a lower price. They lists
• 10:10
  Speaker 1: largely don't do that. And I think the bigger question
• 10:13
  Speaker 1: is why isn't there more entry into what seems like
• 10:17
  Speaker 1: very profitable economics of these wedding businesses. How how are
• 10:22
  Speaker 1: they not How are people not falling over themselves trying
• 10:26
  Speaker 1: to drive the prices down to more competitive levels. And
• 10:29
  Speaker 1: I don't really know the answer to that. Well, maybe
• 10:31
  Speaker 1: I can help you out because I was speaking to
• 10:33
  Speaker 1: the president of kind of the Trade, the leading trade
• 10:37
  Speaker 1: organization for wedding vendors, David Wood, and he was telling
• 10:39
  Speaker 1: me that a lot of the reason why that happens
• 10:41
  Speaker 1: because the market is so fragmented and is so decidedly local. So,
• 10:46
  Speaker 1: for example, for flowers, you're probably going to be going
• 10:49
  Speaker 1: with a local forest because you can't ship in flowers
• 10:52
  Speaker 1: from somewhere else. Right, locality is very important, and same
• 10:55
  Speaker 1: with venues, right like their mother very nature, they can
• 10:58
  Speaker 1: only be in in certain places. He was saying that
• 11:01
  Speaker 1: because because of the kind of fragmented and highly local
• 11:06
  Speaker 1: nature of the market, it's hard to kind of even
• 11:09
  Speaker 1: though it is right for disruption and I am so
• 11:11
  Speaker 1: sorry I just use that word. But even though it is,
• 11:15
  Speaker 1: it hasn't been able to happen because of that. But
• 11:17
  Speaker 1: I think the other thing I mean, Brian, I mean,
• 11:19
  Speaker 1: tell me about Emily's preferences. How, I mean, how strong
• 11:23
  Speaker 1: have her preference has been, because that's the other aspect,
• 11:26
  Speaker 1: like if you want something, you want something and you
• 11:28
  Speaker 1: don't care how much it costs. So Brian, kind of
• 11:30
  Speaker 1: how what's your experience been with that, not just her preferences,
• 11:33
  Speaker 1: my preferences to it's your both day, not just heard it. Well,
• 11:37
  Speaker 1: I think it's really interesting. That's what Austin brings up
• 11:39
  Speaker 1: about sort of being able to resell movie tickets or
• 11:42
  Speaker 1: whether it's a kayak for wedding photographers. It's just it
• 11:45
  Speaker 1: just does not seem feasible because it's so intensely personal. Um,
• 11:51
  Speaker 1: you can't just go online and figure out how comfortable
• 11:55
  Speaker 1: you are in front of your photographer or your videographer.
• 11:57
  Speaker 1: You want to meet with them, you want to speak
• 11:59
  Speaker 1: with them, you want to hear their experiences, and you
• 12:01
  Speaker 1: want to feel like if they reflect what you want
• 12:04
  Speaker 1: to get out of the day. So I think it's
• 12:07
  Speaker 1: really tough and I'm I'm just wondering maybe Austin you
• 12:09
  Speaker 1: can talk a little bit about how how strong preferences
• 12:12
  Speaker 1: and having having that on on the bye side um affects, uh,
• 12:18
  Speaker 1: you know, price and insensitivity and how they're able to
• 12:21
  Speaker 1: market prices. From a ventor point of view, I think
• 12:24
  Speaker 1: it does matter, and sort of the one way to
• 12:28
  Speaker 1: think of it is there are some products like like sushi,
• 12:32
  Speaker 1: like brain surgery and others which just the fact that
• 12:37
  Speaker 1: somebody comes in and says, well, i'll give you the
• 12:39
  Speaker 1: same thing for half price does not induce a whole
• 12:42
  Speaker 1: bunch of demand to switch to them, you know, the
• 12:44
  Speaker 1: half price sushi, half price brain certain you're thinking like
• 12:48
  Speaker 1: whoa wait a minute, The quality makes a big difference.
• 12:51
  Speaker 1: And I do think some element of that that that's
• 12:55
  Speaker 1: correlated with what how strong are people's preferences, and that
• 13:00
  Speaker 1: has a strong bearing in weddings because if you if
• 13:04
  Speaker 1: you I don't know, I don't know your wife, you know,
• 13:07
  Speaker 1: but if you go to say, hey, honey, great, great news.
• 13:12
  Speaker 1: I've got a florist who says that they're willing to
• 13:15
  Speaker 1: do everything you said you wanted in flowers, but for
• 13:19
  Speaker 1: one third the price, and they're gonna bring the flowers
• 13:22
  Speaker 1: over here from West Virginia. You know we're gonna we're
• 13:24
  Speaker 1: gonna bring it in from a market that's a lot cheaper.
• 13:28
  Speaker 1: There are gonna be people who say, who say, in
• 13:31
  Speaker 1: your family, this may be remembered as the Brian incident,
• 13:35
  Speaker 1: and you may hear about that for the next forty years.
• 13:39
  Speaker 1: That that's a great way actually, And it's I think
• 13:41
  Speaker 1: it's interesting you bring up the medical thing too, and
• 13:43
  Speaker 1: like you know, half off isn't always great. I mean,
• 13:46
  Speaker 1: that's I mean, that's a huge thing. There's a lot.
• 13:48
  Speaker 1: I mean, there's an economic principle. It's the names escaping
• 13:50
  Speaker 1: me right now. But the idea is the more something costs,
• 13:53
  Speaker 1: the more you want it. What is the superior versus
• 13:55
  Speaker 1: inferior goods? Well, it sounds like signaling, you know, we
• 13:58
  Speaker 1: we've got a thing of of any any time when
• 14:02
  Speaker 1: there's not just uniform products, let's let's call it that way.
• 14:07
  Speaker 1: They're not just homogeneous. There are quality lad there's there's
• 14:12
  Speaker 1: both what the economists called horizontal differentiation of slightly all
• 14:18
  Speaker 1: the goods are slightly different from each other, but also
• 14:21
  Speaker 1: vertical some of them are just better than others. And
• 14:24
  Speaker 1: we can all agree. Let's say that you know, the
• 14:28
  Speaker 1: burritos at Chipotle are better than a taco bell that
• 14:31
  Speaker 1: are better than a del Taco you know whatever. If
• 14:34
  Speaker 1: you have some ordering of quality, um, and people have
• 14:39
  Speaker 1: a taste for quality, then it's gonna make the normal
• 14:44
  Speaker 1: rules of the market. It's not that they don't apply,
• 14:47
  Speaker 1: it's just that they get more complicated. And you can
• 14:50
  Speaker 1: have situations where in an intensely local market where there's
• 14:56
  Speaker 1: a high taste for quality and hopefully you're only doing
• 14:59
  Speaker 1: this once and it's a big budget thing that you
• 15:04
  Speaker 1: just want to make sure that like in the old
• 15:08
  Speaker 1: days they used to say, nobody ever got fired for
• 15:10
  Speaker 1: buying an IBM. You know, yes it costs more to
• 15:15
  Speaker 1: go with the well known caterer, but you know it's
• 15:19
  Speaker 1: not going to be screwed up, and that your mother
• 15:22
  Speaker 1: in law is not gonna hold against you. You know
• 15:26
  Speaker 1: that he saved us five hundred dollars and he got
• 15:30
  Speaker 1: us a thing that went horribly wrung right at a
• 15:32
  Speaker 1: certain point is just not even worth it, which I
• 15:34
  Speaker 1: mean I think you know, throwing out somewhere you know
• 15:37
  Speaker 1: econ buzzwords. I mean, that's a lot of demanded elasticity too.
• 15:41
  Speaker 1: I mean, I'm thinking, like the Plaza Hotel, doesn't matter
• 15:44
  Speaker 1: how much the Plaza Hotel costs. There's always going to
• 15:46
  Speaker 1: be someone who's going willing to pay the venue price
• 15:50
  Speaker 1: to have their winning at the Plaza Hotel in New York.
• 15:52
  Speaker 1: It doesn't really matter like the I mean, the amount
• 15:55
  Speaker 1: that they I mean, this is just the principle last Disney. Right,
• 15:58
  Speaker 1: the amount that they raised that venue price buy is
• 16:00
  Speaker 1: going to have a very different effect of how many
• 16:03
  Speaker 1: people are become unwilling to buy it. Right. That is true,
• 16:07
  Speaker 1: though there's a there's a somewhat non intuitive result. It
• 16:13
  Speaker 1: comes out of the theory which says, anybody who has
• 16:18
  Speaker 1: market power shouldn't already know that, and they should have
• 16:23
  Speaker 1: already raised the prices up so high that actually their
• 16:28
  Speaker 1: customers are price sensitive, because if they weren't, if if
• 16:33
  Speaker 1: the Plaza hotels customers were as price insensitive as you're describing,
• 16:39
  Speaker 1: then they already should have raised the price even more
• 16:42
  Speaker 1: and just keep on raising it until even the shake
• 16:45
  Speaker 1: of whatever it says, my god, the plaza cast that money.
• 16:49
  Speaker 1: If you're not gonna pay one cent more. So, I
• 16:53
  Speaker 1: think the basic question of what is a what makes
• 16:58
  Speaker 1: a good more price sensitive have a higher demand. Elasticity
• 17:04
  Speaker 1: is kind of the same thing as well. What are
• 17:07
  Speaker 1: the substitutes? And to the extent that a flower supplier
• 17:14
  Speaker 1: from some other market that's far away is not a substitute,
• 17:18
  Speaker 1: then that's gonna tend to make the buyers less price sensitive.
• 17:23
  Speaker 1: To the extent that there are big quality differences, that
• 17:26
  Speaker 1: the Plaza hotel is something higher class than the best
• 17:32
  Speaker 1: Western that's gonna make the that's gonna make the elasticity
• 17:36
  Speaker 1: is different. And the essence of price discrimination, if you
• 17:41
  Speaker 1: just say from the back to the to the brass
• 17:44
  Speaker 1: tax economic theory is you've got to be able to
• 17:49
  Speaker 1: figure out who's more or less price sensitive, and you've
• 17:52
  Speaker 1: got to be able to prevent them from You gotta
• 17:56
  Speaker 1: know who who is more price sensitive, you gotta be
• 17:59
  Speaker 1: able to to identify and charge them, and you've got
• 18:04
  Speaker 1: to be able to prevent them from reselling to others.
• 18:07
  Speaker 1: And in most of those cases the normal problems that
• 18:13
  Speaker 1: that people face. So take the airlines, their price discriminating,
• 18:17
  Speaker 1: but they have the problem of trying to figure out
• 18:21
  Speaker 1: who are they know there are some not sensitive to
• 18:25
  Speaker 1: price customers, but they don't know who they are just
• 18:29
  Speaker 1: from calling up. They know that their business people. But
• 18:33
  Speaker 1: they if you call and you're a business person and
• 18:36
  Speaker 1: you use a lot of hey, dude, you know, and
• 18:39
  Speaker 1: you try to sound like a student and dress like
• 18:42
  Speaker 1: a student, uh, so that you would get a lower price,
• 18:45
  Speaker 1: they have to design the product to force you to
• 18:48
  Speaker 1: stay a Saturday, to force you to have a long
• 18:51
  Speaker 1: um buy it well in advance. All of those are
• 18:55
  Speaker 1: just things that they're using to try to get you
• 18:58
  Speaker 1: to separate yourself yourselves into the types of customers you are.
• 19:05
  Speaker 1: People who supply weddings don't have to do that because
• 19:09
  Speaker 1: they know wedding customers are less price sensitive and they
• 19:14
  Speaker 1: know you're getting married. Hence the guy with the with
• 19:18
  Speaker 1: the chicken dinners. For me, my goal, as I said
• 19:22
  Speaker 1: to my wife, I said, my goal on the food
• 19:24
  Speaker 1: is I don't want anyone to remember the food at
• 19:29
  Speaker 1: our wedding in any way not good and not bad,
• 19:33
  Speaker 1: because if they remembered him like that was the best
• 19:36
  Speaker 1: food I ever had, too much, way too much, and
• 19:39
  Speaker 1: if they remember it was like that was horrible. I
• 19:42
  Speaker 1: didn't want that. But just some middle ground would be
• 19:46
  Speaker 1: totally fine. So I'm not going to get Boston Market
• 19:50
  Speaker 1: to cater the wedding. But you know, as long as
• 19:53
  Speaker 1: it was of acceptable quality. But as soon as the
• 19:56
  Speaker 1: guy heard that it was for a wedding, he was like,
• 20:00
  Speaker 1: you just solved my problem because you just tell me
• 20:03
  Speaker 1: that you are not price sensitive, so price is higher. Okay.
• 20:07
  Speaker 1: So Austin, one last question. Two of your students their
• 20:11
  Speaker 1: PhD and this is hypothetical. Two of your students. So
• 20:15
  Speaker 1: I was like, who know, these are just hypothetical students
• 20:18
  Speaker 1: economics PhDs. And they go to you and they're saying
• 20:21
  Speaker 1: that we want to avoid all these traps. We want
• 20:23
  Speaker 1: to have the most price efficient wedding. How do you
• 20:26
  Speaker 1: do it? Let's let's make this actionable. Oh I think
• 20:28
  Speaker 1: we're gonna say, do you tell them not to get
• 20:30
  Speaker 1: married on a positive note? Um? Okay, so how you
• 20:37
  Speaker 1: do it? Look, the secrets of price discrimination to the
• 20:42
  Speaker 1: merchant are they have more information than you have. They
• 20:47
  Speaker 1: know how price sensitive you are, and they're trying to
• 20:50
  Speaker 1: prevent you from doing uh resale and prevent the cross shopping.
• 20:57
  Speaker 1: So you try to beat them on every on every
• 21:00
  Speaker 1: measure one you leave them like scratching their head. Wait,
• 21:05
  Speaker 1: are these people who want a fancy wedding or not,
• 21:08
  Speaker 1: you know. So so you drop things, You're like, yes,
• 21:11
  Speaker 1: we want that, and you know, the the groom to
• 21:14
  Speaker 1: be says, uh, we want we want fine China. And
• 21:17
  Speaker 1: then in their mind they're like, ah, so this is
• 21:20
  Speaker 1: gonna be expensive wedding. But then you plan it and
• 21:22
  Speaker 1: you say like, do you think we should um do
• 21:26
  Speaker 1: you think we should have free gum as, the as,
• 21:30
  Speaker 1: the as, the departure present, you know, at the wedding,
• 21:33
  Speaker 1: And so the first is like, wait, what you know?
• 21:35
  Speaker 1: And so one of you is wearing something that's like
• 21:38
  Speaker 1: ripped and really kick pull up in a car that's dented,
• 21:41
  Speaker 1: you know, so they don't know what to make of you.
• 21:45
  Speaker 1: Are you a person who's what they want? If they
• 21:48
  Speaker 1: conclude you're a person who wants only the finest, then
• 21:51
  Speaker 1: you're gonna be Mr Markup or Miss mark Up to them.
• 21:55
  Speaker 1: They're gonna jack up the price of everything. So you
• 21:57
  Speaker 1: want them to think you don't have as much money
• 22:00
  Speaker 1: um as as they originally thought to shop around as
• 22:06
  Speaker 1: much as you can. Every additional bid you get is
• 22:11
  Speaker 1: gonna just make you that much more informed and that
• 22:14
  Speaker 1: much better able to play off against them on No wait,
• 22:18
  Speaker 1: a second. You know you're gonna charge me a hundred
• 22:21
  Speaker 1: dollars a person for the food, but I can get
• 22:25
  Speaker 1: the same thing for these other guys for seventy five.
• 22:28
  Speaker 1: You know you forced them to compete because competition destroys
• 22:31
  Speaker 1: their ability to price discriminate. And if you can, you
• 22:35
  Speaker 1: find some some opportunity for resale. You know you you
• 22:39
  Speaker 1: got you got left over wine bottles or something. You
• 22:43
  Speaker 1: friends getting merry, you hand them the wine here, you know.
• 22:48
  Speaker 1: So So I think basically the theory says you just
• 22:53
  Speaker 1: you gotta try to and I guess it also says
• 22:57
  Speaker 1: if you can help it. Normally, the economists take your
• 23:00
  Speaker 1: demand as given. They have no input on how bad
• 23:04
  Speaker 1: you want something. Um. They then just go from given that,
• 23:08
  Speaker 1: here's how bad you want it, here's how to try
• 23:11
  Speaker 1: to get more competition, to make the market blower. As
• 23:15
  Speaker 1: your friend, I would tell you, try to not have
• 23:18
  Speaker 1: anything you want so bad that you're like, I will
• 23:21
  Speaker 1: pay any price to make sure that we have a
• 23:26
  Speaker 1: band that does blah. I will make sure we must
• 23:29
  Speaker 1: have orchids. If it's not orchids, you know, I'd rather
• 23:33
  Speaker 1: get married next year. Anything that you really care about,
• 23:37
  Speaker 1: These guys are excellent at figuring that out and charging
• 23:41
  Speaker 1: you for it. So so reveal nothing got it, Talk
• 23:45
  Speaker 1: only to your spouse. Don't ever identify anything in front
• 23:50
  Speaker 1: of the merchants. Thanks for the Austin. I gotta say
• 23:54
  Speaker 1: I shopped around I think a fair amount, but I'm
• 23:56
  Speaker 1: not sure that I went sort of full incognito with
• 23:59
  Speaker 1: the half rags half riches perspective like you brought up there. Um,
• 24:05
  Speaker 1: I guess. I guess the moral of the story is
• 24:08
  Speaker 1: that you know, weddings, even though they're a big business
• 24:12
  Speaker 1: and they're all over the place and they happen all
• 24:14
  Speaker 1: the time, they sort of defied the rules that we
• 24:17
  Speaker 1: all learned on the first day of a Yukon class,
• 24:20
  Speaker 1: which is that people tend to make rational decisions. The
• 24:23
  Speaker 1: cost benefit analysis UH sewed quite a bit when it
• 24:28
  Speaker 1: comes to uh these hopefully once in a lifetime events.
• 24:31
  Speaker 1: I guess love truly makes people irrational. Indeed. Well well, Austin,
• 24:36
  Speaker 1: thank you so much for joining us and giving us
• 24:39
  Speaker 1: some tips on how to have a cost efficient wedding,
• 24:41
  Speaker 1: and really appreciate it. Um and Brian, thank you as
• 24:44
  Speaker 1: well for kind of giving us some of your experiences
• 24:47
  Speaker 1: and joining us here. In the studio. Thank good luck, Brian,
• 24:50
  Speaker 1: it's a great future ahead of you. Appreciate Austin. Yeah, well,
• 25:01
  Speaker 1: Benchmark will be back next week, but until then, you
• 25:03
  Speaker 1: can find us on the Bloomberg terminal, Bloomberg dot com, iTunes,
• 25:07
  Speaker 1: pocket Cast, and Stitcher. While you're there, take a minute
• 25:10
  Speaker 1: to rate and review the show so that more listeners
• 25:12
  Speaker 1: can find us and let us know what you think
• 25:15
  Speaker 1: of the show. You can talk to us and follow
• 25:17
  Speaker 1: us on Twitter at beach Patta and by Kate Smith,
• 25:20
  Speaker 1: and you have to follow Austin as well his Twitter.
• 25:23
  Speaker 1: His Twitter account is great. Check him out at at
• 25:26
  Speaker 1: Austin Underscore Cool Spain. Thanks for joining us and we'll
• 25:29
  Speaker 1: see you next week.