Phil the Economic Literacy Turtle

January 4, 2011

by Gene Callahan

My family recently acquired “Phil the High-Yield Turtle.” This came about because a friend of my wife, whom we will call Bill and who happens to trade high-yield bonds, saw Phil being sold on the street, presented in rather bad circumstances by his owner, and felt sorry for him. Bill took Phil and kept him (in much better conditions) in his office for several months before realizing that Phil was running out of space and needed a new home — at which point my wife volunteered to adopt him and… now we are Phil’s caretakers!

Well, Bill’s motives were certainly admirable: he wanted to help an animal he thought was in distress. Unfortunately, Bil”s attempt is likely to have the opposite effect to that he desired, since, by newly entering the market for turtles, Bill shifted the demand curve to the right. And that will increase the quantity supplied. In short, even if Bill had been moved enough and generous enough to buy every single abused turtle on the market, he simply would motivate the sellers to immediately replenish the supply. (Do you recall Milo Minderbinder trying to corner the Egyptian cotton market in Catch-22?)

In fact, the horrible thought came to me that this market could be largely driven by mercy purchases. And furthermore, such purchasers give the vendors a motive to make the conditions in which the animals they are selling are kept as bad-looking as possible!

8 Responses to “Phil the Economic Literacy Turtle”

  1. Glen Says:

    Perhaps Bill did not shift the demand curve to the right, but instead he represented one part of the existing demand curve. The turtle suppliers do not have any expectation of specific customers; rather, they expect that some fraction of the general public are likely future turtle buyers. By purchasing a turtle, Bill simply revealed himself as a member of that group. (Of course, you could then rephrase your claim like so: were it not for Bill’s willingness to buy turtles, the demand curve would be farther left.)

  2. Gene Callahan Says:

    “Perhaps Bill did not shift the demand curve to the right, but instead he represented one part of the existing demand curve.”

    Yes, we could look at it that way as well. I phrased it the way I did because I’m picturing Bill wandering around without a turtle thought in his head, and then, upon seeing Phil, suddenly “feeling” a demand for the first time.

  3. N. Joseph Potts Says:

    Reasoning conversely, then, I might consider that my neighbor’s excessive driving of his enormous, gas-guzzling SUV actually makes the few drops of gas I need for my Honda Civic, cheaper.

    Somehow, I sense that the timeframe might have something to do this (e.g., increases in gas consumption first raise, then depress, the price of gas). And vice-versa?

  4. Gene Callahan Says:

    Mr. Potts, a shift in the demand curve to the right produces a higher quantity supplied at a higher price (given normally shaped supply and demand curves).

  5. dunkelblau Says:

    I have a 99er friend named Phil.
    Can you guess the name of his uncle?

  6. Gene Callahan Says:

    Sam?

  7. dunkelblau Says:

    Guys like Bill and Sam should ignore the freakonomics crowd’s argument that seatbelts encourage drunk driving and continue to do what they believe to be right.

  8. TokyoTom Says:

    The horrible thought comes to me that you might also drive the market for mercy turtles by turning Phil into soup.


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