What is variety worth? Freeing

What is variety worth?

Freeing international trade lowers consumer prices. It also gives consumers more products to choose from. Economist's have measured the first benefit, but not the second.

Virginia Postrel highlights an National Bureau of Economic Research (NBER) study addressing the second benefit in her column in today's New York Times:"The Economic Value of Variety".

>>Being able to get exactly the coffee you're in the mood for makes you, in a sense, better off. But this improvement in consumer welfare has tended to go unmeasured. In most economic statistics, coffee is coffee, beer is beer and shoes are shoes.

In a recent working paper for the National Bureau of Economic Research, Professor Weinstein and Christian Broda, an economist with the Federal Reserve Bank of New York, estimate how much international trade has benefited consumers simply by increasing variety. (The paper is available at www.ny.frb.org/research/staff_reports/sr180.html.)

The results are striking. Consumers, they estimate, would be willing to pay $280 billion a year, or about 3 percent of gross domestic product, to have access to the variety of goods that were available in 2001, rather than what they could have bought in 1972...