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Chris DeMuth Jr. is the founder of Rangeley Capital LLC. Rangeley is an investment firm that focuses on event driven, value-oriented investment opportunities. Rangeley Capital and his value investing forum, Sifting the World (StW), search the world for misplaced bets. Rangeley exploits them for... More
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  • Lobster 8 comments
    Feb 24, 2014 3:08 PM

    American colonists did not like lobsters. The crustaceans washed up on the beaches of Plymouth, Massachusetts but the settlers did not like to eat them. In fact, when political leaders served lobster for dinner, they often needed to apologize and explain that it was all that that they had. The fact that they would sometimes pile up several feet deep gave them a reputation as food for poor people. They were mostly fed to those who didn't have a choice - students, slaves, and kids. During the Revolutionary War, British prisoners of war complained about getting served too much lobster. A few states passed laws against feeding inmates lobster more than twice per week.

    But everything changed for the lobster in the nineteenth century. The pivotal moment was the transcontinental railroads. Once fresh Maine lobsters could be quickly transported inland, they became a staple of the first class dining cars. They spread to Chicago - except by then it had been reinvented as an exotic delicacy. Lobster is a Veblen good, a commodity whose demand rises with its price.

    In 1899, economist Thorstein Veblen identified luxury goods that experienced greater customer preference with greater price. For more on Veblen, I recommend reading his book, The Theory of the Leisure Class.

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Comments (7)
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  • Copious28
    , contributor
    Comments (444) | Send Message
    Thanks Chris!


    Here is a free version:
    24 Feb 2014, 04:27 PM Reply Like
  • jacobtr
    , contributor
    Comments (855) | Send Message
    Colonists fed lobsters to their pigs because corn was too expensive.
    24 Feb 2014, 04:48 PM Reply Like
  • arbtrader
    , contributor
    Comments (585) | Send Message
    Corn is far more valuable to make whiskey with vs creating protein. Whiskey is far more portable over poor roads, too. At least in the 16-1700's!
    25 Feb 2014, 03:24 PM Reply Like
  • grendelbane
    , contributor
    Comments (436) | Send Message
    To be fair, lobster is the classic "sell it or smell it" food.


    With no means of refrigeration or preservation, it had to be eaten quickly.


    If I lived under the same circumstances, I would rapidly tire of lobster also.


    When Saturday Night Live did the telephone poll on boiling or saving Larry the Lobster, I decided not to vote. After all, it would have cost fifty cents!
    24 Feb 2014, 08:50 PM Reply Like
  • TheSandman
    , contributor
    Comments (171) | Send Message
    There seems to be a surplus now as well. Right after Valentine's Day, it was cheaper here in DC than hamburger (ground beef). Everyone in my family got lobster, including my 2 year old -- and I am a legendary cheapskate!


    We had lobster spring risotto with seared scallops this weekend for about the same price as a McDonald's "value" meal. I love supply imbalances.
    24 Feb 2014, 10:11 PM Reply Like
  • connellybarnes
    , contributor
    Comments (559) | Send Message
    Hedge funds are a Veblen good/service ;-)


    And Tiffany rings. The diamonds are overpriced relative to e.g. Costco.

    25 Feb 2014, 10:29 PM Reply Like
    , contributor
    Comments (71) | Send Message
    Aren't most rings? I think the mark up on Jewelry is 300%. I prefer estate auctions and metal detecting for lost jewelry.
    26 Feb 2014, 05:34 PM Reply Like
  • TheSandman
    , contributor
    Comments (171) | Send Message
    Get yah lahb-stah! Supply exceeding demand, once again:

    1 Aug 2014, 03:04 PM Reply Like
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