Demand: Law. Gravity: Just a theory.

January 31, 2009 4:44 PM

How would you go about proving that the law of demand does not exist?

Just out of curiouisity. Yes, it is something I think about on a Saturday night.

posted by johannahdeschanel to Religion & Philosophy (8 answers total)

Suppose that it does and try to find a contradiction.
posted by alligatorman at 4:52 PM on January 31, 2009

Best answer: Wikipedia has good articles on Giffen Goods and Veblen Goods.
posted by troy at 4:52 PM on January 31, 2009

Best answer: Do you mean the law of supply and demand?

Well, if it was a mathematical or philosophical theory, then disproving it is as simple as finding a case where it should work, but you don't get the expected result. Then you go about formulating a new theory you can test, which might just be the old one with a new condition.

Of course, the law of supply and demand is not one of these kinds of theories; it's more a model. And if your data doesn't fit the model, then you use another one. No big deal.
posted by sbutler at 4:54 PM on January 31, 2009

I think the law meant is this: A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa.
posted by selfmedicating at 5:44 PM on January 31, 2009

Best answer: What sbutler said. Economics says, "Assume x, y, and z. If these are true, then simply through an exercise of math and logic, these other things should be true as well (including the law of supply and demand)."

In fact, though, x, y, and z are likely flat out wrong. Biggest among them is the assumption that people are perfectly rational. Of course they're not, but it's a necessary assumption so that you can try to make sense of things. Classical economics also assumes perfect competition, which is often not true or even close to true. See, e.g, Microsoft, OPEC, etc. (there are also models that attempt to determine how things work with monopolies or cartels, but they make their own assumptions too). This pdf lays some of the assumptions out in technical detail.

In other words, there's nothing to disprove. The law of supply and demand doesn't claim to be perfectly true in the real world. Does that mean it's useless? No. The point is to build a model, see what makes it tick, and then to see if it provides meaningful insight into how the world works. If you've ever taken physics, think of the times when you dealt with a "perfectly frictionless surface" (which doesn't exist in this world). In chemistry you might deal with "ideal gasses", which have no mass. It's the same with economics. People are strange, imperfect creatures. Economics treats them as perfect little robots. It's "false" by design.
posted by kingjoeshmoe at 6:02 PM on January 31, 2009

Best answer: Yeah, if you can find a counter example, you could prove it's not a 100% law, just as you could disprove gravity by finding an inertial mass that didn't fall towards the earth. That shouldn't be hard, because the law of supply and demand is more of an observation then a law. It's probably true in a lot of cases, but never all of them.
posted by delmoi at 6:03 PM on January 31, 2009

Umm, what do you mean? It isn't a law. No one treats it like a law, it's something that is usually true. There are problems with it. You could maybe find some new problems with it, but you won't find that it is generally untrue because it isn't. There are things that people want less of as the price goes down. Is that what you mean? Snob Goods. Lobster, jewelry made from some metals or gems, some college educations or clothing brands. The point is "the law of demand" is usually true. If something costs more people will 'want' less of it. Of course want means buy. Which isn't what want normally means. If something is more expensive people will want more of it. Which is what want means. So there's that. But really it isn't as though there is an entire subject worth of phds that have been hoodwinked. They know what's up. They're just taking a short cut. Like Newtonian physics which is always wrong except for the 99% of the times when it's close enough.
posted by I Foody at 7:53 PM on January 31, 2009

Best answer: Not sure if this is what you have in mind, but Jan De Vries' work shows how in "the long eighteenth century, new consumer aspirations combined with a new industrious behavior to fundamentally alter the material cultures of northwest Europe and North America...De Vries examines how the activation and evolution of consumer demand shaped the course of economic development, situating consumer behavior in the context of the household economy. He considers the changing consumption goals of households from the seventeenth century to the present and analyzes how household decisions have mediated between macro-level economic growth and actual human betterment. Ultimately, de Vries' research reveals key strengths and weaknesses of existing consumer theory, suggesting revisions that add historical realism to economic abstractions."
posted by Abiezer at 7:53 PM on January 31, 2009 [1 favorite]