“Price Gouging” has a negative connotation. The public broadly supports the vague laws that prevent it. Here’s a list of the states that have laws preventing some form of price gouging along with the language used in the statutes. You’ll notice that fewer than half of the states that have such laws actually specify a percentage increase in the price – most of the statutes use the vague, “weasel wording” of “grossly excessive,” “unconscionably high,” or similar highly subjective language. In my state of North Carolina, they use the term “unreasonably excessive.” Putting aside the problem of putting a precise definition on just what price gouging is, the public supports these laws.
It’s hard to find a public poll directly on this topic – the closest I could find was a Gallup poll about what was to blame when gasoline prices were high in 2008 – 58% blamed “price gouging by oil companies.”
There is a poll, however, of people with the most knowledge of the effects of “price gouging” – economists. They are overwhelmingly against laws preventing price gouging. If your knee jerk reaction is that “economists are just partisans that love the rich” – keep in mind that the average economist is a moderate Democrat.
In another setting, though, the public apparently is very supportive of price gouging. Uber and Lyft are extremely popular with their “surge pricing” being very effective during busy events whether that be a sporting event or a disaster.
I am holding out hope that the public will slowly come around to soften their support of laws against price gouging as they more routinely encounter it via Uber and Lyft and even Airbnb. In fact, as the sharing economy continues to grow more and more of us become the “gougers” – for example, renting out a room in one’s house during a major sporting event.
What other issues have such a large split in support between the public and economists?
I asked that question to economist Mike Munger who quickly answered “rent control” – an issue that is popular politically but where economists are almost universally against.
How do I feel about it? I like to say I’m pro choice – for everything. Especially voluntary transactions.