What can the price of beer tell us?

By Lorenzo

What can the price of beer tell us? Quite a lot according to this amusing piece (via).

Here is a chart of beer prices in various Eurozone countries since 1996.

Greece (blue), Italy (orange), Spain (red), Ireland (green), Germany (black)

Prices in Germany have remained pretty steady, with the price of beer rising about 1% a year. The price of beer in Greece has surged upwards (lots of inflation). Italy and Spain have also had a fair bit of inflation.  Beer prices surged in Ireland until 2003, flattened off, boomed in 2008 and are now dropping to the point where their beer prices have the same total growth over the period as Germany. In the words of the piece:

So really the beer chart says it all: Greece: a wreck. Germany: calm. Spain and Italy: in trouble, and Ireland making a comeback.

The Eurozone crisis in one graph.*

This is also the Saturday chit-chat post.

 

*Actually no, since it completely ignores monetary policy and the ECB. But it makes a good story and graph.

27 Comments

  1. Posted August 18, 2012 at 10:32 am | Permalink

    Another similar economic indicator is the lipstick (particularly up-market ones) to shoes sales volume, as “little luxuries” become an analgesic to economic woes.

    Shares in lipsticks and the like could be described as a smart counter-cyclical hedge investment.

    I wonder what similar “retail therapy” counter-cyclical indicators there are … More dvds verus the big spend on screens and bluray players?

  2. Jonathan Ray
    Posted August 18, 2012 at 10:50 am | Permalink

    The graph shows us that it’s difficult/expensive for businesses to produce beer in the same countries that have massive deficits due to crappy GDP. No coincidence.

  3. Posted August 18, 2012 at 11:15 am | Permalink

    One for the girls …

    Planning to become pregnant? Have a cat? Then speak to your doctor about the necessary precautions because this parasite can cause severe problems for the fetus. It doesn’t happen that often but as more research is conducted we are realising that this parasite, which infects up to 30% of the human popn(80% in Brazil), is not nearly as harmless as we once thought.

    http://www.hivehealthmedia.com/pregnant-women-should-avoid-the-suicide-inducing-parasite/

    Yet another thing for pregnant women to look out for. Avoid soiled cat litter because there is a common parasite in it. A parasite called ‘toxoplasma gondii’ that has been linked to stillbirths and even brain damage if it infects a child in the womb. Toxoplasma gondii spreads through feline feces, undercooked meat or unclean vegetables. But now the latest research evidence from a very large study in Denmark indicates changes in mother’s brains when they are infected by the parasite, making them more likely to commit suicide.

  4. kvd
    Posted August 18, 2012 at 3:05 pm | Permalink

    Lorenzo what sort of beer? And is it the same brand/strength for each country, and why isn’t a comparative line for Aus included in your graph, and why is Germany always represented by Black and Irish with Green, and why beer not Scotch – or a cheeky little white wine I could point you to? Blo-dy economists – always missing the important questions.

    On JohnH’s reference: have been aware of this for years, and totally, thoroughly second his recommend that all women should read it, and be aware of it. Jokes aside, this is a really dangerous pet-bourne problem which continues to amaze for its lack of wide-spread recognition.

  5. Posted August 18, 2012 at 4:45 pm | Permalink

    The Irish figures are probably influenced by the recent (2004) ban on smoking in bars, which has meant that going to bars has become much less popular (very high rate of bankruptcy too), and drinking at home much more popular (overall consumption of alcohol has remained steady). My guess is that supermarkets and bottle shops have very good reasons for discounting the price of beer, in ways that bars would not, thus perhaps driving down the price.

  6. Posted August 18, 2012 at 5:04 pm | Permalink

    And, of course, the crucial question: is Guinness beer?

    /ducks.

  7. TerjeP
    Posted August 18, 2012 at 6:57 pm | Permalink

    Yes clearly Greece is in trouble because European monetary policy has been too tight for Greece. It needs much looser monetary policy so it can keep down the beer price. Every time you print a new drachma beer prices will fall and prosperity will rein. Loose money can ensure low prices. No, wait a second …..

  8. TerjeP
    Posted August 18, 2012 at 7:04 pm | Permalink

    John H – I heard the other day that a diet artificially high in lactobacillus leads rats to be far less anxious, less prone to despair and less likely to quit looking for an escape route when trapped in a tub of water. So clearly some bugs offer a bonus. At least if you’re a rat.

  9. Posted August 18, 2012 at 8:43 pm | Permalink

    So clearly some bugs offer a bonus. At least if you’re a rat.

    Boom.

  10. TerjeP
    Posted August 18, 2012 at 9:01 pm | Permalink

    And then there is this:-

    http://en.wikipedia.org/wiki/Helminthic_therapy

    Which in spite of the yuck factor is an idea that I’m quite sold on and would quite like to try.

  11. Posted August 18, 2012 at 9:46 pm | Permalink

    [email protected] In the words of the FRED database:

    The Harmonized Index of Consumer Prices category “Beer (02.1.3)” is a classification of nondurable goods that includes all kinds of beer such as ale, lager and porter; low-alcoholic beer and non-alcoholic beer; and shandy.

    So, it is an index; a weighted average of beer prices.

    [email protected] Clearly, the ECB can hit any inflation target it wants to, as can the Fed. The issue is the spending collapse which is very clear from the economic data (pdf) that, predictably, made debt problems a lot worse. With capacity utilisation around 80% and M3 having crashed, spending (and income expectations) is the issue.

    Greece (which is simply too small to have a major impact on the Eurozone figures overall) shouldn’t have been in the Euro and is the weakest link. Makes for a great way to divert attention from the ECB-engineered spending collapse.

  12. Posted August 18, 2012 at 9:56 pm | Permalink

    [email protected] Given the Bundesbank dominates the ECB, it is worth reminding ourselves that the Bundesbank has done something like this before.

  13. Posted August 18, 2012 at 10:21 pm | Permalink

    The winners from the Euro are not quite who folk might expect.

  14. Posted August 18, 2012 at 11:37 pm | Permalink

    Okay, so it does include Guinness…

  15. Posted August 19, 2012 at 12:02 am | Permalink

    I never doubted it.

  16. TerjeP
    Posted August 19, 2012 at 6:01 am | Permalink

    Lorenzo – yet there is money enough in Greece to bid up the price of beer. I have no problem with the assertion that there has been an income collapse in Greece. My objection is to the notion that loose money would help. Or if you want to get specific my objection is to the notion that NGDP targeting wouldn’t amount to loose money with inflation and negligible real growth.

  17. kvd
    Posted August 19, 2012 at 7:27 am | Permalink

    Google auto completes for “why are [people] so “:

    Australians – stupid, good at sport, racist, beautiful.
    Brits – ugly, mean, negative, snobby
    Scots – bitter, patriotic, tough
    Germans – smart, tall, serious, rude
    Americans – stupid, fat, religious, loud
    Canadians – hot, nice, weird, annoying
    New Zealanders – rude, good at rugby, arrogant
    Queenslanders – stupid, dumb
    Victorians – famous, important
    Tasmanians (leaving off ‘so’) – inbred

    – prompted by this blog post – from which I also learned a new word – demonym. And if you want to ‘demonyse’ lawyers, try “why are lawyers so …” 😉

  18. Posted August 19, 2012 at 7:48 am | Permalink

    @SL: #6 Yep! Guiness (a brand name) is porter.

  19. Posted August 19, 2012 at 12:37 pm | Permalink

    I love this thread. That is all.

  20. Posted August 19, 2012 at 3:13 pm | Permalink

    [email protected] You are claiming that all price changes are demand side? We are talking about the most supply-constrained economy in Europe, after all.

    You are also essentially asserting that expectations about prices matter but expectations about spending don’t. That just seems a daft way to think about monetary policy.

  21. Posted August 19, 2012 at 5:42 pm | Permalink

    John H – I heard the other day that a diet artificially high in lactobacillus leads rats to be far less anxious, less prone to despair and less likely to quit looking for an escape route when trapped in a tub of water. So clearly some bugs offer a bonus. At least if you’re a rat.

    Terje,

    Some of the recent research on this is raising some important questions. It challenges our fundamental assumptions about the drivers of behavior but there was always plenty of literature indicating that behavior is not just a function from the neck up but involves the whole physiology.

    In relation to bugs we are now faced with the implications of The Hygiene Hypothesis. So to save me some time I’ll reference my recent blog post on this matter. I’m still trying to understand this so the blog post is difficult to read but outlines an evolutionary basis for the symbiotic relationship between us and all them microbes and why our consistent attacks on so many pathogens is undermining our health.

    http://healthycuriousity.blogspot.com.au/2012/08/sunshine-pathogen-genocide-vitamin-d.html

  22. TerjeP
    Posted August 19, 2012 at 7:21 pm | Permalink

    [email protected] You are claiming that all price changes are demand side?

    No I’m not. I’ve never said anything at all like that.

  23. kvd
    Posted August 21, 2012 at 4:29 am | Permalink

    As this is a chit-chat thread I just wanted to ask if anyone else has recently become infested with emails from a Mr Craig Isherwood of the Citizens Electoral Council? The man seems unhinged, and I’m worried as to which particular email address list he found one of my own on.

    As a first defence I’ve replied to his invitation to suggest new members by giving him Mel’s details 😉

  24. Posted August 21, 2012 at 12:01 pm | Permalink

    A “real war on drugs”? What does that involve, calling in artillery strikes on drug labs?

  25. Posted August 21, 2012 at 6:23 pm | Permalink

    It used to be said that the rate for shearing one sheep was equal to the price of a beer in the front bar of a public house. This nexus was broken a few years back and shearers now do the work for much less.

Post a Comment

Your email is never published nor shared. Required fields are marked *

*
*