| Jr. Feature |

Why Are Some Things So Expensive?

What makes Rolls-Royce cars so much more expensive than other cars? And why is a can of Coke more expensive in Los Angeles than in Los Alamos? Or is it?

Fancy Fungus

November 11, 2019, was a great day for truffles, a kind of edible fungi that grows underground. At an auction in Alba, near Turin, Italy, a single truffle sold for 120,000 euros (over $133,000). True, it was no ordinary truffle. This fellow was a genuine white European truffle weighing over 2.2 pounds. That comes to $133.45 per gram. And even that wasn’t the highest price ever paid. In 2012, some truffle-lover paid $300,000 for a single truffle.

Maybe it shouldn’t be so surprising. After all, truffles are among the rarest foods in the world.

But a truffle is just a fungus, like a mushroom. In fact, it is a kind of mushroom. What makes it so expensive?

Well, unlike mushrooms, which can be grown and harvested, truffles usually cannot be cultivated. You just have to go out and hunt for them where they grow in the wild, in a few places in Italy and France. Hunting is the word for it, too. The professionals use specially trained sniffer dogs to locate the truffles, typically hiding out underground in forests.

And the taste — truffle connoisseurs say it’s worth every penny. You’ll have to take their word for it, though, unless you can afford to do your own taste test.

Truffles are so prized that a black market has grown up around them. Gangsters steal them from restaurants and sell them illegally in back alleys for cheaper prices. They even steal the sniffer dogs so they can hunt their own truffles.

You can buy canned truffles too. But watch out for phonies. Truffles from China are sometimes sold as European truffles, for the same price, but the quality is not nearly as good. Check the label: Even if it says “Product of France,” if the Latin name given is Tuber indicum, send it back to Beijing. The real thing is Tuber melanosporum.

 

The Ups and Downs of Supply and Demand

Truffles demonstrate why some things are more expensive than others: It’s called the Law of Supply and Demand. If something’s hard to get, people will be willing to pay more. If truffles could be grown as easily as mushrooms, they’d be much cheaper.

Think of antiques. The word comes from the Latin antiquus, which means old. Very few pieces of furniture survive from generations ago. But those that do can be worth a lot.

 

Not all old furniture qualifies as antiques. Most aren’t worth a trip to the junkyard, like your falling-apart patio chair.

Several things make an antique valuable: Rarity, like we said. Craftsmanship: If it was made by hand by a master carpenter, not in a factory. Materials: The fact it’s lasted so long — some are hundreds of years old — means it was made of good, sturdy stuff, like oak or mahogany. Beauty: A beautiful shape or carved or engraved details that are not found on similar, modern items.

Some antiques are valuable because of their history: If George Washington slept in it after a hard day fighting the British, or Abraham Lincoln sat on it while telling his funny stories, you probably can’t afford it, any more than you could afford a truffle.

The most expensive piece of furniture ever sold is the Badminton Cabinet, for $36.7 million, made out of ebony wood, gilt-bronze, and hard stone by 30 craftsmen in Florence, Italy. It took them six years to make the cabinet (1726–1732). It was ordered by the Duke of Beaufort, Henry Somerset, who could afford it.

Furniture isn’t the only kind of antique. There are antique cars, antique art, antique kitchen tools, antique books and letters. For example, a clipping of the earliest printing of the “Star-Spangled Banner” (under its original title, “The Defence of Fort M’Henry”) from the Baltimore Patriot and Evening Advertiser, September 20, 1814, was sold at auction by Christie’s for $75,000 in 2018.

Antiques have had their ups and downs, though. Take beautiful old writing desks with drawers for example. “They’re almost useless now,” Clifford Lansberry, an antiques expert, told the New York Times. “PCs and laptops don’t fit on them, and the cables get in the way. And we don’t write letters.”

A Rolls-Royce — In Just Your Color!

Another reason some things cost so much is that anything custom made will cost more than buying it ready made. A custom-made suit will be more expensive than one off the rack. It costs more for a tailor to take your measurements and make a suit to fit you exactly, than to mass-produce suits in standard sizes in a factory.

Rolls-Royce earned a great name with its custom-made cars. They give you a choice of 44,000 different colors. If you like, they can match the color of your eyes or your dog (Rolls-Royce once painted a car to match the owner’s red setter). “It’ll be registered as your color, and you can give it a name, and it’s yours,” they say. As in, Leah Lavender or Moishe Maroon.

Rolls-Royce is most famous for its incredibly smooth, quiet ride. This is made possible by 300 pounds of soundproofing material, including foam-filled tires and triple-thick, 1/5-inch glass windows. In fact, Rolls-Royce found that drivers couldn’t hear sirens of nearby emergency vehicles, and the super soundproofing was even causing acoustic sensory deprivation, so they took some out. Whew!

The most expensive Rolls-Royce ever: The Sweptail, $13 million.

Coronavirus Gold

Gold was always valuable. It is the very symbol of wealth and success. Immigrants who wanted to describe how incredibly rich America is would say that “the streets are paved with gold.” They never said it was paved with osmium, or even silver.

A civilization at its height is often considered to be in its “golden age.” In the Olympics, the winner gets the gold medal, the runner-up gets only silver.

In recent weeks, the price of gold has shot up. As of this writing, it stood at almost $1,760 per ounce, up from $1,050 in mid-December.

Why the rush to buy gold now? In a word: coronavirus. No, gold won’t cure coronavirus. But the pandemic is one of the main causes of the current craving for gold.

Because the economy is in a mess and people are worried about the future, they invest in gold, because gold doesn’t lose its value, like paper money. So no matter what happens, you can use the gold to buy things.

But what makes gold so valuable in the first place? First, it’s rare, and people just naturally like rare things. But that’s not the only reason. Osmium is rarer than gold, but it’s only about $400 an ounce. Gold has more to offer. It’s malleable, meaning you can shape it any way you want. And it’s durable — that gold ring on your finger will last centuries without rusting or corroding. And because you can carry small pieces in your pocket, gold makes a good currency.

And its beautiful color is unique. Other metals are silver- or copper-colored (and copper turns green, like the Statue of Liberty). Only gold is golden.

As for the future, gold will probably get more expensive. Why? Because the world is running out. Right now, if you were to collect together every bit of gold in the world, from wedding rings to the tiny lines of gold in every computer chip, you’d have a single cube of about 60 feet by 60 feet (Business Insider).

Geologists say all the major discoveries have been made. They think that in about 20 years all the gold remaining in the earth’s surface will have been taken out. Then what? They’ll search the seabeds, possibly even asteroids.

But that’s a pretty far-out idea, so get some Earth gold while you can.

An Urban Myth

Everybody says it’s more expensive to live in a big city than a small city or town. Studies show that people in some cities pay over 75 percent more for their groceries than they would in smaller places.

There are reasons for that. For example, real estate prices and taxes are higher in the cities, so the stores have to charge more to pay their own costs.

Still, for many it’s worth it because of all the advantages, like more job and educational opportunities. On the other hand, some are just stuck there because they can’t find work anywhere else. Cheyenne, Wyoming, is cheap and nice, but if you’re a subway driver it might be tough to make a living there.

But according to a recent study, the price differences between big and small places may be a lot less than people think. Could be it’s an urban myth based on sloppy research.

The World Economic Forum looked at the research on grocery prices and found that they were mistakenly comparing products that were similar but not the same. Milk, eggs, and cheese, for example, can vary in price within the same city, even in the same store, depending on the brand you buy. So it doesn’t make much sense to compare the big-city price to the small town’s.

Only by comparing identical products, like a 12-ounce can of Coca-Cola, would price differences be meaningful. When they did that, they found there was very little difference in what the Coke cost in Manhattan versus Paducah or Peoria in the same type of store. On the other hand, you’d pay more for it at an airport than a corner grocery store in the same city, whatever the city’s size.

Other things, like houses, might still be more expensive in the big city. Of course, some folks are willing to pay more. Because who wants to live in Paducah or Peoria when you can live in Manhattan?

Stamp Out Complaining

People like to complain: “Mailing a letter is too expensive! And it takes forever to get there!”

This too could be an urban myth. While it’s true that the price of postage has gone up — from 15 cents in 1980, and most recently in 2019 from 50 cents to 55 for a regular letter — so has almost everything else. As Ed Stoddard, a retired United States Postal Service (USPS) worker asked on Quora, “Expensive compared to what? Making delivery yourself? You can’t even buy a candy bar anymore for 55 cents and spending that much to send a letter clear across the country in two to three days is too much?”

Former Post Master James Eginoire notes that letters have a personal value that emails and phone calls don’t: When you send a letter in your own handwriting to someone you love, they “will have a cherished keepsake to read over and over again, knowing the loved one didn’t just sit in front of a keyboard and begin typing,” but took the trouble to write it out, buy the stamp and envelope, and mail it.

But even the government admits the mail is slow. In 2015, the number of letters being delivered late rose by 48 percent, according to USPS Inspector General Dave Williams.

The coronavirus pandemic has hurt the postal service. Most mail is sent by businesses, and the shutdown has reduced mail flow by as much as 30 percent, according to Politico. USPS has been asking Congress for permission to raise rates, but so far, they won’t allow it.

But the government can’t let the postal service fall apart, especially now. In the November elections, mail-in votes will be crucial as people avoid going to the polls, where they could catch coronavirus. Not to mention the millions of government checks that are sent to mailboxes.

So don’t be surprised if the price of a stamp goes up again — after November.

Fun Facts

Gold is used in astronauts’ visors to block harmful ultraviolet rays from the sun. On Earth, the atmosphere does most of the blocking. Suntan is the skin’s reaction to the rays that get through.

Egyptian Revival is a type of antique style that became popular during and after the Civil War. You can still see the Pharaohs on the Pythian building, 135 West 70th Street in Manhattan, and the step-pyramid of the Bankers Trust Company Building at 14 Wall Street.

Americans have their own home-grown truffles — in Oregon. Four types are shown off at the annual Oregon Truffle Festival. Which just happens to be held in… that’s right, Oregon.

So now you know. And you won’t be so surprised, whether you’re buying a gold ring or a postage stamp, why some things are so expensive, or just seem to be.

 

(Originally featured in Mishpacha Jr., Issue 826)

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