August 28, 2013 — For more than a decade, we’ve been living through a commodity price boom. From oil to wheat and beef, the general rule has been that if you farmed it, caught it, or took it out of the ground you were probably going to make money selling it. But there has been a strange exception: lobster. In 2005, Maine lobster was selling for almost six dollars a pound wholesale. By 2009, it cost just half that, and, in the past couple of summers, huge lobster harvests, believed by some to be a result of global warming, have glutted the market, sending prices tumbling further. This month, lobster off the boat is selling for as low as $2.20 a pound.
The impact of low-priced lobster is easy to see in the ports of Maine, where lobstermen are wondering how they can stay in business. And you can see it in supermarkets in the Northeast, where whole lobsters are often surprisingly cheap. Where you won’t find much evidence of a lobster glut, though, is in American restaurants. Even as the wholesale price of lobster has collapsed, restaurant prices for lobster tails and that hipster favorite the high-end lobster roll have stayed buoyant. There’s more lobster out there right now than anyone knows what to do with, but we’re still paying for it as if it were a rare delicacy.
Keeping prices high obviously lets restaurants earn more on each dish. But it may also mean that they get less business. So why aren’t we seeing markdowns? Some of the reasons are straightforward, like the inherent uncertainty of prices from year to year: if a bad harvest next summer sent prices soaring, restaurants might find it hard to sell expensive lobster to customers who’d got used to cheap lobster. But the deeper reason is that, economically speaking, lobster is less like a commodity than like a luxury good, which means that its price involves a host of odd psychological factors.
Lobster hasn’t always been a high-end product. In Colonial New England, it was a low-class food, in part because it was so abundant: servants, as a condition of their employment, insisted on not being fed lobster more than three times a week. In the nineteenth century, it became generally popular, but then, as overharvesting depleted supplies, it got to be associated with the wealthy (who could afford it). In the process, high prices became an important part of lobster’s image. And, as with many luxury goods, expense is closely linked to enjoyment. Studies have shown that people prefer inexpensive wines in blind taste tests, but that they actually get more pleasure from drinking wine they are told is expensive. If lobster were priced like chicken, we might enjoy it less.
Read the full story at The New Yorker