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Trade gives consumers more choice by increasing variety in the marketplace, correct?

As Virginia Postrel writes in her latest article in Economic Scene in the NY times: "Being able to get exactly the coffee you're in the mood for makes you, in a sense, better off. But this improvement in consumer welfare has tended to go unmeasured."

Well, look no further, because, lo and behold, in a recent working paper for the National Bureau of Economic Research, David Weinstein (Professor of Economics at Columbia University) and Christian Broda (an economist with the Federal Reserve Bank of New York) estimate how much international trade has benefited consumers simply by increasing variety.

Using some phat mathematical models (extremely complicated, of course), the calculations took about four days using four computers. Ten years ago, the economists estimate, the same calculations, also using four computers, would have taken more than four months! As Ms. Postrel states dryly in her article: "Little wonder that nobody has done this calculation before."

And the final tally?

"Consumers, the economists estimate, would be willing to pay $280 billion a year, or about 3 percent of gross domestic product, to have access to the variety of goods that were available in 2001, rather than what they could have bought in 1972."

Damn! Variety is EXPENSIVE.

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