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3.3 SPECIAL PREFERENCES 93

A recent study of wine drinkers came to a similar blind taste test. The team blended a high-end organic
conclusion. 8 The food and wine publishing firm dog food made exclusively from “human grade” agri-
Fearless Critic Media organized 17 blind tastings of cultural products until it had consistency similar to
wine by 506 participants in 2007–2008. Wines ranged paté. This was compared to Spam, 10 supermarket liver-
from $1.65 to $150 per bottle. Tasters were asked to as- wurst, and two types of gourmet paté. The good news
sign a rating to each wine. The data were then statisti- is that 72 percent of tasters ranked dog food as the
cally analyzed by economists. They found a small and worst tasting of the five products. The bad news is that
negative correlation between price and rated quality. this result was not statistically significant!
They did find a positive correlation between price and These kinds of studies do not suggest that all
quality among tasters with wine training, but the cor- consumers regard all beer, wine, or paté style prod-
relation was small and had low statistical significance. ucts to be perfect substitutes. However, when a con-
Two members of that research team recently col- sumer does not have a strong preference for one
laborated on a similar study that is perhaps a bit more brand over another, the marginal rate of substitution
9
troubling than the wine research. Noting that canned of brand A for brand B might be nearly constant, and
dog food and paté are both made at least partially from probably near 1, since a consumer would probably be
small pieces of ground meat, they studied whether willing to give up one unit of one brand for one unit
(human) tasters could distinguish the two products in a of another.

shown in Figure 3.13. Since MRS P,W 1 2 , on a graph with P on the horizontal
axis and W on the vertical axis, the slope of the indifference curves is 1 2 .

Preference
4 directions
W, waffles 2 U = 8

U = 4 FIGURE 3.13 Indifference Curves with Perfect
Substitutes
A consumer with the utility function U P 2W
4 8 always views two pancakes as a perfect substitute for
P, pancakes one waffle. MRS P,W 1 2 , and so indifference curves
are straight lines with a slope of 1 2 .

PERFECT COMPLEMENTS
In some cases, consumers might be completely unwilling to substitute one good for an-
other. Consider a typical consumer’s preferences for left shoes and right shoes, depicted
in Figure 3.14. The consumer wants shoes to come in pairs, with exactly one left shoe for
every right shoe. The consumer derives satisfaction from complete pairs of shoes, but
gets no added utility from extra right shoes or extra left shoes. The indifference curves in
this case comprise straight-line segments at right angles, as shown in Figure 3.14.

8 R. Goldstein et al., “Do More Expensive Wines Taste Better? Evidence from a Large Sample of Blind
Tastings,” Journal of Wine Economics (Spring 2008).
9 J. Bohannon et al., “Can People Distinguish Paté from Dog Food?” American Association of Wine
Economists’ Working Paper #36, April 2009.
10 Spam is an inexpensive canned food made out of precooked chopped pork and gelatin.