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Pizza Economics: The Life of a Pie

Apr 17, 2013 • Behavioral Economics, Businesses, Economic Humor, Households, Innovation, Labor, Macroeconomic Measurement • 506 Views    No Comments

Pizza economics could provide good case study potential for looking at income inequality, a creative workplace, and (from Saturday Night Live) starting a small business.

Income Inequality:

  • In Williamsburg Brooklyn, you can buy pizza made by a chef who graduated from the Culinary Institute of America. At $3.25 a slice, it has homemade mozzarella, gourmet dough, and specially imported Sicilian oregano.
  • Also though, the dollar slice is spreading. All in Manhattan, there are nine 99-cent Fresh Pizza stores and eleven 2 Bros. Pizza stores that sell the dollar slice. The dollar pizza reminded me of the Model-T Ford. It uses less expensive ingredients that can be standardized, its price is low, and it requires high volume for its producers to make a profit.

We could say that pizzerias are catering to the hourglass consumer. In a post on Starbucks raising and lowering prices rather than targeting the middle, we suggested imagining an hourglass to describe consumer buying behavior. A bulge at the top, a bulge at the bottom, and a squeezed middle class.

A Creative Workplace:

  • Described in a bio of Amazon founder Jeff Bezos, the “two pizza team” is the biggest size to which any group should expand. If it takes more than 2 pizzas to feed a work group, then it is too large to generate independent ideas.

Starting a Pizza Eater Business:

  • Hilarious, Melissa McCarthy’s proposal for a small business loan for a pizza eating business is from Saturday Night Live. Her philosophy:  ”Do what you love and the money will follow.”

Sources and Resources: This (gated) WSJ article was a good source of information on the growing divide between cheap and expensive pizza while here at econlife, we discussed Manhattan’s pizza price war.

Hat tip to the Slice blog for the McCarthy clip.

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