LETTING CONSUMERS VALUE IMPROVEMENTS. Kids, do not take lightly improvements that you think are frivolous (such as the improvement of Grand Theft Auto V over Grand Theft Auto IV cited by the Goldman Sachs economists in yesterday’s post). When Meyer Burstein presented to us in Economics 1 the problem of measuring product improvements, he chose a product that seemed frivolous—a new cream that cured chronic itches. The class tittered as Burstein described the suffering that could now be relieved, and he made the point that the judgments of people who had the itching problem and thought it was unimportant should not prevail.

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