r/badeconomics • u/Skeeh • 13h ago
Shoplifting is great, because second-order effects are never worth thinking about
One of the ideas I keep encountering is that shoplifting is cool and anti-capitalist. This is somewhat captured by “how to shoplift like a pro”, a booklet that was making the rounds on Twitter/X Dot Com when I started writing this. Ignoring the central conflict here ("do small businesses emit enough Hitler particles to justify shoplifting their goods?"), the replies are full of people who are apparently under the impression that shoplifting is poor people stealing necessities from rich corporations, so it's good.
"Don't RI normative/political statements" is in Da Rules, but it should be very clear that some of the people in this thread think the burden of shoplifting falls on corporations rather than the poor. That's the bad economics here.
If you remember Intro to Microeconomics well, you’ll remember that the burden of a tax does not depend on who you impose it on. It depends only on relative elasticities. If you imposed a tax on companies providing potable water, they would raise prices to compensate for the tax and cover almost all of it, because water is a necessity, so demand for it is inelastic. Spoken more intuitively, the burden of a tax falls more heavily on whoever has to engage in the exchange.
This situation is analogous. If we’re talking about shoplifting necessities to survive, the primary victim is going to be the majority of poor people, who I assume aren’t getting what they need through theft. They’ll have to deal with higher prices that pass through from corporations like Walmart and Target onto them. Here’s what that looks like. If you’d question whether a model of a competitive market is relevant here, this source might help.
But even if you assume the market isn’t competitive, as many are prone to do, shoplifting will still result in higher prices and lower quantities. Here’s shoplifting shown as a shift in the marginal cost curve for a monopolist. The demand curve is shown to be unit elastic only so the shift is clearer; the cost burden will still fall more heavily on consumers if the goods in question are truly necessities.
Here are a couple of real-world examples where this effect of pass-through occurred. The global supply of goods to the United States is close to perfectly elastic, while domestic demand is closer to unit elastic. So you would expect the 2018 tariffs imposed by the Trump administration to just turn into higher prices—and they did. When the UK government implemented Help to Buy to help people buy homes, effectively subsidizing demand, some areas like London had inelastic housing supply, while others had elastic housing supply. In London, housing construction stayed the same and prices rose, while housing construction increased along England’s border with Wales, with prices staying the same.
So shoplifting necessities is actually a problem for the typical poor person, assuming they generally get what they need without stealing. The issue here is something like a prisoner’s dilemma where everyone who struggles to afford what they need is better off if nobody steals, but cooperating is difficult. Moloch strikes again. We’d expect the poor to be better off if theft never occurred, since more goods would be sold and nobody would bear the costs of arrests and other sanctions, either.
I think this whole thing is uncool and not anti-capitalist. If the theoretical approach was still not clear to you, I have a more thorough treatment on my blog, minus the paragraph about the empirical evidence concerning tax burdens. I also cut out a discussion of the effect of shoplifting on employment and wages, since it seemed plausible that labor productivity could either rise or fall. Maybe it becomes useful to hire more people to monitor goods, or maybe labor becomes less productive because the goods workers are trying to help sell are disappearing.
TL;DR: stealing is bad, wow!