Home sweet home

After reading the previous blogs, we are sure that the consistency of brand success in different cultures is a difficult assignment. But it gets more complicated. Did you know that migrants hold on to their local habits, even after 50 years and even if they have to pay a lot more for it?! Just look at the big sympathy that expatriate Britons in New York have for their pots of Marmite, an original British pasta with a distinctive, powerful flavour, which is extremely salty.

A new study by economists from the universities of Tilburg and Chicago did a research and discovered two things. First of all that there is a lot of variety in the most preferred brands in different regions, although every region had the same choice of brands. Second remark: 16 % of the studied people were migrants. The test clearly showed us that they bought fewer local hits and more from their original hometown, even after 50 years.

This phenomenon has important consequences on how economists calculate the gains of trade, according to David Atkin of Yale University. As we all know from our economy class last year, opening up a region to (inter)national trade can raise the relative prices of the goods where the region has a comparative advantage in. This goods were often the cheapest in a closed economy and therefore also the most used.

In theory, people change their purchases of food when the relative prices change. Mr. Atkin proved that in practice, consumers keep practising their traditional food preferences. This means less food for more money.

Did the economists, who stimulated the liberalisation of trade, forget that people can also be traditional instead of rational?

Lara Moons.

The Economist