Photo: Chris BarberA Reuters article notes that the price of rat meat in Cambodia has quadrupled, even as the overall inflation rate is “only” 37 percent.
Consumers are substituting away from higher-priced meats (beef is still four times as expensive as rat) toward rat, increasing the demand for rat meat.
If the relative price of rat has risen, how can this be? Rat meat is almost surely an inferior good, and people switch to cheaper alternatives as inflation accelerates and erodes their real incomes.
Cambodian consumers are fortunate that the price of rat meat hasn’t risen even more. Flooding in the Mekong Delta is forcing rats to higher ground and making them easier to catch; this creates an increased supply. Not surprisingly, the rise in price has raised the return to rat catching — so more kids are entering the labor market for rat catchers and are offering rat meat to the market.
Think about this the next time you see a rat scurrying across the streets of a large city; in Cambodia he might be dinner!
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Rat meat is a Giffen Good in Cambodia. The quadrupling of the price of rat, an inferior good eaten more by those with lower incomes, has eroded the real incomes of Cambodians, forcing them to consume more of the inferior good, as the income effect of rising rat prices (making Cambodians poorer) outweighs the substitution effect that would otherwise cause consumers to consume other meats when Rat prices rise.
We teach this stuff in Econ 101, but it’s hard to find good examples to use in class.. Thanks for this one!
Rat meat may soon become a luxury in Cambodia with the demand for rats rising. It has opened up a new market and new jobs as mentioned. Once a hobby for kids, rat hunting is now a job that will be in demand by the majority of population, considering Cambodia is a poor nation. If the demand for rat meat continues to rise people will look for other methods of obtaining rat meat, probably catching the rats themselves. How hard can it be? If kids can catch them, anyone can with a trap and some cheese.
The price of rat meat has risen because of the high demand in Cambodia, if this continues it will probably rise as high as the beef, which in this point will be froced to decrease its price since no one will be buying it. But still Cambodians must be assured of whether or not this meat is healthy for their development. Also this is promoting jobs for the Cambodian children as rat catchers, which is probably not something very producitve, since these children need to have a good education in order to help Cambodia’s future; someone else could do it. Definetly something with advantages and disadvantages for Cambodian’s.
I’m not sure whether the rats are necessarily sewer rats or street rats. Bamboo rats are mainly herbivorious rodents that are considered a delicacy in Southeast Asia.
It sounds funny to talk about the price of rats. I couldn’t help but chuckle when I heard that the price of rats has quadrupled, but apparently rat meat is a big player in Cambodia’s meat market. Tt’ll be interesting to see how long the price of rat meat will continue to rise. An increased supply of rat meat would logically drive the prices down, but apparently the demand for rats is peaking simultaneously.
As mentioned, Cambodia is experiencing an inflation of 37% in the country. So even though it may be surprising that such an inferior good, as well as a very common item to come by, is rising in price, you must also take into account that the average price level is rising. Meat isn’t the only good increasing in price in Cambodia. Along with these high prices, milk, eggs, flour, sugar, and other essentials are also becoming more expensive. So consumers must spend a much larger percentage of their income to buy necessities- food. While meat is more of a luxury than a necessity, it is easier to find substitutes for this product. So this is causing the widespread incrase in demand of rat meat. I would argue that although the demand for rat meat is increasing, it isn’t a rarity in Cambodia, but more of a temporary commodity and substitute. And as mentioned previously, when these prices begin to increase even more, consumers will again begin to find more substitutes for rat meat. Who knows? Maybe Cambodians will adopt China’s custom of frying up lizzards, scorpion, and other creative meat goods.
I’m missing the connection Jason sees: What evidence is there in the article that rat meat is a Giffen good? Falling real income and rapidly rising prices of substitutes have shifted out the demand curve, right? Supply has shifted out, but so far not far enough.
Funny you should mention this, I’ve looked in all the pet stores in my area for a new pet rat and none of them have any rats for sale, nor are they expecting any in soon.