"I like it okay. But the thing I am interested in is how societies create wealth and I think you'd learn more about that trying to do it. We're taxpayer-funded. I want to have money in my bank account because that's how much wealthier I made the world."

"Here I thought the money was how much wealthier I made me."

"There are complicated technical tools for measuring the former but in freeish markets they strongly correlate."

"...cool."

"Yep."

"Making the world richer one end table at a time." Snort.

"But that's exactly what you're doing! People buy what they want - less true in some really complicated industries but furniture is that at its purest, you don't have to factor in that maybe consumers aren't very informed about the product, they know exactly what they're getting - and so pretty much every furniture transaction leaves the buyer better off. It's the same principle as the thing where you pay your employees because you make more money having them as employees."

"If I only made as much off them as I pay them I might as well not have them."

"Yep. The thing we measure when we talk about wealth is the difference between how much you make off them and how much you pay them, or for end table sales the difference between how much they would pay for a table and how much they actually have to pay."

"How do you figure out what they'd pay for it?"

" - do you mind if I draw a graph."

"As long as it doesn't need more than two colors and four labels to make its point."

"That is very reasonable. It doesn't. So you can survey people - or look at buying decisions under conditions of artificial scarcity when prices are temporarily really high - or check how their buying behavior moves in response to coupons and subsidies - and you can draw a curve of how many people would buy an end table at various price levels -" curve!

"- and you probably have better data on that than we do at least within the price range you actually consider setting the end tables, because you've more incentive to get it right. And then you can survey carpenters on how many end tables they'd be willing to make if end table prices were set at forty ni, at sixty ni - the idea being that if someone was undercutting you and you couldn't move them unless they were cheap you might close a marginal factory but keep one that's very productive, and that if prices got really high you might build a whole new one or change machinery over from chairs -" curve!

"And in theory the price point is here -" dot - "and the area under the one curve is how much wealth has been created for producers and the area under this other curve is how much wealth has been created for consumers and added together you've got how much wealthier the world is. And then there's lots of empirical data that lets us guess the areas under the curves without constantly surveying everyone about their end table preferences. And lots of empirical data that lets us guess how the consumer surplus tracks the producer surplus in simple consumer goods industries. - you want to be able to do that because producer surplus is easy-peasy to measure, it's just your profit plus all your fixed costs, but consumer surplus is tricky to measure directly. But for consumer goods we know how reliably they correlate and so we can say with around 90% confidence that you make the world richer by something between two and four times your profits, every year."

"Is this hypothetical 'what if tables, in particular, were suddenly expensive for no reason', or does it take into account that there'd be a reason and lots of other things would be more expensive too -"

"It's about what you can sell them for, it assumes your costs of producing them doesn't change. If, say, wood got more expensive then we'd redraw the supply curve like so and the price point would be different."

"I was thinking shipping, people absolutely hate paying for shipping so I hide it in the price of the furniture even though this means nearby delivery orders subsidize faraway ones."

"Clever. If you could sell them for double whatever they currently sell for - maybe they got really trendy - that might make it worth shipping to most distant places, that'd be the sort of thing that influences these numbers."

"How's this handle price discrimination?"

"'s a way of eating into this curve, right? The ideal for you is to charge every customer exactly as much as they'll pay for the end table, and if you actually did that the consumer surplus would be zero. In practice price discrimination that fine-grained is practically impossible - but castes reduce consumer surplus a lot, because it's totally doable to sell the same furniture for more in a store in a blue neighborhood and presume the blues won't go over to a purple store even to buy the exact same thing at half the price."

"I do that but the online orders can't tell, I have to be sneakier with those."

"Is there a way to do it? Different websites, different ads?"

"It's all one website, but yes, different ads, slightly different products that some people have a preference between that cost different amounts so half the people who have a preference get to fill it only if they're less price sensitive, sales, discounts, add-ons. I'll ship things assembled if you pay a ridiculous amount extra and some people actually do it."

"I guess if your time is worth a lot and you haven't household help - I bet that describes mostly purple business owners and yellow programmers, actually -"

"Surveys suggest, yes."

"Blues and greens are busy but on the margin our time's not really worth very much money. I think that probably affects a lot of policy in a bad direction, honestly."