A test of fundamental economics

No, not something that will win you the Bank of Sweden Prize but rather a simple honours research project crossing the domains of economics and human behaviour. The subject is toilet paper.

You might have noticed that the quality of toilet paper in large office blocks, universities, schools and sporting complexes usually isn’t a patch on what you might have a home. A quick check of warehouse prices for bulk buys of toilet paper suggests that you could spend anything from AUD$0.40 to AUD$1.60 per roll so my guess is that purchasers believe that buying a lower quality product will save money overall. But does it, or does usage increase as quality decreases, more than compensating for any of the original cost-per-item saving? I’m assuming that price and quality are highly correlated but they might not be.

It couldn’t be too hard to create nicely controlled experiments to answer both the question about the relationship between price and quality, and the question about quality and usage. Using my own mythical numbers, I estimate that a building of 1000 people could save around AUD$20,000 annually by answering the questions.

Contributors: Mark R. Diamond