Economics lessons from pet rocks?
The innovator of pet rocks, Gary Dahl, passed away last week. Readers my age will recall pet rocks sweeping the nation in 1975. In addition to making highly obedient pets, pet rocks also illustrate some important economic concepts.
The idea of rocks as pets occurred to Mr. Dahl while listening to friends complain over adult beverages at a drinking establishment about the typical problems of animal pets. Mr. Dahl guessed that people might like a “pet” that did not need to be bathed, fed, or walked, and which wouldn’t mess in the house or tear up the furniture. He was right: 1.5 million rocks sold for $4 each in a year. The Pet Rock made a list of the top fads of the 1970s.
One economics lesson from pet rocks involves entrepreneurship. Entrepreneurs introduce new products and practices to our economy. Mr. Dahl acted entrepreneurially, envisioning something that did not exist which might contribute to peoples’ lives. He packaged the rocks with extras to increase their attractiveness to consumers, like a Pet Rock carrier box complete with air holes and a humorous manual for training the rocks to sit, stay, and roll over. As happens to most entrepreneurs, I’m sure that some people laughed at his idea. But Mr. Dahl had the last laugh, becoming a millionaire from pet rocks.
Were rocks in boxes really valuable to our society? Yes, because ultimately our lives are the source of all value in our economy, and the things we invest our lives doing or making or caring about thus become valuable. Hundreds of thousands of people paid $4 for a Pet Rock. Most earned this money working. People get out of bed and spend a part of their lives working because they value the things they eventually buy. Spending money to buy pet rocks (or other items) effectively gives them some of the value of our lives.
Were pet rocks as important as food, housing and medicine? Certainly pet rocks did not help sustain life, but the value of food and housing also arise from people’s willingness to trade some of their money for these items. The source of value is the same; the difference is one of degree.
Many scholars sometimes try to claim that money, property and market values are different from and subordinate to human values. I disagree with this. We are the source of value for all things in our lives, including our families, homes, most prized possessions, animal pets, and even pet rocks.
Economists use the term subjective value to refer to how our lives and choices provide the source of economic value. Subjectivity explains the indispensability of economic freedom in creating value in society. We do not have to justify why we want to purchase each item in our cart to cashiers at a store, and the cashiers will not then reject our purchase if we do not provide a satisfactory explanation. And Mr. Dahl did not have to get permission from any authority to try to market his rocks. As long as he could find willing funding, he could give it a try.
Subjectivity makes it extremely difficult for governments to direct economic activity while still creating value. What people find amusing, entertaining, tasty or stylish is nearly impossible to determine through technical analysis. Bureaucrats quite reasonably might have nixed a proposal to bring rocks from Mexico (Rosarito Beach in Baja California to be exact) to the U.S. during an energy crisis for sale as pets as a frivolous use of funds.
The 1970s were the source of many unique ideas, and possibly none were more original than the pet rock. I am an economist and so will not try to explain why this craze swept the nation. Personally I recall that four dollars was a lot of money for me in 1975, so I domesticated a wild rock for a pet. But for a brief while, pet rocks certainly created genuine value in our lives and our world.
Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. Respond to him at email@example.com and like the Johnson Center on Facebook.