Complementary goods: Choice architecture edition

In economics, complementary goods are goods where the demand schedules move together. Typically, complementary goods are used together. A classic example is hot dogs and hot dog buns. If the price of hot dogs rises, the demand for dogs falls. So does the demand for buns.

In choice architecture economics, the Nudge blog proposes that complementary goods are also goods frequently used in combination, and goods whose arrangement together can promote better decision making.

Consider the following humorous example at a grocery store. Beer and condoms. Two things that belong side-by-side. (Hat tip: Kelly Carter)

Addendum: Jodi Beggs spots more complementary goods over at the Consumerist. Beer and ping pong balls (for beer pong, of course). The link is below in the comment section, but this photo is too perfect.

Tags: ,

  • http://www.economistsdoitwithmodels.com Economists Do It With Models

    I would be curious to know whether it works the other way around- in other words, whether you could make goods act as complementary goods by placing them next to each other.

  • http://www.economistsdoitwithmodels.com Economists Do It With Models

    I would be curious to know whether it works the other way around- in other words, whether you could make goods act as complementary goods by placing them next to each other.

    • http://www.nudges.org/ Nudge blog

      Interesting. Food is a good example that has many goods that I would think yes. As different cuisines have become popular in the U.S. they have introduced new ingredient combinations. These combinations probably aren’t always on the top of a customer’s head – like hot dogs and hot dog buns. But if they were side-by-side, customers would recognize their complementarity.

  • http://www.nudges.org/ Nudge blog

    Interesting. Food is a good example that has many goods that I would think yes. As different cuisines have become popular in the U.S. they have introduced new ingredient combinations. These combinations probably aren't always on the top of a customer's head – like hot dogs and hot dog buns. But if they were side-by-side, customers would recognize their complementarity.

  • Nudge blog

    Interesting. Food is a good example that has many goods that I would think yes. As different cuisines have become popular in the U.S. they have introduced new ingredient combinations. These combinations probably aren’t always on the top of a customer’s head – like hot dogs and hot dog buns. But if they were side-by-side, customers would recognize their complementarity.

  • http://www.economistsdoitwithmodels.com Economists Do It With Models

    Here's some photo evidence of one example of the complements concept :)

    http://consumerist.com/2010/07/one-stop-shoppin…

  • http://www.nudges.org/ Nudge blog

    :) Gotta put this photo in an addendum.

  • http://www.economistsdoitwithmodels.com Economists Do It With Models

    Here’s some photo evidence of one example of the complements concept :) nnhttp://consumerist.com/2010/07/one-stop-shopping-for-beer-pong.html

  • Nudge blog

    :) Gotta put this photo in an addendum.