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Why Does Your Refrigerator Have a Light, But Not Your Freezer?

Robert Frank: Today's question was posed by my former student Karim Abdallah. "Why," he asked, "does a light come on when you open the refrigerator but not when you open the freezer?"

The cost-benefit principle offers a promising framework for thinking about this question. In both compartments of the appliance, the cost of installing a light that comes on automatically when you open the door is essentially the same. It is also what economists call a fixed cost, which in this context means it does not vary with the number of times you open the door.

The benefit of having a light inside either compartment is that it becomes easier to find things. Since most people open the refrigerator far more often than the freezer, the benefit of having a light in the refrigerator is considerably larger.

So with the cost of adding a light the same in both cases, the cost-benefit test for whether to add a light is more likely to be satisfied for the refrigerator than for the freezer.

Of course, not all consumers place the same value on the convenience afforded by a light in the freezer. In general, the benefit of such features, as measured by what people are willing to pay for them, tends to increase as income increases. The cost-benefit principle thus predicts that consumers with extremely high incomes might think a light in the freezer well worth the extra cost. And indeed, the Sub-Zero Pro 48 refrigerator has a light not only in its freezer, but also in its separate ice drawer. The price of this unit? $14,450.

Robert Frank's latest book, The Economic Naturalist's Field Guide: Common Sense Principles for Troubled Times, was published last month. He is guest-blogging for the Business Desk for the next few weeks.

-- Posted July 2, 2009 | Comments (1) | Permalink