when egg prices rise, is it “rent”? not quite.
recently, portland city council member mitch green posted a graph on bluesky that aimed to show how much of the egg price spike during the 2025 bird flu outbreak constituted what he labeled “pure rent.” the graph implies that egg producers earned excess profits without producing more — just taking advantage of a crisis.
while the motivation is understandable — concern over affordability during a crisis — the analysis contains a subtle but critical economic error: a false counterfactual. see, economic rent “is any payment to the owner of a factor of production in excess of the costs needed to bring that factor into production”. so if i would have been willing to produce a widget for a payment of merely 10 dollars, and i sell it for 15, there was 5 dollars of rent.
the test
the test of whether that 5 dollars is indeed a rent is to subtract it and see if behavior remains unchanged. so the correct counterfactual in mitch’s graph should be an alternative in which the bird flu still occurred, supply remained constrained, and prices were lower — meaning producers earned less revenue per unit. the key question is: would they still have produced the same quantity of eggs under that scenario? if not — if they’d cut back or exited the market — then the extra revenue isn’t rent, it’s a necessary incentive. by instead comparing to the pre-bird flu market, his graph treats all price increases as unearned, ignoring the new economic reality. the correct graph looks like this:
what actually happened in the egg market?
avian flu wiped out tens of millions of hens, reducing egg supply. with demand mostly stable, this caused prices to rise. this is textbook supply-and-demand: a leftward shift of the supply curve, leading to a new equilibrium with higher prices and lower quantity.
j.g.p.m. (just give people money)
but all of this talk of mitch green’s erroneous graph obscures a more fundamental flaw in the very idea of rationing as a policy.
let’s start by imagining that people are allowed to sell their rationed eggs. some might object to this idea, fearing that people who don’t even want eggs will buy them just to sell them. intuitively, this may seem problematic, because it seems like we’re bypassing the intent of rationing: giving eggs to people who need them.
but why is this a problem? why should the size of a person’s social safety net benefit depend on how much they specifically like eggs more so than on their need? why should we help a relatively well off person who likes eggs more than we help a poor person who doesn’t like eggs? that makes no sense.
in addition to who receives the benefit, there’s the irrationality of earmarking the benefit to a specific good in the first place. why help someone obtain eggs if there’s something they value more, like bread — or even a non-food good like clothing for that matter? a person who doesn’t like eggs might find greater value in selling their rationed eggs to buy something they truly need. i’ve voluminously discussed this gift card fallacy before.
once we accept the advantage of allowing people to sell their rations, it logically follows that we might as well reduce the wasteful cost of having them show up to the grocery store and buy their rationed amount and then hawk it on corner. instead we can simply give them ration cards they can sell to others who value them more, thus facilitating a market for eggs without restricting consumption.
but then we should realize: if we’re giving people ration cards that hold value, why not skip the middle step and just give them cash directly? no need to deal with the friction of collecting cards and reselling them. just give them cash and eliminate the inefficiency altogether.
at this point, we’re essentially talking about a universal basic income (u.b.i.). cash is more efficient and flexible, and it avoids the problems of rationing. it’s a cleaner solution that ensures people can get what they need based on their personal circumstances — not on some arbitrary distribution of eggs based on a temporary price spike. ultimately, u.b.i. allows people to use their resources where they see fit, optimizing their welfare, and eliminating the waste associated with rationing systems.
this also elegantly solves another irrationality of rationing that i skipped over. i discussed how irrational it was to earmark specific goods, like eggs. but even more so, why earmark based on it having experienced a recent change in price rather than based upon its price in absolute terms?? there are plenty of things people value every bit as much as eggs that are just inherently more scarce and therefore expensive all the time.
