Thursday, September 5, 2019

econlife - The Surprising Reason That We Love Our Pumpkin Spice Lattes by Elaine Schwartz



We are about to witness the earliest (and maybe biggest) Pumpkin Spice Latte (PSL) launch ever. A week earlier than last year, the Dunkin’ pumpkin menu will roll out on August 21. At Starbucks we have to wait until August 27.

Perhaps because we were used to the Tuesday after Labor Day, the official Starbucks launch date feels much sooner. Below, you can see they made the switch last year:



Commenting on its popularity, a Dunkin’ employee suggested that pumpkin syrup be available all year round.

That would be a big mistake.

The Pumpkin Spice Latte

The Dunkin’ fanfare includes eight stores temporarily named Pumpkin’ where 250 guests will get some free pumpkin flavored coffee and a lip balm named Munchkins. (The eight stores will be in eight locations that together spell pumpkin–maybe Paducah, Utica, Memphis…we shall see.) Although apple cider doughnuts are new to the Dunkin’ menu, it’s the Cinnamon Sugar Pumpkin Signature Spice Latte that is creating the buzz.

Meanwhile Starbucks is engaging in its own product differentiation:




Our Bottom Line: Diminishing Marginal Utility

With all of this happening, there still is just one reason for the huge popularity of the Pumpkin Spice Latte. It is all about how much we enjoy that extra cup.

Given a pile of chocolate chip cookies when we are hungry, the first is delicious and so too is the second one. But then the extra pleasure we get from each subsequent cookie plummets. Or, using economic language, we say that the marginal utility diminishes.

Similarly, when Pumpkin Spice Lattes hit the menu, fans rush to purchase them. For whatever reason–taste, anticipation, trendiness–the quantity we demand surges. Next however, the excitement subsides and, sooner or later, we buy less. Like our chocolate chip cookies, we experience diminishing marginal utility. Every extra Pumpkin Spice Latte tastes less good…

However, before we can touch the bottom of our demand curve, Thanksgiving arrives and these limited edition drinks disappear from the menu.

So why do we love our PSLs? Because they are gone for at least eight months.

My sources and more: My first hint that a PSL would arrive early from Dunkin’ came from the NY Times. At the same time, BusinessInsider told us about the Starbucks rollout and this 2014 article described its discovery. Finally, I should add that although I am in Starbucks frequently, I have never purchased a PSL because I am one of the few people who dislike it.

Also, please note that several of today’s sentences about diminishing marginal utility were published in a past econlife and our featured image is from eater.com.



Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.