Why eggs are cheaper than you think

By Megan McArdle. Excerpts:

"The truth is that U.S. egg production is still recovering from a bout of avian flu that has devastated flocks in the United States and Europe. And while activists and senators are puzzled by how a 29 percent decline in egg production can lead to a much larger increase in the price of eggs, agricultural economist Jayson Lusk says that’s exactly what you would expect with a product for which demand is relatively insensitive to price changes. Americans do love eggs — we consume an average of 277 per person, per year — and, unfortunately, eggs don’t have a lot of close substitutes. If the price of meat rises, you can downgrade from steak to ground round, but when the price of eggs goes up, well, most people don’t want to make do with a yogurt omelet or toss a block of tofu into their cake in lieu of egg whites.

This inelasticity explains why the price of eggs has spiked so much — from $1.79 in December 2021, to $4.25 a year later — and also why we’ve noticed: We’re buying a lot of pricey eggs, and we resent it. The good news is that flocks are recovering, and the price of eggs has already begun to decline. In the meantime, it might help to contemplate that as expensive as they are, eggs are still really cheap, historically speaking.

If you look at old cookbooks, you will notice that the authors seem to view eggs and chicken as almost a luxury good. My 1950 “Betty Crocker’s Picture Cook book” contains recipes for making mock chicken dishes — out of veal. Go back further and the 1896 Fannie Farmer cookbook sternly informs readers that, “eggs, even at twenty-five cents per dozen, should not be freely used by the strict economist.” An odd assertion to the modern ear, until you realize that in 1896 a pound of round steak was about 35 percent cheaper than a pound of eggs. (Today, by contrast, a pound of eggs — about 9 eggs — would cost you roughly $3.21 at my grocery store, while a pound of round steak is $8.69.)

In between then and now we had a vast increase in household incomes, and a shift in the price of chicken relative to other meats.

In 1901, the average family spent 42.5 percent of its budget on food, and, according to economist Deirdre McCloskey, a typical middle-class household devoted about 44 hours per week to preparing food. By 2021, U.S. consumers were spending about 10 percent of their household income on food, and less than 10 hours a week preparing it. Advances in food processing, coupled with a century of economic growth, have liberated almost 35 hours a week, and a full 30 percent of our incomes, to spend on something else. And that has happened even as our food consumption has shifted toward things that would have been luxuries back then. People eat berries out of season, fresh seafood even far inland … and the average person eats about six times as much chicken as they would have a century ago.

Which brings us to the relative price shift. Almost all food items have gotten much cheaper, relative to our incomes, than they were a century ago. But some food prices fell faster than others, and chicken and eggs were among those that saw the greatest improvements, thanks to a combination of agricultural innovations. Raising chickens indoors helped protect them from disease and predators. Providing them with warmer conditions and artificial light helped extend a laying season which otherwise stops in winter. Farmers developed the raised cage system which has helped increase egg production, as have breeding programs. Modern hens have gone from laying about 150 eggs per hen per year in the 1930s, to 296 today."

"But the benefits of this revolution have also been enormous. In 1905, an average male factory worker older than 16 took home $11.16 a week, enough to buy about 41 cartons of eggs. Today, the median man earns $1,176 a week, enough to buy more than 275 cartons of eggs, even at today’s elevated prices. If you can’t help cringing when you see the cashier ring up eggs that cost twice as much as they did a year ago, it might help to remember that however poor you feel, your ancestors would have taken one look at your grocery cart and declared you rich beyond their dreams."