[jfengel]

That doesn't strike me as a problem. It models what consumers actually do. The consumers are still being fed and they're suffering only a minor loss in their preference.

They don't keep any kind of hedonic measure, which might be interesting. If a consumer would rather have steak, but switches to chicken when it's over $10/pound, and then switches to tofu when chicken hits $10/pound, they're considerably less happy even if they're reasonably well fed.

You could probably use that to calculate some kind of hedonic metric: "I was originally willing to pay only $1/lb for tofu because it brought me 20% of the pleasure that a $5 steak would have." But you're not 80% less happy overall, since food is only part of your total happiness, so you'd need a "basket" of happiness.

[Tadpole9181]

What? No. How in the world would that be an honest reflection of economic health?

Even in your ideal scenario, if they switch to chicken. Compare the old price and new price of the chicken.

Under your model, if people stop buying toilet paper, there's a 100% REDUCTION in the price of toilet paper in the model. The economy must be great! And, what, do we only want to care that food got more expensive the moment people are starving to death or eating pagpag to survive?