Trade restrictions typically cost students very little as a percent of their expenditures, so it is all too easy for them to conclude that economists' ideas about international trade are abstract and apply little to their daily lives. Conducting a Coca-Cola tasting in the classroom can help drive home how international trade policy affects them in a way that they will remember beyond the final exam.
Import quotas push the price of sugar (i.e., sucrose) in the U.S. far above the world market price. In 2006 the average world market price for raw sugar was 15.5 cents per pound, while in the U.S. the same pound of sugar cost 22.1 cents. Over the last 25 years the U.S. price of sugar has averaged more than double the world market price. As Figure 1 shows, a consistent gap between U.S. and world market prices has existed since 1960, and the trend has been particularly pronounced since 1982. Meanwhile, corn subsidies combined with the sugar quotas keep high fructose corn syrup prices in the U.S. consistently below the U.S. price of sugar. (1)
As a result of these price differentials, Coca-Cola alters its recipe in the U.S. Coca-Cola is made using sugar throughout the world but it is made with high fructose corn syrup in the U.S. The result, in my palate's opinion, is that Coke tastes less "sharp" in the U.S., though not necessarily less sweet. (2) In any case, most students can easily identify a taste difference between international Coke and domestic Coke when they are tried side by side. Thus, a horizontal Coca-Cola tasting in the classroom can show a direct way that international trade policy affects their lives. (3)
[FIGURE 1 OMITTED]
You can conduct an effective tasting in a variety of ways. I usually conduct the tasting shortly after a trip abroad so I can bring back the Cokes myself and tell a recent story about how I enjoyed the different taste while away and wanted to share it with them. However, you need not go abroad to conduct this exercise. Many neighborhood stores in areas with high concentrations of Mexican immigrants carry Cokes bottled in Mexico and imported to the U.S. against Coca-Cola company policy. (4) Just check the bottle: If "Hecho en Mexico" is written on it, you have found an international Coke. Coke also bottles kosher Coke, made with sugar, during Passover, which tastes the same as international Coke. Although this third option is acceptable, the first two are clearly better because they involve an international...