Last updated on September 17th, 2023
Heard about the law of large numbers (LLN)? LLN is a fundamental principle in probability theory and statistics applicable to economics, the idea is as the number of independent random trials increases, the average of the observed outcomes will converge to the expected value. While the law of large numbers is typically applied in the context of probability and statistics, At Vegan Is Us we explore its application to the economics of veganism:
- Market Demand: The law of large numbers suggests that as more individuals adopt veganism, the overall demand for vegan products, including plant-based foods and alternatives, is likely to increase. This increased demand can lead to economies of scale, enabling manufacturers to produce larger quantities at lower costs. As a result, prices may decrease, making vegan products more affordable and accessible to a wider range of consumers.
- Cost Reduction: Large-scale adoption of veganism has the potential to impact the costs associated with agriculture, food production, and supply chains. Increased demand for plant-based ingredients can incentivise agricultural practices that focus on growing crops for human consumption directly rather than using them as animal feed. This shift could lead to cost savings by eliminating the resources required for animal farming, such as feed production, animal healthcare, and transportation.
- Technological Innovation: The law of large numbers suggests that as more individuals embrace veganism, there will be a greater incentive for research and development in plant-based alternatives. This can lead to technological advancements in food processing, manufacturing, and ingredient sourcing, resulting in more diverse and affordable vegan options. Innovation and economies of scale could drive down production costs and improve the overall quality and variety of vegan products that would be good for the planet.
- Investment and Infrastructure: As the number of individuals adopting veganism increases, there may be an influx of investment in vegan businesses and infrastructure. This could include the establishment of vegan restaurants, plant-based food production facilities, distribution networks, and retail outlets. The law of large numbers suggests that this increased investment could spur further growth and development in the vegan sector, potentially driving down costs through improved efficiency.
- Supply Chain Optimisation: With a larger market for vegan products, supply chains may become more optimised and efficient. This could involve streamlining processes, reducing waste, and improving logistics, ultimately leading to cost reductions. The law of large numbers implies that as the vegan market grows, supply chains will adapt and evolve to meet the increasing demand, potentially resulting in improved economies of scale, lower prices, and improve animal welfare.
It’s important to note that while the law of large numbers can provide insights into potential economic effects, it may not guarantee specific outcomes in the short term because economic dynamics are influenced by various factors, including consumer preferences, government policies, technological advancements, and market competition. The law of large numbers provides a conceptual framework to understand how the scale of veganism can impact economics, but its actual realisation depends on a multitude of complex factors and interactions within the wider market. However, in the long run, we hope that there would measurable optimal outcome that keeps our ecosystem safe.