Gun Law “Rumors” Can Dictate Gun Economics

The stock market and Futures markets are controlled by the same things…supply and demand…expectation of things to come. When there is low supply demand usually increases and of course prices increase. It’s a scarcity principle in economics. This is the same for perceived issues that might be occurring, such as the weather in the prediction of crop production. Our economy is run by these types of indicators and expectations. So is the firearm market…

While people think more gun controls and stricter gun laws will diminish the supply of guns, it has shown to work in the opposite way. When there is a fear that with fewer guns will be available because of these stricter laws (scarcity) the behavior seems to follow basic economics…demand goes up as well as pricing. But when there isn’t talk about the laws changing or becoming more limiting, then the demand goes down (lowered fear of scarcity) along with the pricing. We have seen this played out numerous times over the past several years.

The easiest way to see how this works is when there is a major news event about a shooting. Almost overnight the faction that wants stricter gun laws kicks into gear and wants to get some new laws passed to restrict the sales and ownership of firearms. This creates a “perceived state of scarcity” and while you might think lower firearm sales would happen, the exact opposite happens…demand and prices go up.

Take for instance the shooting at Sandy Hook just a few years ago. There was a great article written in the Sentinel and Enterprise News talking specifically about how this happened in the Twin Cities region. The article, “Area gun-permit applications spiked after Sandy Hook,” that talks exactly to this point. They pointed out what exactly happened after the Sandy Hook shooting…

“In the wake of the Sandy Hook Elementary School shooting in December 2012 and the public discourse over limiting gun ownership, the opposite happened: Gun permits issued throughout the Twin Cities region and elsewhere spiked in the year after that tragedy. And when the talk about gun control passed the news cycle and the airwaves, the number of issued gun permits came back to normal levels in 2014.”

So watch the laws in our own area as the discussions happen over more or less gun control. I think you will be amazed at how well this follows economic principles. The element of “perceived scarcity or abundance” plays havoc on almost anything…even gun laws and purchases. If you have seen this in other areas, share your story. We are seeing this happen right now in the Pacific Northwest with both Washington and Oregon with regard to “background check” laws.

Sorry, comments are closed for this post.