Thursday, January 31, 2008

More on time in a capitalist economy

Part of what interested me in the article was the time requirement to find the best price. Economists tell us that prices are supposed to be signals indicating how utility can be produced with the least opportunity costs. In this sense, exploring alternative prices can be seen as a productive activity. Here, the problem is that business is creating an artificial need to muck around to find the best price.

Parents take eggs out of the refrigerator to hide them on Easter, because children enjoy looking for them. This article suggests that the stores are wasting their own energies manipulating prices in order that they can make potential customers chase around for the best deal.


Robert D Feinman said...

I think many of the purchase decisions that people make are based upon reasons other than those offered when asked.

For example, many people now buy a coffee and a "something" on the way to work. They claim that this saves time over preparing it at home. But, in many cases this is not so. One can use an automated coffee maker to prepare coffee while dressing and pickup your muffin (bought in advance) from your cupboard as you leave.
Cost 15 cents for the coffee, 50 cents for the muffin vs $3-7 in the store.

Another example is bread. I've taken to baking bread in a bread machine. Total prep time is ten minutes (measure ingredients and dump in machine). Cost of the loaf is about thirty cents, compared with $3 in the store.

Shopping takes time. I'm willing to guess that it takes longer than ten minutes to buy a loaf a bread (of course you can combine this with other purchases).

So, it's not time or money that is the motivation, but some sense of indulging oneself with little luxuries.

It's all part of being a conspicuous consumer. Something that is so ingrained now that we don't even use the term anymore.

Anonymous said...

There is more than one reason why buyers spend "extra" time shopping for retail items. As I've noted previously, I sell expensive cars.
Some buyers can't be bothered shopping here, there and everywhere in the hope of saving $500-$1,000, sometimes more. Those understand that there are trade offs in getting the lower price; less flexibility of color and options choices. But for some the savings is as important as the ownership. It often seems clear that the buying process is as important as the ownership of the product or its price.

Others seem most put off by the flexibility of retail pricing of an expensive item. They claim not to enjoy the "haggling" that takes place, but they want the lowest price all the same. There is no fixed lowest price because individual dealers are not permitted by law to fix a lower or higher price. So the buyer, in many cases, drive themselves nuts while they drive the sales staff nuttier, in search of the bottom price. Many buyers seem to actually be relieved if the specific model they want is in short supply, causing the prices to be firm from the seller's perspective. The buyer doesn't have to fight over the price. The market has set a higher value and bargaining is not available.

The cost of time doesn't frequently seem to be a significant consideration on the part of the buyer. I suspect, however, that those who don't look for the bargain basement price and rely more on their relationship with the seller, are taking cost of time into consideration. On the other hand, I've worked with professionals who are likely to be earning over $200 per hour of the typical 35 hr work week who will spend an inordinate amount of time to save $500. There is some element of ritualistic behavior involved in the buying process.

Sandwichman said...

Shopping at the at the co-op grocery store where I work is a social occasion for many of the customers. They expect to run into friends shopping and they have friends among the staff whom they chat with. They take the kids along and discuss with them what they would like to eat and talk to them about the nutrious value of various foods. In many cases, the economic abstraction, which focuses on the exchange of money for commodities, puts the cart before the horse. There is, ultimately, an economic transaction but the meaning of that transaction cannot be reduced to supply, demand and price.

Michael Perelman said...

Tom is absolutely correct. Our farmers market is a social event without the fetishism of commodities.

Shag from Brookline said...

Back in my salad days (decades ago), I looked upon this topic romantically per song lyrics: "Time on my hands, You in my arms ...." Spending time haggling over prices is not a satisfactory substitute, unless seeking Viagra bargains.

Also, consider the time involved in returning a product that doesn't work well but has a low cost or value. Cheaper to recycle?

Eleanor said...

Sandwichman -- Have you read Oliver Sachs' book on music? Some of the material reminds me of your posts on music, dance and work.

Now, on to the topic at hand... I have always thought the model that says that people rationally search for the best deal is nuts. Often, people don't have the ability to make such a search -- lack of time, lack of transportation, lack of someplace to put the kids while you shop. As Jack mentions, the search for the best deal can be irrational. You spend more in time than you save. But for people who enjoy hunting for deals, this is fine.

Any model for how people shop needs to include constraints such as time, money, mobility, and motivations other than getting a good deal. Off the top of my head, there is the social pleasure of shopping, the influence of advertising, the need to create or reinforce a certain kind of self image, the desire to spend one's time on something other than shopping...

I think we may be moving toward Thorsten Veblen, who may be far more important than I ever thought he was, because of his attack on rational motivations in economics.

Due to quirks in the system, I may have psted this comment three times.

Anonymous said...

perelman, "Our farmer's market is a social event without the fetishism of comodities."

Sometimes a carrot is just a carrot.

YouNotSneaky! said...

"Our farmers market is a social event without the fetishism of commodities."

In my experience of farmers markets and co-ops (northern California, Minnesota) people at those places of exchange tend to fetishize the commodities to a far larger extent then a regular costumer at Wal-Mart. It's just what they're fetishizing is not "luxury" and "income status" but rather status within a particular sub culture and a particular identity.

That and the stuff's really expansive. Everytime I think I should buy small farm grown stuff and free range critters and go to these places, look at the prices and ... buy a tomato or something and leave quietly. To be honest at this point in my life I could probably actually afford to pay the 4.50$ for a catfish that costs 1.50$ at a regular store (today's purchase) but I still got the habits from when I and my family didn't have money.

Lots of people can't afford that kind of luxury. Or don't want to.

Anonymous said...

fetishism in the Marxist sense carries a semantic load of social pathology. The sense of community and the search for nutritional foods produced by sound agricultural practices is the antithesis of fetishism. We might say enthusiasm, intentionality, neighborliness, etc.- but not fetishism.

Michael Perelman said...

One correction. Our farmers market & most I have seen have very inexpensive produce.

Anonymous said...

the economic man may exist but only as the businessman when he is attending to his business.

for the rest of us, price is only one consideration.. sometimes more important than another

but retailers have done everything they can to obscure the price/value relationship

so it is somewhat simple minded to talk about "price signals" at the consumer level at least in the present marketplace.

YouNotSneaky! said...

Generally farmers markets tend to be better (lower priced) than co-ops in my experience although it still depends. You can also get good deals on quality organic meats if you live near an ag school - but doing this way you don't get to show off to everybody what a progressive consumer you are.

And yes, I was (purposefully)using the word 'fetishism' in the common sense, ordinary way - the attribution of extraordinary characteristics (such as status within a particular community) to physical goods which have an intrinsically different purpose - rather than the goofy Marxist way.