Bargain Hunting Is Making You Broke
Most errands are boring, but shopping can be exhilarating. Stores have figured out how to convert the pursuit of saving money into spending too much. Bargain hunting is making you broke.
When you think about it, shopping should be full and painful. You have to interrupt your day to commute and brave crowds, only to hunt, kill, and then hand over your hard earned money. But lots of people love shopping. They shop when they’re broke, bored, and when they don’t need anything. And the weirdest part is that “bargain shopping” can be seen as a productive financial hobby instead of a waste of money and time. How did this happen?
Confusing Shopping with Saving
When I buy something, I feel smart for getting something I really like, and for getting it for less than others could spend on it. I don’t get the same satisfaction when I use something I have even though the latter situation costs $0. Anyone can use something they have, but only savvy people can get good deals.
Sales and discounts make it seem like you’re winning. You get something tangible and the price tells you how you compare to others – which makes you feel victorious. The term for this feeling is is transactional utility – the joy you experience from the difference between you expect to pay and what you actually pay. It also helps that I use a credit card so it doesn’t feel like I’m giving anything up.
In contrast, when I use things I already own, I can’t actually visualize how much money I would have saved because I didn’t spend any money. Further, rather than amassing more things, I might actually be using them up. The endowment effect is the term for the value we give objects based on how much we sacrificed for them and how much we value things we own over things we don’t. So because the object is mine already, I can feel loss for using it up. Ironically I might feel poorer doing this activity even though I’m actually richer because of it.
It’s odd that when you feel like you’re making progress, you’re may actually be getting farther behind. And you might feel like you’re losing, when you’re actually winning. Your emotions are not as good a score card as your bank account.
Why We Like Shopping so Much
I’ve done my fair share of retail therapy. The salespeople are paid to be nice to you. Buying anything at all can be classified as a win, and with cheap credit, nothing is out of reach.
Further, bargain shopping is framed like a hunt. Some years ago, JCPenney changed its structure to fair and square pricing instead of having sales – and their customer base withered. You could pay less for the same products – but the customers missed the hunt. It’s not enough to down the woolly mammoth – you have to feel like the mammoth is out of reach.
Ultimately, shopping is pleasurable because it’s made to feel like a contest, but it’s something we can’t really lose at. But because we can’t lose, it’s not fulfilling.
Happiness is neither virtue nor pleasure nor this thing nor that, but simply growth. We are happy when we are growing.
John Butler Yeats to his son William Butler Yeats, 1909
The thrill of shopping is like the hedonic treadmill in reverse. When you buy something, you have to keep getting better and better deals to feel like you’re breaking even. But when you use something you have, you don’t get the thrill.
Here are things that feel like wins even though they’re obstacles to wealth:
- Getting a freebie with purchase, when you didn’t really want either.
- Taking trial subscriptions for services you wouldn’t pay for.
- Buying things on sale that you would never buy at retail.
- Eating free food in the office when it ruins your diet.
Here are some other things that actually show progress but don’t trigger thrill emotions.
- My rent decreased. Every month, it’s just a number. I don’t feel any new benefits.
- Returning stuff to the store is annoying and the credit back isn’t tangible.
- I stopped buying many things when I started going zero waste. I notice it in my trash can but not in my wallet. All the stuff in my closet has expanded to fit the space around it, so I don’t even feel like I have more room.
Just because you can’t see the progress of not buying stuff, doesn’t mean you’re not progressing.
Why Cheap Costs You More
Let’s say I want a new pair of shoes. If I look up the prices and see that I can find something that fits the bill for less than $50, maybe it’s an automatic impulse buy. Between $50-$100, perhaps I can justify it. Over $100, no new shoes. I will make do with what I have.
The most important word in that previous paragraph: “want.” I don’t “need” shoes. I don’t have to go barefoot if shoes are too expensive. Second important word: “a.” I just wanted one pair.
So what happens when the shoes are cheap? I auto-buy them. Maybe I buy multiple. If I find great shoes for $40, maybe I buy three because it’s a great deal. Isn’t that funny though because that’s $120 and that’s more than I would spend.
So even though each pair is within the range of auto buy, I end up spending more than I would have spent if they had been priced at $100 each.
What Cheap Costs the World
There’s an episode of Project Runway where they get the designers to create clothes that would retail for $X. And the designers know that in order to retail for $X, the raw materials have to cost $X/2. Actually that assumes the designer don’t get paid at all. In fact the raw materials have to cost $X/4 to be profitable.
How do you get a $40 pair of leather shoes?
That means you have to get leather and raw material that costs a maximum of $10, the designer makes $10 minus the costs of manufacture, and the retailer tries to sell for $40.
How do you get leather that costs $10?
…when you buy a fast-fashion T-shirt for four dollars. . . you never ask. . .”How does the cotton get grown, ginned, spun, woven, dyed, printed, sewn, packed, shipped, all for four dollars?” . . .
So what happens if we pay more? And how much more do we have to pay?
If he was able to pass along two cents more per garment made in his factory, it would be the equivalent of two extra days’ pay each month per worker ( a raise of 7 to 8 percent). Alternatively, the two-cent increase could allow Fakir Fashion to produce fewer articles of clothing – they could make clothing better, or simply at a less harried pace – without anyone losing their job or any income. Imagine what might be accomplished if shoppers ere willing to pay an extra dime.
The Day The World Stops Shopping
Conclusion- Bargain Hunting is Making You Broke
We could try to get euphoric feelings from doing the right things – likely by employing gold sticker stars. Or we could put less credence into our feelings and more into our numbers. The best way to quit the hunt for bargain shopping is only to shop after we’ve determined we can’t make do with what we already have. Then we can spend our time pursuing real opportunities for growth in other pursuits.