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Author Topic: bah humbug?  (Read 522 times)

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Offline KurzykTopic starter

bah humbug?
« on: November 25, 2009, 12:20:37 PM »
Has anyone heard of the new book by Joel Waldfogel, Scroogenomics?

(Please excuse the price portion of that link. This is not promotion of the book, but it was the only info I could find on it that attempted to explain without commentary or review.)

I don't understand the economic theory behind it. Where does the loss come in? Aren't we still spending money regardless of the received value?

I heard an interview with this guy the other day who suggested giving cash as the best gift from a national economic perspective because the receiver would then spend on gifts with the most value.

Value... Is it referring to pricing which is based on need? Is he suggesting that the value of items is affected thus causing a downsurge? I don't understand.

Offline RubySlippers

Re: bah humbug?
« Reply #1 on: November 25, 2009, 01:06:04 PM »
Well his book focuses on three basic ideas.

1. That if you spend $1 on something for someone else if has the potential to bring less satisfaction than if you spent that on yourself, assuming you will always spend it at least on something that pleases you. Say you by a child the popular toy for $50 and they play with it a few hours and its ignored is it worth the $50 really, when they end up playing with the box in came in longer. (That really happened so its not far fetched.)

2. That we do tend to go into debt for this which means your losing more money on interest rates on the debt to by stuff.

3. That in some ways other uses of say $50 may be better for example instead of buying that toy giving the child a U.S. Savings Bond in the end worth twice that plus interest might be more sensible. For example helping pay for school which will be of higher value.

Offline KurzykTopic starter

Re: bah humbug?
« Reply #2 on: November 26, 2009, 10:43:09 PM »
Oh I see. So it's how we spend, not just the act of spending that he's talking about. He's targetting the gifts we get from people who don't know us very well, and wind up spending on something we may not value.

Credit issues aside, how does the receiver's worth factor in on the economy though? Regardless of what the child did with it, the store covered its costs and made a profit, as did the manufacturer who sold it to the store etc. Shouldn't that be good for the economy? How does the receiver's worth factor in if the money is still spent?

Offline Will

Re: bah humbug?
« Reply #3 on: November 26, 2009, 10:58:10 PM »
If the product was bought, then technically, it was worth the price to the buyer.  If it was not worth the price, then they wouldn't have bought it. 

A large part of the value comes in the form of seeing a child's face when they open their presents.  A lot of times that is enough to justify the price.  Those are memories that you keep, and that's worth much more than the money involved.  Whether or not they play with for years after that is not always relevant, from the parents' (the buyers) point of view.

I can't really get my head around the arguments that we should keep our money instead of spending it on the holidays.  The last thing our economy needs is a terrible holiday quarter, I would think.