Apr 082016
 

Before upsetting anyone let’s define cheap:

CHEAP — Buying inexpensive or low quality despite being able to pay for the higher quality item.

Cheapness can be good or evil. The latter can damage reputations, friendships, the economy, and/or personal health. Good cheapness can lead to financial freedom.

Examples of evil cheapness:

  • Postponing preventative medical care
  • Eating low quality food
  • Wearing poor-fitting clothes
  • Bailing on social situations
  • Foregoing international travel

Examples of good cheapness:

  • Fixing things that break
  • Bringing bag lunches
  • Biking/walking instead of driving
  • Drinking water (instead of sugar drinks)
  • Using the library

You’ll notice that all the good cheapness examples have secondary benefits related mostly to health and/or personal satisfaction.  Now that we’ve defined cheapness let’s call it frugality. But why bother with it?

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Oct 182015
 

Alternative title: 4 WAYS TO TAKE ADVANTAGE OF HUMAN NATURE TO SELL THINGS TO SUCKERS

Most people realize that companies are in the business of making money. They like using marketing that targets loopholes in our seemingly rational psychology. Lots of self proclaimed “savvy consumers” think they are smart enough to avoid clever sales tactics. WRONG. Like it or not everyone succumbs to marketing! Education and abstinence are your best tools.

Predictably Irrational by Dan Ariely describes these psychological loopholes that often end up with us buying more stuff. Lets take a look at some:

1 – Relativity – Making decisions based on bogus comparisons

Given the choice between A, the slightly inferior A-, and B, most people will choose A

Given the choice between A, the slightly inferior A-, and B, most people will choose A

Imagine you are buying wine and there are three choices. You don’t know much about wine so you base your decision on price. The prices are $10, $25, and $30. You don’t want to appear cheap to your hot date so you axe the cheap one, and you are conscious of saving money so you axe the $30 one and go with $25.

Little do you know the $25 wine is exactly what the restaurant wanted you to pick. They understand that most people won’t buy the most expensive item, but they will buy the second most expensive. The priciest item is a decoy. Here is an example right from Predictably Irrational:

You want to subscribe to the Economist magazine. The choices are:

  • Economist.com subscription – $59
  • Print subscription – $125
  • Print + web subscription – $125

Wait what? Why is the print + web the same price as print? does that mean the web is actually free? Well if that’s true then it’s a great deal and you buy the print + web for $125.

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