A New Car or Ten Thousand Lattes?

At Big Think, Dan Ariely discusses ways to think about money so you splurge less — like equating expensive wine with gallons of milk and making paying hurt a little more. Ariely’s advice could have been useful to some people in the Congo, who lament they didn’t see their Prada suits as houses for their families. (HT: Marginal Revolution) [%comments]

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  1. Martin says:

    I like to rationalize my purchases by estimating the price per hour of usage.

    That way my $500 suit, which felt enormously expensive, comes in at about a quarter. My $500 sitar, on the other hand, which I never learned to play, land closer to $100, and probably wasn’t a very rational purpose.

    The missing factor is of course how much you enjoy those hours of usage. This variable can be adjusted to whatever lets you motivate buying what you want.

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  2. Al says:

    Where does the person live? If they live in new york city they would not need a car and it would probably cost more money to store it. Not even taking into acount the wasted time spent on traffic. At that point they might make out better having the latte for the subway commute.

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  3. Sara says:

    LOL. Well, I do that all the time since I was very young. This is probably contributed by the fact that I have very low dependency on others as I would consider my own self-worth before anything as in I would rather depend on my own strength in accomplishing something. Making purchase included. However, I find that it somehow inculcates thriftiness over time. It took me some time to discover that I was actually confining myself to a certain choices. Yes, reality bites. But being a scrooge would hurt the GDP, I supposed. One is hold accountable for his expenditure and it all swivels about the pivot of discipline. I find it useful to have 2 bank accounts: first, for savings; second, for the cash-flow. This way I control my spending better as I can monitor my limit. It is all rather elusive as limit is only an illusion. Sticking to the plan, well, that’s discipline, too.

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  4. Thom says:

    I resist buying lattes by reminding myself that one latte costs three really good beers. That’s good budgeting, and fun too.

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  5. James says:

    I measure things based on how many rockstars or chipotle burritos they would cost.

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  6. Lee says:

    Sometimes, I ignore the decimal point in prices or mentally convert them into yen, pesos or other currencies which make you think twice before buying.

    Also, it started thinking about politicians and other public figures caught in sex scandals. They miscalculate the trade-offs with one hour of pleasure costing them years of work going down the drain and ruined reputations. Are these the people you could trust to make sound economic decisions?

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  7. Kieran says:

    Unfortunately, I’ve often used this reasoning in reverse, as in: “Aw, what’s six bucks? That’s the price of a beer at the Meeting House”….

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  8. Jeff #3 says:

    When I was in college frozen waffles were 10 for a dollar. From that point on everything became priced in waffles. Getting takeout? I’ll pass, that’s 74 waffles.

    I called it eggonomics.

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