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Price shocks in formative years scar consumption for life

knowledge.wharton.upenn.edu

451–460 of 478 posts

Re: Price shocks in formative years scar consumption for life

#451

Earlier quoted context omitted.

I wonder which is more wasteful: A built-in rechargeable battery that lasts 500-1000 charge cycles but is difficult to replace, or a requirement of six AAA batteries that need replacement after every 3-4 hours of use.

ok, but you're replying to a comment about toys that don't need their batteries replaced, because they still work without the batteries. a toy with optional batteries obviously requires less battery use than a thing which requires a battery. it's tautological.

I think it's a weird comparison to begin with because an iPad is a hell of a lot more versatile than a Darth Vader action figure.

Re: Price shocks in formative years scar consumption for life

#452

Earlier quoted context omitted.

If people produce less, the tax intake will be lower, which makes the country less competitive internationally. In particular, the smaller the GDP, the less military spending the country can support. If the country can not support a sufficient military spending owing to a lack of consumption (production), it will be conquered by someone who can, a bit like private equity buying out an unprofitable company with good p…

Speaking of gambling, you also left out theft and loss. You seem to be applying a macroeconomic template. Individuals can and do behave somewhat differently. I don't have any responsibility to prop up your economy with my spending and you have no responsibility to prop up mine, but please do. If I spend less and you spend more, I hope you spend it on my services and goods, so I get your money and you get my designer…

> Speaking of gambling, you also left out theft and loss.

Correct. Theft is included in GDP, as is spoilage. As I said, it doesn't matter how 'good' people's consumption is, only that they consume. This being said, theft isn't ideal, because it could depress the prices for the items later on. Loss would be better.

> You seem to be applying a macroeconomic template. Individuals can and do behave somewhat differently.

That's correct, which is why the state - if it wishes to remain relevant - has to get them back in line, lest it be consumed by someone who does.

> I don't have any responsibility to prop up your economy with my spending and you have no responsibility to prop up mine, but please do. If I spend less and you spend more, I hope you spend it on my services and goods, so I get your money and you get my designer throw pillows or whatever.

You don't understand - it's not about "propping up an economy" - it's about making sure that people work. If you stop spending, there's a risk that it would cause you to stop working. This is the risk; the consumption itself is damaging for the economy, and it would be preferable that people lose their wages to less damaging forms of consumption (e.g. buying scalable forms of entertainment services)

> The vast majority of the wealth of the wealthy is in unrealized gains which may be spent someday, it sounds like you're calling them economically unproductive.

The money isn't economically unproductive, because money isn't what makes production, but people can be unproductive, and this is the risk.

In practice, the losses from this are very small, because it's held by a rather small billionaire elite, and so the losses to rentiers don't actually end up in a lot of real-world consumption.

> Desiring not to spend, and desiring not to earn, are vastly different.

Different, perhaps, but they are brothers. Spending = earnings + borrowing, or, conversely, earnings = spending + saving. If you don't consume, your net saving goes up, and those savings are like a ticking time-bomb that can be sprung on the economy at any time to seriously cut the GDP.

It's correct to say that you can spend less on petroleum and more on other stuff. It's even more correct to say that, from the macro-economic view, you have to. (And if you don't want, you will be forced to)

Re: Price shocks in formative years scar consumption for life

#453

Earlier quoted context omitted.

The S&P 500 is down 21% since the beginning of the year.

Muni bond and treasury ETFs are not down 21%, and neither is my emergency fund investment account.

"Stocks are liquid enough..."

Neither of those are stocks.

Bonds are (usually) less volatile than stocks, but yeah, be careful about using them for short-term emergency funds.

Re: Price shocks in formative years scar consumption for life

#454

Earlier quoted context omitted.

I myself would ealk or bike to the train. My tolerance for walking is 2.5 miles each way and I've been fortunate to have spent all but about 9 months of my career like that. So many can't or don't, though.

Your tolerance is very high! More than one hour of walk per day is not what I meant.

It's so good for the body and has opportunities for stopping at stores, pubs, etc.

Re: Price shocks in formative years scar consumption for life

#455

Earlier quoted context omitted.

Speaking of gambling, you also left out theft and loss. You seem to be applying a macroeconomic template. Individuals can and do behave somewhat differently. I don't have any responsibility to prop up your economy with my spending and you have no responsibility to prop up mine, but please do. If I spend less and you spend more, I hope you spend it on my services and goods, so I get your money and you get my designer…

> Speaking of gambling, you also left out theft and loss. Correct. Theft is included in GDP, as is spoilage. As I said, it doesn't matter how 'good' people's consumption is, only that they consume. This being said, theft isn't ideal, because it could depress the prices for the items later on. Loss would be better. > You seem to be applying a macroeconomic template. Individuals can and do behave somewhat differently.…

In your model, retirement and leisure don't exist. When I can, I will absolutely stop working. Work to live, not live to work. I've done my time earning money for others. People don't need to be maximally productive all the time. Only the owner class thinks this, and we fought a civil war over an extreme form of this.

Re: Price shocks in formative years scar consumption for life

#456
post #353

Earlier quoted context omitted.

I read a few news stories that during lockdowns, many people would only buy a few groceries at a time, so that they could go out more, and spend time at the market.

I was working in a grocery store at the time. People did head out a lot for groceries due to boredom and low gas prices.

And no restaurants.

Re: Price shocks in formative years scar consumption for life

#457

Earlier quoted context omitted.

> Inflation ate almost 9% of its value this past year. Granted stocks are down 20% this year, yeah, so you're still ahead of the game if you had it saved.

This year. Meanwhile it would have missed out on 27% in gains the previous year (and its associated dividends), if I kept it in a bank account. Also that 20% loss will most likely recover in time. Inflation almost never reverses itself, it only slows down. There's a reason rich people park most of their money in assets, and not in savings accounts. If they got more returns by keeping it in savings accounts, they woul…

> rich people park most of their money in assets

6 months of basic living expenses isn't "most of their money" for rich people. Ideally it wouldn't be for the rest of us either.

You seem to be thinking I'm against investing altogether - I'm not, but there is a significant risk avoidance in having an emergency fund that is 100% liquid and not tied to market risks.

Re: Price shocks in formative years scar consumption for life

#458
post #356

I have a form of this in other areas. Growing up we didn't have a ton of money and batteries were expensive. We never had batteries to replace depleted ones, so once a toy was out of batteries, it was done. We just played without those features. Now, having kids, I'm so conscience of batteries. I have a tester and check each battery when "dead" and put them in a separate box if I think they have enough juice for a lo…

You can get rechargeable batteries.

Ya now I have the money to buy whatever batteries I need (thank you Amazon Basics) but as a kid we definitely didn't have the money to afford batteries. We didn't even buy paper towels, just used tea towels (as we called them). This also created an aversion to over using paper towels in my adult years. This isn't meant as some "whoa is me", but just a comment on how pricing and costs growing up can affect you for a very long time.

Re: Price shocks in formative years scar consumption for life

#459

Earlier quoted context omitted.

It's not "putting up with". What are they going to do otherwise, not take insulin?

Demand action from their representatives. Works in a lot of other areas but not in health care. I guess the lobbies are too strong.

Those so-called "representatives" created the problem in the first place by restricting the supply with drug patents, FDA regulations, import restrictions, and limitations on the number of new doctors and medical facilities, and now you want to "demand action" from them on behalf of patients? Good luck. They're representing someone all right, but it's their donors, not their official constituency.

That, BTW, is a consequence of the system responsible for selecting and influencing those in power and not any particular individual, so voting in someone new won't change anything. And that goes for much more than just health care.

Re: Price shocks in formative years scar consumption for life

#460
post #89

I know someone who immigrated from a former communist country. She talked how they lived in extreme poverty and now despite having great job and substantial savings, she pretty much lives the way she learned. For instance cooking the same food her parents used to cook from whatever they managed to find, only wearing used clothing. When her phone was stolen and she had to buy a new one, she literaly cried for a week t…

I perfectly understand her, I am in similar position despite being in top 3% earners in Czechia I will refuse to buy overpriced goods I know they are cheaper in other shop. I have 4 years old phone, wanted to upgrade for really long time, but I don't see the value in new one worth spending that much money for flagship just because I want compact phone with good camera and battery (Pixel 4A was closest price wise, but…

This is totally reasonable. However, I found that going out of her way to find a product marginally cheaper to be counter productive. I was unable to explain to her the concept of alternative cost. For instance spending extra 30 minutes to save £1-2. I mean there is nothing wrong with that if you don't have anything else to do and can be a form of entertainment, but these things pile up and that shows in her looks - constantly tired. She could have spent that extra £1-2 and used gained time to do something else like relaxing bath, listening to music or reading a book.
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