Temporary Austerity

Unless you've never heard of a place called "Europe" before, you've probably seen the phrase fiscal austerity quite often in the media over the past few years. Usually, it's in the context of fiscally challenged countries like Greece or Cyprus: countries needing to slash government spending quickly and aggressively to fix a severe debt or deficit problem.

Here at Casual Kitchen we use the concept of fiscal austerity too, but we apply it to household budgeting. And for the past two summers we've been doing what we call temporary austerity: each year, for just a few months, we aggressively reduce our spending--and reap the benefits.

How do we practice temporary austerity? We choose, for a few months only, to emphasize things like cooking laughably cheap food rather than eating out, enjoying the summer at home rather than traveling, or inviting friends over for dinner rather than going out on the town. Our temporary austerity might also include enjoying mostly low- or zero-cost activities like running, hiking or playing tennis in our town's public courts. We even make a point to avoid TV and mass media, helping us to be even less tempted to go out and buy stuff.

In other words, for a finite time period, we center our lives around doing things that don't involve spending money, and reject (more than we already do) the default consumerist solution of using money to entertain ourselves.

The benefits of fiscal austerity are obvious, of course. You can ramp up your savings during these months to a level much greater than typical--it works for household budgets the same way it works for Greece or Cyprus. And money freed up during a period of austerity can fund all sorts of great things: future travel, aggressive debt reduction, investments in income-generating assets like dividend paying stocks, or pre-funding some major household expense.

But we also found that austerity involves much more than just saving money. We also found ourselves deliberately choosing to do less during these months, embracing a more tranquil, less busy and less chaotic daily life.

All of which led to a totally unexpected outcome: by doing less, we could do more.

The time we didn't waste on default consumer activity or passive media consumption opened up significant additional time for intellectual pursuits we deeply enjoy--like reading, writing and language learning. We planted basil and cherry tomato plants on the little balcony of our townhouse (we also planted horseradish roots outside our front door, sadly our community groundskeeping service mistook them for weeds and murdered them). Except for the unfortunate horseradish plantings, these were all tranquil, deeply satisfying and practically free pursuits that we could never have done properly if we'd spent the summer rushing around.

But what was most striking about this experience is how it made the past two summers among the best summers of our lives. I never really thought about this before, but it's not only true that the busier you are the more money you spend. It's also true that the busier you are the less meaningful life seems.

Finally, we never felt deprived in the least. Why? Because all along we knew the austerity was temporary. In just a few short months we'd go back to our normal lives.

Ironically, we didn't really want to.


Read Next: Expediency and Treadmill Effects


How can I support Casual Kitchen?
Easy. Do all your shopping at Amazon.com via the links on this site! You can also link to me or subscribe to my RSS feed. Finally, consider sharing this article, or any other article you particularly enjoyed here, to Facebook, Twitter (follow me @danielckoontz!) or to bookmarking sites like reddit, digg or stumbleupon. I'm deeply grateful to my readers for their ongoing support.

The Taboo Tradeoff

Readers, today's post is a follow-up to last week’s contentious* article on how the consumer products industry sells us high-priced aspirational goods safer insecticide survey--when they actually make us negligibly more safe. Today we'll explore another example of how the consumer products industry benefits from our irrationality.
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There was an alternate version of last week's safer insecticide survey asking parents to imagine two additional types of the product for their children:

1) The regular insecticide where the risk of inhalation and child poisoning was 15 per 10,000 bottles.

2) A less expensive insecticide where the risk rose from 15 per 10,000 to 16 per 10,000.

The survey asked parents how much of a discount would induce them to switch to the less expensive product. Shockingly, two thirds of the parents said they wouldn't purchase the less expensive product... at any price!

Now, on one hand, this is really just a reframing of the consumer choice question from last week. This time, however, the choice is framed as a comparison between a "regular" product with a very small risk and a "discount" product that's technically more dangerous, but negligibly so.

Any consumer capable of sixth grade math will see that the incremental danger of choice #2 is so tiny as to be utterly meaningless. Further, if our personal safety has any quantifiable value at all, there must be some discount that would make the second product worth it to us.

Except that the discounted product is never worth it to us, no matter how much cheaper it is. Why? This is the part that's heavy: Because it "feels" like you're subjecting your child to more risk... just to save a little extra money. In fact, the greater the price discount, the stingier and more terrible you feel!

It's like going to a discount heart surgeon. Nobody goes to a discount heart surgeon.

Psychologists call this the taboo tradeoff. And people respond to taboo tradeoffs in an irrational and deeply emotional way. Yet again, we struggle to think clearly or logically about both the economics and the incremental degree of safety, and we view our feelings of safety to be far more important than the actual quantifiable increment of safety. It's difficult to explain exactly why this happens, but Daniel Kahneman offers a theory that fear of regret motivates the decision:

"The what-if? thought that occurs to any parent who deliberately makes such a trade is an image of the regret and shame he or she would feel in the event the insecticide caused harm."

Okay. So if consumer products companies can create products evoking aspirational feelings, taboo tradeoffs--even anticipatory regret and shame--don't you think it would be child's play for them to use these feelings to get us to pay more? A lot more?

Think through this. Are you getting real value for the high-priced "safer" products you buy, or are these products merely preying on your fears and your need for identity construction? How would an empowered consumer think about this? Readers, what do you think?


Once again, I’m grateful to Daniel Kahneman's book Thinking, Fast and Slow for helping me think though these psychological issues and apply them to the theme of consumer empowerment.

* Finally, speaking of contentiousness, here's a link to an, uh, interesting twitter exchange with a reader who missed my point entirely and tried to shame me for being "gleeful at the expense of human suffering." Nice, right?


Read Next: Consumers: Pay For Your Own Brainwashing! (Or Don't)




How can I support Casual Kitchen?
Easy. Do all your shopping at Amazon.com via the links on this site! You can also link to me or subscribe to my RSS feed. Finally, consider sharing this article, or any other article you particularly enjoyed here, to Facebook, Twitter (follow me @danielckoontz!) or to bookmarking sites like reddit, digg or stumbleupon. I'm deeply grateful to my readers for their ongoing support.

Consumer Empowerment: The High Cost of a "Feeling" of Safety

Readers, today I want to share an unsettling insight into consumer psychology, using an experiment described in Daniel Kahneman's striking book Thinking, Fast and Slow.

Edit: see the follow up to this post: The Taboo Tradeoff
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The question below is adapted from a study of the rationality of consumer valuations of health risks, which was published by a team of economists in the 1980s. The survey was addressed to parents of small children.

Suppose that you currently use an insect spray that costs you $10 per bottle and it results in 15 inhalation poisonings and 15 child poisonings for every 10,000 bottles of insect spray that are used.

You learn of a more expensive insecticide that reduces each of the risks to 5 for every 10,000 bottles. How much would you be willing to pay for it?

The parents were willing to pay an additional $2.38, on average, to reduce the risks by two-thirds from 15 per 10,000 bottles to 5. They were willing to pay $8.09, more than three times as much, to eliminate it completely. ...This premium is compatible with the psychology of worry, but not with the rational model [of decision-making].
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So: it's clear that we humans will gladly overpay for vanishingly small increments of perceived safety, in total defiance of both math and probability. With that in mind, a question for readers:

Do you think the companies that sell to us are aware of this? Is it likely they price "safer" products accordingly and (essentially) profit from our worry?

Duh, of course. Yes, yes, and yes. Here are some consumer products categories where we can see this exact phenomenon:

Organic foods
"All natural" food products
"No added nitrites" meats
DEET-free mosquito repellent
Bisphenol-a free canned foods

Do you expect these products to carry premium prices, typically? Yes, in all of them. But more importantly, are the price premiums commensurate with the increased costs to the producer or retailer? In other words, is the producer charging more because the "safer" product actually costs more to make, or are they charging more simply because they can?

Admittedly, we don't know all the direct costs in each of the examples above. But we do know, for example, that grocers make significantly more profit on organic foods. Also, the cost of the chemicals in a DEET-free insect spray is likely to be very close to the cost of the raw materials in DEET-based spray. The cost of the plasticized liner inside a can of food is an irrelevancy compared to the value of the actual food in that can. Finally, it's quite likely that production costs for "no-added nitrites" meats are actually less then "nitrite-added" meats. You just have to think about it for a minute to see why.

So if the costs are the same, yet we see 30%, 50% and 100% price premiums for these products, let's be honest and call it like we see it: these products are obviously aspirational, and they're priced and marketed that way by design.

So, consider the following question as an empowered consumer: What value do you really get by paying substantially more for a label or sticker that may make you feeeeeel safer, but in reality offers you, at best, an imperceptible increase in safety?

Asked a slightly different way: how much extra will a disempowered consumer pay for the "feeling" of safety?

The consumer products industry already knows the answer to this question. Do you?




Read Next: Divorce Yourself from the False Reality of Your Grocery Store


How can I support Casual Kitchen?
Easy. Do all your shopping at Amazon.com via the links on this site! You can also link to me or subscribe to my RSS feed. Finally, consider sharing this article, or any other article you particularly enjoyed here, to Facebook, Twitter (follow me @danielckoontz!) or to bookmarking sites like reddit, digg or stumbleupon. I'm deeply grateful to my readers for their ongoing support.

Bringing Partisan Rage to the Grocery Store

A few weeks ago, The Economist told its readers about a new smartphone app you can use in your grocery store to find out if the makers of a given food or consumer product agree or disagree with your politics:

"A new app called BuyPartisan reveals whether any given product is made by Republicans or Democrats. Using an iPhone's camera, it scans the barcode and reports back on the ideology (as measured by donations to political parties) of the directors and staff of the company in question."

Even the Colbert Report got in on this story (warning before you click: it's not all that funny). After watching it, I'm thinking that half of all Cheerios eaters are gonna need to rethink breakfast.

Of course, any CK reader--regardless of political affiliation--already knows to avoid all branded boxed cereals. It's not a political issue, it's an issue of consumers receiving proper value for their money.

But this brings up a bigger, broader question that I'd like to ask readers: How important is it that the company you buy from shares your views?

And if it's important, where do you draw the line? With what products? If you hear, for example, that the chairman of the company that makes your pasta brand doesn't happen to validate your lifestyle, do you instantly change brands?

And if that's the case, what if your monopoly electric power company leans to the left and you're a Republican? Do you live off the grid? What do you do if you're a Democrat, you need to fill up your tank, and you can't find a left-leaning oil company? Where do you compromise, and where won't you? Or does this even matter at all?

Readers, share your thoughts: does it matter if a company you buy from holds views that differ from yours?


Read Next: How To Be Manipulated By a Brand



How can I support Casual Kitchen?
Easy. Do all your shopping at Amazon.com via the links on this site! You can also link to me or subscribe to my RSS feed. Finally, consider sharing this article, or any other article you particularly enjoyed here, to Facebook, Twitter (follow me @danielckoontz!) or to bookmarking sites like reddit, digg or stumbleupon. I'm deeply grateful to my readers for their ongoing support.

CK Links--Friday September 26, 2014

Readers, a quick update: I'm going to put Friday Links posts on hiatus for the month of October while I do a little traveling. You can still expect my weekly article every Tuesday while I'm away, and I'll also moderate comments from the road. See you in a month!

Links from around the internet. As always, I welcome your thoughts.

PS: Follow me on Twitter!

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Let's start off with a few easy recipes:
Making your own Hot Sauce will change your life. (Amateur Gourmet)

Salsa Borracha or Drunken Salsa. (Mexico In My Kitchen)

Sausage, Spinach and Pepperoni Pasta Bake. (Alosha's Kitchen)

Articles:
Shockingly, National Geographic comes out in favor of GMOs. Unshockingly, they believe even with GMOs we can't prevent the coming Malthusian catastrophe. (National Geographic)
Related: More on why Malthusian logic is fatuous.

Really useful (and rational!) debate between three doctors about the best way to eat. Great stuff. (MindBodyGreen)

Why do top experts give wildly conflicting advice on salt? (Forbes)

What does it mean to "listen" to your body? (My Fitness Pal, via 50by25)

Multivitamins do more harm than good. (Greatist)

The problem with nudging. (Jayson Lusk)

Really useful videos on the NY Times website on how to master various cooking techniques. A good page to bookmark and return to. (New York Times)

Excellent site that teaches, once and for all, that correlation does not equal causation. (Tyler Vigen)

Do you have aging parents or relatives? An important list of telltale signs that they aren't "doing fine." (Ombailamos)

16 ways you cause road rage. Uh, #1, #7 and #10 are pet peeves of mine. (Wise Bread)

Four simple steps to deal with doomsday predictions. (Above the Market)

Cracking open a can of Stoicism... and sipping it all day. (Mr. Money Mustache)

Book Recommendation: Clash of the Financial Pundits: How the Media Influences Your Investment Decisions for Better or Worse by Josh Brown and Jeff Macke. Useful and readable dissection of the world of financial news and infotainment. This book helps explain what goes on behind the scenes in the financial media--and it will help you become a more sophisticated investor.




Got an interesting article or recipe to share? Want some extra traffic at your blog? Send me an email!


How can I support Casual Kitchen?
Easy. Do all your shopping at Amazon.com via the links on this site! You can also link to me or subscribe to my RSS feed. Finally, consider sharing this article, or any other article you particularly enjoyed here, to Facebook, Twitter (follow me @danielckoontz!) or to bookmarking sites like reddit, digg or stumbleupon. I'm deeply grateful to my readers for their ongoing support.