Unexpectedly Intriguing!
May 3, 2007

Are you feeling kind of down? Could you use a quick pick-me-up? Have you considered therapy?

As we ask that last question, we don't mean psychoanalysis. Instead, maybe some "retail therapy" is what's called for in your situation!

We first learned about retail therapy from Russ Roberts' podcast with Tyler Cowen via EclectEcon, who excerpted Tyler's commentary from the podcast and observed the following:

Go to Amazon.com, look for some CDs, click, buy the CD....

It's genuinely fun. It's fun to do the shopping; it's fun to get the CD.

Lots of people do this. What is nice about his approach is that he is quite open about it: no guilt, no regrets.

And "retail therapy" provides utility not just if you are feeling down. Even when you are up, and not in need of a boost, shopping for something, buying it, getting it home, and trying it out — they are all fun activities. For someone to unabashedly admit it and support it is refreshing.

But there's also the potential problem of "buyer's remorse" to consider if you opt for retail therapy. What if you spend more than you really should have for something that maybe you don't really need? Like a trip to the international space station?

It's really a question of how to balance the good feelings stemming from retail therapy with the potential regrets of buyer's remorse. Fortunately, Geek Logik author Garth Sundem has math we can use, which we've put to use in the tool below. Just answer the questions as best you can, and we'll help see if retail therapy is the thing for you!

How Much Do You Want It?
Input Data Values
How much do you want this item?
(1-10 with 10 being "1969 Mustang Fastback")
How much do you need this item?
(1-10 with 1 being "1969 Mustang Fastback")
How good an investment is this?
(1-10 with 10 being "legal insider trading")
How many months have you been ogling this item in catalogs, store windows, and/or online?
Your Financial Situation
Your monthly salary
Your monthly bills
Your monthly rent/mortgage
Current balance in your checking account
Cost of the item


Should You Buy It (or Not)?
Calculated Results Values
Buy Index Value
The Bottom Line

You can use the Buy Index Value above to tell how close you are to the "Buy Point" - if the value is greater than 1, you should buy the item. Otherwise, you shouldn't buy it.

Garth Sundem observes the following about the math behind the "buy it or not" equation:

This equation weighs the desirability of the purchase against its practicality. If it's a good buy and you have the money, of course you should buy the item. However, if your desire and the need fail to outweigh the cost and it's also a bit of an impulse buy, perhaps you should consider waiting for your heart to stop its consumer-frenzy palpitations. Or maybe think about investing this money in a safe place until your judgment improves.

Or maybe just limit your retail therapy to something else that fits better in your budget!

Labels: ,

About Political Calculations



blog advertising
is good for you

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Applications

This year, we'll be experimenting with a number of apps to bring more of a current events focus to Political Calculations - we're test driving the app(s) below!

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

Visitors since December 6, 2004:

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links
Charities We Support
Recommended Reading
Recommended Viewing
Recently Shopped

Seeking Alpha Certified

Archives
Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.