Unexpectedly Intriguing!
03 May 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!

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About Political Calculations

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

Thanks in advance!

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