she will treat her time as unlimited in finding similar quality goods for less money
It is interesting you say this. I have a friend who struggles to get by. Single mom, two kids, a father who does the absolute bare minimum to provide support to his kids, and she is unemployed.
She does get support from the state (rent assistance, energy assistance, SNAP), but it is barely enough to squeak by and what little money is left over is quickly consumed with unexpected expenses.
With that said, I find she spends an exorbitant amount of time searching for "deals". It is not far-fetched for her to spend 2-3 hours to save a $1 on something. While apps like ebates, ibotta, etc.. have made these quick deals better, they still don't cut down on the time she spends. With the apps she spends just as much time searching through the deals or trying to find the best store to get something.
While it can be frustrating at times as a third-party sitting back watching her do this, I can somewhat sympathize. The most frustrating part to me is that she will sometimes say that there is not enough time in the day to get things done. I try to convey to her that at some point time is money. Meaning that she needs to evaluate the opportunity cost of saving a dollar versus spending 2-3 hours to save that dollar.
>I try to convey to her that at some point time is money. Meaning that she needs to evaluate the opportunity cost of saving a dollar versus spending 2-3 hours to save that dollar.
If you don't have realistic prospects of finding a good full-time job and taking on part-time or casual work would result in a loss of welfare benefits, the value of your time is essentially nil. "Working" for 33 cents an hour to find good deals may be the best option available.
Your friend isn't necessarily acting rationally, but she isn't necessarily acting irrationally either. If you've never been poor, it's difficult to understand just how many practical obstacles poor people face on a daily basis.
Think of money as a form of control and you will understand you friend. When you are accustomed to being knocked down every time you get a little ahead, deal searching is something of a coping mechanism, a way to take back control from the system.
> It is not far-fetched for her to spend 2-3 hours to save a $1 on something.
That's not a far-fetched thing for a poor person to do. $1 can buy a can of beans and add nutrition to an otherwise hungry day.
> Meaning that she needs to evaluate the opportunity cost of saving a dollar versus spending 2-3 hours to save that dollar.
Opportunities aren't unlimited, and the closer to poverty one is the shorter their term.
So she needs short term opportunities that beat $1 savings for the 2-3 hour period. Short term here means the amount of time it would take her to spend the saved $1-- let's be optimistic and say two days.
What do you have for her that beats the $1 savings and beats it with the same (or better)predictability of success as searching for deals?
Your comment is good. The relevant question is what can I do right now to make money? Maybe Mechanical Turk? (can you make $1 in 2 hours?). The abundance of human potential sitting idle agonizes me.
Yes, I think you're right-- MT might be a better use of that time. But then, how many other opportunities look very similar to MT but turn out to be scams? What damage can be done by taking out a payday loan?
I think another way to put what I wrote is that opportunity costs are a luxury one can afford once one has saved enough to move on from focusing solely on catastrophic costs like losing food, shelter, electricity, etc.
OP's friend probably started searching for deals because it returned predictable savings and-- most importantly-- carried very little risk. The fact that she's filling lots of idle time with the same behavior is evidence of her poverty as she is probably not able to take on any greater risk for fear of catastrophic failure.
Thus it is suspicious when the OP analyzes only in terms of opportunity costs. It would be more persuasive to convey ideas in terms of catastrophic risk. But that's a more difficult problem to address and an area where the OP-- like most people-- has little expertise.
I think cash cliff effects are harder on the poor.
If your friend comes up a dollar short, she'll miss paying for something. She'll have to choose among food, gas, electricity, rent, meds - all the things & basic services with nonnegotiable prices.
The stress of missing a payment for something critical is enormous. Your friend may be spending 2-3 hours saving a dollar in part to avoid that hard cash cliff and its stress.
Years of that sort of stress will likely degrade one's cognition in ways described in the posted article.
It's tricky though, if you work, marginal benefit from an extra unit of work is quite high.
If you're unemployed and on benefits, it tends to be zero and could even be negative, until you reach a full workweek and/or something above minimum wage.
For example, I know people who receive about $1k a month and don't work. If they worked 20 hours, they'd lose their entire $1k assistance and earn about $650 (at $7.5 minimum wage). If they work 40 hours, they earn about $1300, which ends up slightly above $1k after-tax. They effectively earn the same but now have full-time employment and need to pay someone to take care of the kids. Financially, she's better off saving $100 a month with a 15 hour discount-seeking occupation and taking care of her kids.
It really depends on the welfare system how all of this works, but there's this idea of the benefits/welfare cliff:
It is interesting you say this. I have a friend who struggles to get by. Single mom, two kids, a father who does the absolute bare minimum to provide support to his kids, and she is unemployed.
She does get support from the state (rent assistance, energy assistance, SNAP), but it is barely enough to squeak by and what little money is left over is quickly consumed with unexpected expenses.
With that said, I find she spends an exorbitant amount of time searching for "deals". It is not far-fetched for her to spend 2-3 hours to save a $1 on something. While apps like ebates, ibotta, etc.. have made these quick deals better, they still don't cut down on the time she spends. With the apps she spends just as much time searching through the deals or trying to find the best store to get something.
While it can be frustrating at times as a third-party sitting back watching her do this, I can somewhat sympathize. The most frustrating part to me is that she will sometimes say that there is not enough time in the day to get things done. I try to convey to her that at some point time is money. Meaning that she needs to evaluate the opportunity cost of saving a dollar versus spending 2-3 hours to save that dollar.