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Right, but there's a subtlety: The dollars saved in those minutes are worth a different amount to a rich person depending on their relative impact on the sale.

Right, but there's a subtlety: The dollars saved in those minutes are worth a different amount to a rich person depending on their relative impact on the sale. $50 off of $300 is a 1/6 discount, so a "good deal" that they will (somewhat recreationally) decide to go and get. But they still don't inherently care that much about $50. You could say if they make lets say ten times what I do, they probably care 1/10th as much as I do, about $50. Anyway and meanwhile, $50 off of $1000 is a 1/20 or 5% discount. Now it's still the same $50 they don't give a shit about, but it's also now an insignificant discount. Would they spend extra time on what to them is a rounding error on a $1000 purchase? They're not really getting a "deal" anymore, it's a bore, and they decide to spend the extra $50 just to buy back their half-hour. So long as the price is still "about $1000" they're OK with it.

tylerhou 9y ago
The rational answer is that if you would drive 30 minutes to save $50 off a $300 tablet, then you should also drive 30 minutes to save $50 off a $1000 tablet. You've described the psychology of why a wealthy person might not drive the 30 minutes for the $1000 tablet well (but still will spend the time to save money on the $300 tablet), but that choice is still irrational.
- rdiddly 9y ago
  Well yes, it's completely arbitrary! Those with the luxury to act irrationally will sometimes do so, I guess. And economics doesn't do a good job of explaining it, so the root of this branch of the comment tree was kinda right when they said traditional economic theory is a ass.[0] Adversity and scarcity breeds a precision and a ruthless attention to detail that prevents that $50 from escaping. Meanwhile abundance leads to a relaxing of all such, and maybe even a dulling of that skill. Being born into wealth I imagine would put you at an even bigger disadvantage in that regard... though I might be okay with having such problems... [0] I'm paraphrasing of course and I changed Law to Economics. http://www.bartleby.com/73/1002.html http://www.bartleby.com/73/1002.html
  - tylerhou 9y ago
    The reason why people act irrationally has more to do with psychology than economics. Vsauce has a good segment talking about human tendency to think in terms of proportion instead of absolute scale: https://youtu.be/Pxb5lSPLy9c?t=1m53s https://youtu.be/Pxb5lSPLy9c?t=1m53s
- keenerd 9y ago
  It can still be rational, but you need to look at shopping as an aggregate of probabilities. Let's make it more extreme. A $50 item for free or $50 off a $5000 purchase. Discounts as big as 100% off don't come every day. Maybe you'll never see that deal again in your life. You should jump on it. Where as a 1% discount is something you see every day at dozens of stores. There will probably be a bigger discount next week, so don't bother going out of your way. If you have to make a choice between the two, you choose the item with the less-common discount.
  - Buge 9y ago
    You're thinking that the question is "should I this item or not", or "should I buy this item now or wait a while". Then it could be logical to prefer the higher percent discount. But that's not what the study asked. The study said "you need to buy this item now, where will you buy it?" In this case it is illogical to prefer the higher percent discount, dollar value is the only thing that matters.
- morgante 9y ago
  That is too simple of an answer, as it ignores the added utility from getting a "good deal" on the tablet. People feel good/smart for finding good discounts and they can even brag about the great price to their friends. Without that added utility, saving $50 alone might not be worth 30 minutes to them.

tylerhou 9y ago

The rational answer is that if you would drive 30 minutes to save $50 off a $300 tablet, then you should also drive 30 minutes to save $50 off a $1000 tablet. You've described the psychology of why a wealthy person might not drive the 30 minutes for the $1000 tablet well (but still will spend the time to save money on the $300 tablet), but that choice is still irrational.

rdiddly 9y ago
Well yes, it's completely arbitrary! Those with the luxury to act irrationally will sometimes do so, I guess. And economics doesn't do a good job of explaining it, so the root of this branch of the comment tree was kinda right when they said traditional economic theory is a ass.[0] Adversity and scarcity breeds a precision and a ruthless attention to detail that prevents that $50 from escaping. Meanwhile abundance leads to a relaxing of all such, and maybe even a dulling of that skill. Being born into wealth I imagine would put you at an even bigger disadvantage in that regard... though I might be okay with having such problems... [0] I'm paraphrasing of course and I changed Law to Economics. http://www.bartleby.com/73/1002.html http://www.bartleby.com/73/1002.html
- tylerhou 9y ago
  The reason why people act irrationally has more to do with psychology than economics. Vsauce has a good segment talking about human tendency to think in terms of proportion instead of absolute scale: https://youtu.be/Pxb5lSPLy9c?t=1m53s https://youtu.be/Pxb5lSPLy9c?t=1m53s
keenerd 9y ago
It can still be rational, but you need to look at shopping as an aggregate of probabilities. Let's make it more extreme. A $50 item for free or $50 off a $5000 purchase. Discounts as big as 100% off don't come every day. Maybe you'll never see that deal again in your life. You should jump on it. Where as a 1% discount is something you see every day at dozens of stores. There will probably be a bigger discount next week, so don't bother going out of your way. If you have to make a choice between the two, you choose the item with the less-common discount.
- Buge 9y ago
  You're thinking that the question is "should I this item or not", or "should I buy this item now or wait a while". Then it could be logical to prefer the higher percent discount. But that's not what the study asked. The study said "you need to buy this item now, where will you buy it?" In this case it is illogical to prefer the higher percent discount, dollar value is the only thing that matters.
morgante 9y ago
That is too simple of an answer, as it ignores the added utility from getting a "good deal" on the tablet. People feel good/smart for finding good discounts and they can even brag about the great price to their friends. Without that added utility, saving $50 alone might not be worth 30 minutes to them.