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I think the theory is not so much that people go hungry because food will be cheaper tomorrow, but that there is a perverse incentive to spend a little less bec

by gfodor 12y ago

I think the theory is not so much that people go hungry because food will be cheaper tomorrow, but that there is a perverse incentive to spend a little less because you'll be able to get a little more with it later. I'm not sure I buy this theory but I think it's more about the macro effects of a small tweak in incentives.

mindslight 12y ago
> incentive to spend a little less because you'll be able to get a little more with it later Yes, I completely agree with this. I just don't think that it's bad. At a certain point, the utility of having the good today surpasses any additional utility that could be achieved by delaying the purchase. The balance shifts back towards consumption as people build wealth, since the utility of saving decreases. Rather than being encouraged to quickly spend income on goods, saving wealth to spend at any time allows one to plan their purchases and better negotiate for the value of their time.
imaginenore 12y ago
That theory is complete nonsense. If you wait a little longer, you can buy a better tablet, a better computer, a better phone, a better TV with the same amount of money (inflation-corrected or not). That doesn't stop people from buying all kinds of electronic devices, even though they get obsolete much faster than their money.
- gfodor 12y ago
  The point is not that it stops people from buying things, but that on a macro scale it will cause people to delay or dampen their consumption. Sites like http://buyersguide.macrumors.com/ http://buyersguide.macrumors.com/ show this phenomenon exists, the question is how much of an effect it has when it's a few % yearly discount spread out over every good and service.
MCRed 12y ago
I think the question hinges on whether that incentive is "perverse" or not. (Not criticizing your use of the word, it is the perfect word for this point.) I believe it is not perverse because saving allows for investing, and is the basis of capitalism- the accumulation of capital that can be deployed productively. Even if you're just saving on the downpayment of a house- putting %20 vs %10 can save a whole lot of money on a 30 year mortgage, leaving you better off in retirement, etc.

by gfodor 12y ago

mindslight 12y ago

> incentive to spend a little less because you'll be able to get a little more with it later Yes, I completely agree with this. I just don't think that it's bad. At a certain point, the utility of having the good today surpasses any additional utility that could be achieved by delaying the purchase. The balance shifts back towards consumption as people build wealth, since the utility of saving decreases. Rather than being encouraged to quickly spend income on goods, saving wealth to spend at any time allows one to plan their purchases and better negotiate for the value of their time.

imaginenore 12y ago

That theory is complete nonsense. If you wait a little longer, you can buy a better tablet, a better computer, a better phone, a better TV with the same amount of money (inflation-corrected or not). That doesn't stop people from buying all kinds of electronic devices, even though they get obsolete much faster than their money.

gfodor 12y ago
The point is not that it stops people from buying things, but that on a macro scale it will cause people to delay or dampen their consumption. Sites like http://buyersguide.macrumors.com/ http://buyersguide.macrumors.com/ show this phenomenon exists, the question is how much of an effect it has when it's a few % yearly discount spread out over every good and service.

MCRed 12y ago

I think the question hinges on whether that incentive is "perverse" or not. (Not criticizing your use of the word, it is the perfect word for this point.) I believe it is not perverse because saving allows for investing, and is the basis of capitalism- the accumulation of capital that can be deployed productively. Even if you're just saving on the downpayment of a house- putting %20 vs %10 can save a whole lot of money on a 30 year mortgage, leaving you better off in retirement, etc.