When Less is More: The Importance of Perceived Value
Published on - December 9th, 2008 (Modified on - December 11th, 2008) (by J.D. Roth) The things we buy have an absolute value — the price we pay for them — but they also possess relative perceived values. Not everything with the same price holds the same value to me. An $80 pair of work boots might be worth much more to me than an $80 sweater or an $80 meal in a restaurant.
And I can often (not always) derive more value from something cheap than from a more expensive equivalent. Our discussion about wine last week is a perfect example: a good $8 bottle of wine is more valuable to me than an excellent $80 bottle of wine. It’s difficult for me to detect a $72 difference between two wines. I get good value for that first $8, but the excess is an exercise in diminishing returns. (Plus, a lifestyle of good $8 bottles of wine is sustainable; a lifestyle of excellent $80 bottles is not.)
A night at the opera
Here’s an extended example. I enjoy live theater. On occasion, I pay to see a play or — more often — a musical.
A couple of years ago, Kris and I went to the opera for the first time. We dressed up, drove downtown, met friends at an expensive restaurant, and then joined the crowd for a performance of Mozart’s Don Giovanni. The night cost us over $200. We had an okay time.
Last year, we did the same thing. We dressed up, drove downtown, met friends at an expensive restaurant, and then joined the crowd for a performance of Mozart’s Die Zauberflöte (The Magic Flute). Again we spent over $200. Again we had an okay time.
We also attend many amateur theatrical performances. One of Kris’ co-workers is in a community theater, and we’ve been to see two of his shows. It’s not high art. The plays are cheesy, but they’re fun. The total cost is about $12 per event: $5 each for admission plus $2 for popcorn. But our main source of live theater has been small-town high school productions. These are always inexpensive and usually, well, interesting.
Sky Masterson finds value in gambling.
Surprisingly, I have just as much fun watching the neighbor kid as Sky Masterson in Guys and Dolls as I do watching a professional as Don Giovanni. Yes, it’s entertaining to be part of the whole opera-going experience: fancy restaurant, fancy clothes, fancy music. But it’s just as entertaining, and far cheaper, for me to eat dinner at Dairy Queen and then to catch a high school performance of You Can’t Take it With You or Oklahoma!
I’m not saying that a sixteen-year-old singing “I Cain’t Say No” is the same as watching a professional belt out the Queen of the Night’s “Der Hölle Rache” aria — few things can compare. What I’m saying is that for the cost in time and money, I get far greater value from attending community theater and watching the neighbor girl sing “I Cain’t Say No”. (Note: video is not of actual neighbor!)
Making the most of perceived value
This notion of perceived value goes to the heart of how we use our money. When we spend on things that give us little or no value, we’re wasting our income, our work, our energy. When we buy out of habit, when we spend compulsively, we obtain little in return for our efforts.
Over the past two years, I’ve worked hard to use my money in ways that bring me the most value. To that end I try to:
- Buy things I need — or truly want.
- Buy things I will use.
- Buy things that possess quality.
- Buy things used or on discount.
- Buy things I can afford.
Seeking value is a new way for me to shop. It’s a conscious process. I’m more mindful of my choices. I buy less Stuff, but I’m happier with the purchases I do make. If I make decisions that reflect my values, and that bring me commensurate pleasure, my money has been put to good use.
I’m glad to have been to the opera twice, but we didn’t return this year, and we don’t have plans to go anytime soon. That $200 per trip? I’d rather save it for home repairs or a vacation or a new car. Or to go see 20 community theater performances. These will provide me with greater value for my dollar. (Your mileage may vary.)
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Elizabeth says: “For those of you who say you don’t like opera but would like to think about the period of the shows that you have seen. Just as music today is very different from the ’50’s operas very greatly as well. Listen to music from different time frames and see what you like best. I love works from the Romantic era (1800’s) especially Puccini!”
Not only that–it has to do with where you are in your life, too. I never thought I would be an opera fan (though I grew up with classical music–I’ve just never liked classical w/vocal)… this summer, while in London for research, I went to Covent Garden for the heck of it. I’d seen one opera before (a college production which, while okay, didn’t do anything for me)–but I figured I might as well give the pros a shot. I bought one of the higher-end “day tickets” (the Royal Opera holds about 70 tickets for same-day sale), figuring it might well be the last opera I’d ever see.
Well, it blew my mind–I can say without exaggeration it was one of the most amazing experiences of my life. I don’t just mean because it was musically beautiful, but because it was intense _on every level_… at least as physically intense as the time my sister-in-law let me test-drive her Porsche!
Would I have had the same reaction at another point in my life? Maybe, maybe not. It’s now an important part of my life, though, so I budget for it–and I’m lucky to live in a part of the country where you _can_ get decent seats if you plan well. In NYC, seats in the boxes at the Met are just $15 ea.–you just have to grab them before they sell out. And to come full circle to Ramit’s original point–I would much prefer to pay $15 a dozen times to be relatively near the orchestra for 12 performances [though with the risk of not being able to see a corner of the stage], than pay $180 once for a “premium” seat at one opera. As to dinner beforehand, it’s usually a sandwich! You just have to be honest with yourself about what things are really important to you–and you have to have enough imagination to recognize that “opera” doesn’t have to mean “a night at the opera as it’s snootily understood, i.e., with fancy clothes and an expensive dinner beforehand.”
Not to diss people who want to try the latter once or twice, of course!–just saying that it actually is possible to love/enjoy opera even if you’re not rich enough to have your chauffeur (or even a cabbie) take you. And it’s possible to discover you suddenly have an abiding passion for something you never thought you’d _ever_ be into…
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Sam @ #35: For me, I value travel and art. When we travel we stay at either very high end accomodations or very different/unique accomodations, both of which tend to be pricey.
I love to travel, too–but for me it’s the destination itself that is the point of it. When it comes to accommodations, I’m far more likely to stay in a hostel, or shop around online for the cheapest acceptable hotel so I have more money to spend on local food and other experiences. And I like staying in hostels because I get the chance to meet all kinds of people from all over the world; since I travel alone, meeting my fellow guests also gives me the chance to find activity partners to go sightseeing with, or to try out a restaurant.
(Another thing I do to cut travel costs if I’m staying in hotels is depart on Sunday and fly home on Friday, because Sunday-Thursday hotel room rates are lower than weekend rates. And I’m willing to go off-season, in most cases–I go to New Orleans every year in May, immediately after Jazz Fest is over and before the weather gets too sultry. It’s dirt cheap, and still a great time, and during the week there are far fewer drunks stumbling around the Quarter. But I digress…)
For me, food is the thing I’m most willing to spend money on when traveling. I don’t spend time in places that aren’t known for good local food. I’m pretty much indifferent to where I sleep, so long as it’s clean and safe, but lousy food? That’s a vacation-killer. [laughs]
sally @ #27: Sometimes people do benchmark the value of a good by its market price and then, when this good goes on a mega-sale (like now, when merchants are attempting to woo reluctant spenders with deep discounts this christmas season), they sort of forget that getting a $3,000 TV for $600 is only a “steal” if their personal value for the TV exceeds $600.
I caught myself in this just recently, when the chance to buy a really nice LCD TV at a steep discount presented itself.
And then I pulled up short–my current TV still works; why think about replacing it? And not only do I watch very little TV as it is, but I’ve pondered getting rid of cable TV altogether. That TV was a great deal–but was it a great deal for me?
I thought about how much I would honestly be willing to spend on a new TV on any given day, should the old one crap out. I decided that $250 was perfectly reasonable, and that $400 was my absolute upper limit. The TV on sale was $700. And yes, it had a much nicer picture than my 15-year-old 19″ TV, but did that really matter to me? No. My personal value for “a TV” does not exceed $400, and in fact is significantly less than that.
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Great post. I think we could substitute many habits in your closing list.
* Buy things I need — or truly want.
* Buy things I will use.
* Buy things that possess quality.
* Buy things used or on discount.
* Buy things I can afford.
For example:
* Use Time for events I need — or truly want.
* Use Time for events I will use.
* Use Time for events that possess quality.
* Use Time for events that are used or on discount.
* Use Time for things I can afford.
-or-
* Eat Food that my body needs — or truly wants.
* Eat Food that my body will use.
* Eat Food that possess quality.
* Eat Food that is used or on discount. (coupons, doggie bags, left-overs)
* Eat Food that my body can afford. (if you exercise a ton, you can eat more if not, you can’t.)
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JD and Kris,
I’d heartily recommend, if you are able to get over to the westside or Portland, the productions of Bag & Baggage.
http://www.bagnbloggage.com/history.html
Community theater, even having used the Octagonal Barn at the McMenamins Cornelius Pass Roadhouse for several of the productions in the past. (Macbeth and the very funny “The Complete Works of Shakespeare” among the several I’ve seen)
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You know, this very idea prompted my husband and I to go on an extreme debt reduction plan. A year and a half ago, we learned that the performer Sting was going to play in our area. The minute the tickets went on sale, my husband bought “the best” (costing $400 for the 2 of us). A few months later, when the concert took place, we went out to dinner with a group, and my husband bought a round for the group. Well, in short, the evening cost nearly $550, and it wasn’t that enjoyable. (I could go on about the drunk peeing in front of us, but I won’t!)
Anyway, when the concert was over, and we were back to our day to day lives, I realized that had we applied that $550 to our mortgage, we would have been able to knock out 3 months worth of mortgage(principle). It was that very minute that I sat down with DH and said, look, if we have the kind of money to do a one night event, then we have the money to supercharge our debt repayment. So, we developed a plan to pay off the mortgage early. We stuck to the plan until last month, when we decided to stick the money in the money market account, as who knows what’s going to happen with this economy. In doing so, we’ve been able to knock down about 60% of what was owed on our principle, and now, much more goes to principle every month than last year. That feels much better than many concerts or shows. We still splurge a little, but it’ll be a long time before we ever do that again…a good lesson learned!
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To my mind, this is probably the best GRS post I’ve read (and I love local productions too!). It goes to the heart of happiness and the novel fact that lower consumption can definitely support human happiness — while leaving enough resources in place to support future generations. My site Diamond-Cut Life has many posts on this same topic. http://diamondcutlife.org/
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Consumption smoothing is my motto. I will pay more for something if I deem it to be a once-in-a-lifetime experience. The value of the experience is worth the extra cost.
That said, my son and I have had some excellent nights out at our local High School football stadium this season. It’s cheap and the community spirit can’t be beaten!
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You have a very good point, and I can agree with it entirely only because I entirely disagree with your example.
My wife and I have a motto: “fewer, nicer”. We’ve both agreed that we’d rather have one stellar evening at the Opera each year — even if it costs us $400 — than to attend 10 other performances a year at $20 each. For us, the memory of that singular event is much more valuable than the little mundane memories of other items. (For us, the Opera is especially important: it’s how we met, it’s my wife’s degree, etc.)
We feel the same about wine. I find many bottles we absolutely adore in the $40-80 range; I’d rather have one of those a month than a $10-20 bottle each week.
This approach has also reduced a lot of clutter. I have two very nice suits ($600 each retail, but I took advantage of a 2-for-1 sale) and a handful of fine shirts ($80 each) for work. This will last me for several years, and takes up very little closet space.
So, in the end, I agree — value is not just about the cost paid, but the quality of what you purchase. And “quality” is subjective.
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Ahem. Clearly, I meant 10 other performances at $40 each. Typo.
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Pastabagel@27 – thanks for the clarification; I see where you’re coming from now.
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Re: Chris in #22.
I agree that JD has tastes that can be met with a cheaper experience. I don’t think it was that he couldn’t afford it as another poster mentioned.
Maybe tastes as related to opera/music (esp. those with esp. high levels of training) can’t be easily changed, nor is it necessary..we. can adjust our tastes for food. When we moved to Poland and Kellogg’s Frosted Flakes were 4x the price of a store brand I informed my family that we were going to “learn to like” the cheaper ones. At first my family rebelled, but we did, and began eating only the cheaper ones. After a few years of eating the cheaper ones, my children were given real Kellogg’s upon arrival back in the states and they didn’t like them!
I have been thinking about this in relation to travel. I have the chance to go on a cheaper trip to Africa at HB but want to wait and save the money til I have enough to go for AI (all inclusive) as I will feel more pampered…and I want to feel pampered on my vacation.
So, for me, the value is in having it nice. However, I don’t HAVE to have it. I don’t get 10x the value out of a $50 meal as opposed to a $5 meal. IN fact, I don’t enjoy a $50 ‘cuz it costs too much–can’t help but think it is a waste of money.
I’m the opposite of the one poster who said she’d rather buy the real Coca Cola. I’m opposite. At almost $2 for 2liter (Coca Cola), if I’m going to drink soft drinks, I told my family we were going to drink the store brand that I can buy for under $1 for 2 liters. You can learn. I actually value the bubbly taste more than the actual “coca cola” brand taste. My tastes are much wider than that. Amy Daczyn ofo the Tightwad Gazette introduced me to that idea years and years ago.
When I travel, I value being able to eat out and get up and walk away from the mess. Thus, I don’t want to do picnics if I don’t have to. That’s part of what is valuable to me about vacations.
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Not just Coca Cola, IMPORTED COCA COLA! Way more high brown than what the rest of you riff raff drink.
But that’s the point. I spend the same amount and get one soda and four glasses of water to your five sodas. It’s the same way with calories. I would rather have one sugar soda per week than a diet every day. It’s worth it to me.
The trick is being conscious of your tradeoffs. My grandmother got on my mom’s case for “wasting” money on long distance bills, but my mom never ate out while my grandmother did once per week. Talking to friends was my mom’s luxury, eating out was my grandmother’s. A key to budgeting (both money and calories) is knowing what your luxuries are, and keeping the list exclusive. When everything is a luxury then nothing is. You’re just a glutton.
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As someone who worked in the opera industry, I am extremely curious as to why you felt you only had an “ok” time.
I don’t know where you live, so I don’t know what opera house you patronized.
Many opera houses have dine/ticket combos where local restaurants cut you a great deal – ask the box office.
Also, it is usually only mainfloor or orchestra seats that are so expensive – most operagoers don’t buy these seats unless they are hard-core fanatics or very well-heeled.
Buy a cheap seat and rent a pair of opera glasses, or bring your binoculars (and yes, men use them)
Rush tickets are often half-price, and the dress rehearsal is also usually sold as a ticketed event (with the understanding that you are watching a rehearsal, which can be a LOT of fun)
just a few choices…
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Great post! I think the pop and popcorn is part of the fun of going to the movies. We like to wait for the cheap theater to get shows we like, spend $1 to get into the movie and buy the snacks. We do our fair share of checking out DVDs from the library (for free) and providing our own snacks, but when we do go to the theater, it’s for the buttery popcorn. LOL!
In the spirit of the season, I’m trying to get the grandparents to “buy” an experience this year for my boys rather than gifts. We let each sibling pick out a gift to get their brother. Last year we spent abut $50 on one of their gifts (from one brother to the other) and it was used for a couple of days and eventually got sold at a garage sale. Pitiful! This year I’d love it if we could do a fun dinner and then pack into a van with hot cocoa or cider and drive through a place with tons of holiday lights. We can visit in the car and talk about all the cool displays, enjoy our snacks and listen to our favorite holiday music. I’d bet that the memory of that would stick with my boys for a lifetime and be significantly cheaper than that darn toy!
Like beauty is in the eye of the beholder, so must value be. I wouldn’t pay much for opera or wine, but I’m willing to pay for a massage now and then or would install a remote-controlled gas fireplace if my next house doesn’t already have one.
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I’m afraid I didn’t have time to read through all of the comments, so I apologize if this has been mentioned already.
Another option if you enjoy opera is to go see it in the movie theater. One of my professors mentioned this in class. Apparently they do professional recordings of live operas and you can go see them in a theater setting with surround sound and all the normal movie bells and whistles, and at a fraction of the cost of going to a live performance. I’ve yet to go to either a live or a prerecorded opera so I can’t compare the two, personally, but he seemed to like the experience for the price.
Here’s a little more info I found with a quick search: http://www.metoperafamily.org/metopera/broadcast/hd_events_next.aspx
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The diversity of comments just goes to show that the values we put on things are inevitably individual. If someone has a different value set about material possessions and experiences to me then what right have I to knock it?
If we all perceived the same value in the same things not only would the world be a boring place, but we would be playing into the hands of marketers who could hike up prices and make even more profit.
Like JD, I’m happy with wines at the cheaper end, and appreciate the taste just as much as I do a more expensive wine (also appreciating how much more of that taste I can have for the same money). In fact here in Greece I can get perfectly drinkable wine in plastic bottles or tetrapacks, even cheaper still than glass bottles.
I had a co-worker who was horrified by my ‘lack of taste’ and determined to educate me into better ways. Not surprisingly, she failed. It really doesn’t matter to me whether someone thinks I have taste or not, I’m confident in who I am and don’t feel a need to live up to anyone else’s value set.
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Talking about the opera. Since my wife and I decided to live on a tighter budget, season tickets to the opera are out. A night at the opera is just too expensive. But I do miss opera. So, once in a while I still get an opera fix and we get cheaper tickets which cost a lot less than the good seats we used to get each season.
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You don’t get the value with a professional vs. local for the same reason you don’t like expensive wine. You personally can’t tell the difference. Like they say, it’s an acquired taste. Once you notice the difference between two levels of something, it’s hard to go back unless it’s not something you care about.
I appreciate professional musicians because I can tell the difference. It’s one reason I don’t listen to a lot of pop music, the singing especially is often awful! I also won’t buy acrylic yarn for knitting with. Wine on the other hand, I do cheap because the good stuff tastes pretty similar to the cheap stuff. I also buy cheap purses, because while I know there’s more quality in the more expensive bag, I won’t get the value out of it, because I don’t use purses much, and I just don’t care.
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In general for utility use/enjoyment, I agree that an $8 bottle (or a $15-20 3liter box, which comes out as between 3 and 7 dollars per bottle) is the way to go. I also would like to add that a higher price tag, although correllated with a higher quality in general, is no guarantee of an excellent wine. For that you usually need to combine higher price with either luck or knowledge about wine to pick out the right bottle.
So for most cases, I go for the sub-$10 a bottle stuff. It does the trick at a price I can afford to buy fairly regularly.
However, if you ever experience a truly *GOOD* wine, you will be immediately able to tell the difference.
I had one a few weeks ago by accident, and I was astonished. There was a complexity and layering of flavors that I had never experienced before. And it wasn’t a really expensive bottle either-a $16 Beaujolais.
It was leagues beyond the $8 bottles, and beyond all of the other $16 bottles I have had. I am also guessing that I will never find a wine like that in a box. But guess you could say it was an “outlier” statistically.
That being said, unless and until I start pulling in triple the amount of money that I am, there are no regular $16 bottles in the cards for me, let alone $50 bottles!!!!
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Maybe all this worry about cost/value, etc, is hampering you’re enjoyment of the opera and other high-priced things.
While I am very much in favor of saving, and share a lot of the philosophy expounded at this site, I think the “economist” in me has to take a break sometimes and let other “irrational” personalities have their fun.
Every once in a while I “go crazy” for the good cause of a romantic night with a girlfriend, or a nice time with some good friends. The only way to do it is “all the way”, take the money you’re willing to spend and spend it as if there were no tommorow, have a good time, have an extra piece of cake
. No worries, today you’re a rich man.
Of course, I would never jepordize my personal finance for such things. But come on, $200 bucks twice in you’re life, and you couldn’t help analizing cost/benefit…. hmmmmm…. isn’t that too much?
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What happens when J.D.’s friends read on the internet that he’d rather do home repair than go out with them to the opera again?
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